Enterprise resource planning (ERP) systems have become essential for businesses to manage their operations efficiently. An ERP brings together various functions like accounting, HR, supply chain, and more onto a centralized platform. This improves data flow and provides organization-wide visibility.

However, getting a new ERP system can be challenging and expensive for companies. This is why some businesses prefer to create their own custom ERP systems tailored to their specific needs. In this post, we will look at the benefits of building your own ERP, must-have features, steps to create it, costs involved, and mistakes to avoid.

Introduction to ERP System

An ERP system integrates key business processes across departments into a single unified system. It replaces the fragmented systems used for individual functions with a comprehensive platform. ERPs help with automation, standardization, planning, reporting, analysis, and decision-making. However, purchasing a ready-made ERP solution can cost upwards of hundreds of thousands of dollars just for licensing fees.

Add to this high costs for customization, hardware, implementation, training, maintenance, and more. For small and midsize businesses, such high costs may be prohibitive. This is why some companies opt to create their own custom ERP systems designed specifically for their needs. A tailored ERP can provide better efficiency, growth options, data security, and cost savings in the long run.

Why Make Your Own ERP System

Having an ERP system that is molded to your exact business needs and processes can provide great advantages. Here are some key reasons to build your own system:

Perfectly Fits Your Requirements

As every business is unique, having a customized ERP platform allows you to incorporate your specialized workflows and operations. It will have the exact features you need without unnecessary tools that would only cause clutter.

Optimizes Your Processes

You can design the system around your workflows to make them faster and more efficient. It can automate manual tasks, minimize errors, and reduce downtime across departments. This optimization is difficult to achieve with an off-the-shelf ERP solution.

Adapts As You Grow

The system can be designed with enough flexibility to scale and change as your business expands into new products or markets. Adding modules and capabilities is easier than with third-party ERP platforms.

Enhanced Data Security

You can build tougher security measures into your ERP to control access and protect sensitive data. The risk of data theft or privacy violations is reduced when you own and manage the system.

Must-Have Features of a Custom ERP System

While the exact ERP configuration will depend on your business, there are some essential features that every good custom system should have:

Seamless Integration

The power of ERP lies in its ability to seamlessly bring together different business functions like finance, inventory, sales, HR, and more onto a single platform with a shared database.

Intuitive and User-Friendly Design

The system’s interface must be clean and simple so that employees can easily navigate and use it with minimal training. Complex systems lead to low adoption.

Real-Time Data Access

Users should be able to view live data updates from across the organization for faster decision-making and prompt responses to problems.

Custom Reporting and Analytics

The ERP should allow the creation of custom reports with business intelligence for data-driven decisions. There should also be access controls over sensitive data.

Steps to Build Your Custom ERP System

Constructing your own ERP platform requires careful planning and execution:

Define Business Requirements

First, analyze your workflows, pain points, data needs, and desired features. Involve key stakeholders to compile comprehensive requirements.

Decide on In-House Build vs Outsourced Development

You can either hire an IT services firm to create your ERP system or build it in-house if you have the expertise. Evaluate costs, time, capabilities, and maintenance for both options.

Software Development and Testing

Work closely with your technical team or vendor during review software design and development. Conduct rigorous testing before deployment to ensure seamless performance and security.

User Training and Feedback

Provide extensive ERP training to employees and collect their feedback after a trial period. Use insights to refine the system before the full rollout.

Maintenance and Upgrades

Continuously monitor system performance and upgrade features regularly. Keep improving the ERP as your business scales greater heights.

How Much Will It Cost?

The costs for an in-house built ERP system can vary greatly. Here are some of the main expenses to factor in:

Software Development and Customization

You’ll need to pay developers and designers to build the system from scratch based on your needs. More customization means higher costs.

Servers and Hardware

Factor in expenditures for on-premise servers, networks, workstations, backup systems, and other IT infrastructure.

User Training and Documentation

Well-designed training programs and manuals are a must for getting employees up to speed on using the new ERP.

Ongoing Maintenance and Support

You’ll need a dedicated IT team for routine maintenance, troubleshooting issues, backups, upgrades, and patching security flaws.

Miscellaneous Costs

This includes expenses like consulting fees, vendor management, license renewals, change requests, and additions of modules. Keep at least 20% as a buffer.

Common Mistakes to Avoid

Some pitfalls to be aware of when creating your own ERP system:

Lack of Planning

Insufficient requirements analysis and design planning can lead to flaws in the system down the road, requiring expensive rework.

Not Involving End-Users

Failure to actively consult users during development results in an ERP that does not meet their workflow needs.

Poor Data Migration

Without a clear data migration plan, moving data from legacy systems into the new ERP can be complex and prone to errors.

Insufficient Testing

Buggy performance and security issues can plague the system if enough time is not allotted for rigorous, real-world testing.

What’s Next for ERP Systems

Some emerging ERP trends to consider when building your system:

Cloud-Based ERP

Web-based ERP systems enable access from anywhere and reduce hardware costs. However, evaluate security risks.

Incorporating AI and ML

Artificial intelligence can take ERP data analysis and automation to the next level but requires expertise to implement.

Mobile Capabilities

Allowing employees to access a simplified version of ERP via smartphones and tablets can boost productivity.

Conclusion

Creating a custom ERP system tailored to your exact needs can be truly transformative for your business. With careful planning and budgeting, it can significantly improve efficiency, decision-making, and growth. Make sure to involve key stakeholders, invest in robust design, train employees thoroughly, and keep improving the system continually. With the right approach, your purpose-built ERP can be a key competitive differentiator.