Why Develop Custom ERP? 5 Reasons

So, you are at an impasse: to go with an out-of-the-box ERP system or invest in custom ERP software development. This is not an easy choice, especially considering that ready-made solutions can boast shorter implementation and lower initial costs. Still, businesses are unique, so why should your ERP solution be off the racks?

All widely used ERP systems, such as SAP S/4HANA, Oracle NetSuite, Microsoft Dynamics 365, and Odoo, are great due to their versatility and excellent functional capabilities. However, while boasting rich functionality, none of the systems will perfectly suit each organization because of specific workflows or unique scalability demands.

What is the advantage of a custom ERP system? Simply put, it was created for your workflows, team, and long-term goals. That is to say, it is like wearing a fitted suit instead of taking something from a rack. Sure, both options might “fit” initially, but only one will adapt when you grow and change and new challenges come.

In this article, we will explain why investing in custom ERP software development is not just about the technical decision but also about business strategy.

Let’s dive in.

1. Fit Around Your Business Processes

Off-the-shelf ERP solutions are sold as complete solutions. The problem? You might not need half of them, while the other half doesn’t fit your workflows.

Take SAP S/4HANA, for instance.

It is an enterprise-class ERP that is out of the box for global companies but is notoriously tiring and costly to customize. Meanwhile, Oracle NetSuite, while robust in the context of financial management, may be overkill for specific workflows that may be niche.

With a custom ERP, it’s your rules.

Every module, every dashboard, and every data point is built for your team’s daily operations.

Real-World Example:

A mid-sized manufacturing company must rely on a score of complicated workflows in the supply chain. Even though Microsoft Dynamics 365 would do well in supply chain modules, they cannot capture the real essence of their operations, like the various raw materials supplied by different suppliers at different timelines. A custom ERP would let them integrate those seamlessly instead of having some workaround technique.

Why It Matters:

Custom ERP development reduces unnecessary features and focuses on the important ones. Thus, it presents a clean platform where every module serves a purpose.

Key Takeaway:

A custom ERP adjusts to your business and not the other way around.

2. Limitless Scalability

Business growth is significant, but when one does not build a system for it, this can surely break it. Store-bought ERPs often need expensive upgrades- or worse, a whole new platform- when you grow beyond their limits.

To illustrate this, let’s take the example of Microsoft Dynamics 365.

Sure, it scales well for medium-sized companies, but since every business has a unique growth pattern, bottlenecks might be reached without significant add-ons or third-party integrations.

Growth Beyond the Ordinary:

Imagine a chain of retailers expanding their initial five stores to 50 in three years. An off-the-shelf ERP system will always need big reconfigurations or an expensive upgrade at every such phenomenal growth story. A custom-made ERP would have been designed to cater to the same growth.

Flexibility Factor:

Custom ERPs are made in modules, which means new features can be added without hindering core functionality. For example, if you want to integrate IoT sensors into your warehouses in a year, you can do so with a custom ERP.

Why It Matters:

Scalability isn’t just about adding more to the pile—it’s about honing and perfecting what you have.

Key Takeaway:

Custom ERP grows with your company, covering long-term operational efficiency.

3. Seamless Integration with Existing Tools

Raise your hand if you’ve tried integrating two tools that should work together only to discover they don’t. Yeah, we’ve all been there.

One of the most significant advantages of a custom ERP

Is seamless integration with your existing systems—your CRM, warehouse management software, or third-party payment platforms.

Example of Integration Challenges:

Many businesses implement Salesforce for CRM and QuickBooks for accounting. Although these tools have integrations, businesses regularly experience glitches, mismatched data fields, or workflow bottlenecks. A custom ERP can connect these systems into a cohesive workflow.

Smoother Information Flow:

With a custom ERP, you centralize all of your critical data:

• Sales data flows directly into your inventory system.
• Financial reports are auto-generated based on actual time-sensitive operational data.
• Updates to client information instantly populate all integrated tools.

Why It Matters:

Disconnected tools are how teams get bogged down with delay, error, and frustration. Integration isn’t a nice-to-have; it’s a need-to-have.

Key Takeaway:

Out-of-the-box ERP systems allow silos whereby no tools communicate with each other. Custom ERP avoids them.

4. Data Security Matching Your Needs

Let’s get real: data breaches cost money in almost every possible way. And if you are dealing with sensitive customer data, financial records, or proprietary business insights, you cannot afford to cut corners.

The issue here is that off-the-shelf ERPs

SAP S/4HANA and Oracle NetSuite will have standardized security features, which are seldom designed to meet your particular risks and compliance needs.

Industry-Specific Compliance:

• Healthcare organizations operate under necessary HIPAA compliance.
• Rigid data privacy regulations often hold down financial organizations.
• E-commerce online systems need PCI DSS compliance.

These unique compliance needs can be met through a custom ERP without eye-wateringly expensive third-party add-ons or custom patches.

Why This Matters:

Security is not a one-size-fits-all approach. Different businesses have different weak points.

Key Takeaway:

With a custom ERP, your data is safeguarded with security features designed for your needs.

5. Long-Term Cost Efficiency

This is probably the elephant in the room: Custom ERP development isn’t cheap upfront.

Let’s set the records straight, though:

Off-the-shelf ERPs come with recurring licensing fees, expensive add-ons, and even more expensive engagements for customization or adding users.

For example, Oracle NetSuite

Businesses mostly buy additional licenses since they grow more prominent, which, over time, costs lots of money.

Long-Term ROI of Custom ERP:

• There will not be any recurring licensing fees.
• There will not be any surprise costs when you need to add features in the future.
• You will rely less on third-party integrations.

Hidden Costs of Off-the-Shelf Solutions:

Most of the off-the-shelf ERPs have extra charges in case you want to:

• Add more users
• Have custom modules
• Integrate it with third-party software

What It Means for You:

Custom ERP systems are an investment and not an expense. Because of that, the efficiency gains, lower licensing costs, and a minimum level of manual errors lead to huge payoffs in due course.

Key Takeaway:

The money that you invest upfront in custom ERP will eventually pay off.

Conclusion

If your business has particular workflows, plans for explosive growth, or security concerns that off-the-shelf solutions cannot handle, developing custom ERP software is not just an option but a wise choice.

Quick Recap: Why Choose Custom ERP?

• Tailored workflows explicitly designed for your operations.
• Scalability without hitting arbitrary limits.
• Seamless integration with existing tools and platforms.
• Enhanced data security customized to your needs.
• Long-term cost efficiency and more substantial ROI.

If you’ve been nodding along while reading this, it might be time to start planning your ERP journey. 

Need help mapping out your ERP strategy? We’re here to chat.

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