How to Build Your Own ERP System: All Questions Answered

Running your own business can be a blessing and a curse. On one hand, there is endless room for personal and financial growth, on the other hand, it means 24/7/365 responsibility which can turn into a nightmare. And you obviously want your business to perform well. This is why it goes without saying that it's exceptionally important to manage all resources you have effectively. From Procurement to Sales and Marketing departments everything is supposed to work like clockwork. An ERP (Enterprise Resource Planning) system can help with that.

This blog post will discuss what ERP is, how it can benefit your business, and how to build an ERP application. We’ll look at some outstanding ERP solutions as well as the reasons you should consider hiring an ERP developer. Let’s get started.

What is ERP software?

Enterprise resource planning (ERP) software has been around for many years. Basically, it's the fruit of evolution from material resource planning that helped manage factories effectively. However, the world soon embraced digitalization in virtually every aspect of business and commerce. Consequently, it was important for businesses to manage the resources in an effective manner but also to collect and store large databases, make predictions and business decisions based on them, and readily adapt to changing conditions.

ERP systems help businesses manage their daily processes while forming a strategic vision on the future of their companies. It does this by creating an integrated ecosystem that can involve every department in the operation. ERP collects data from them and makes it work in order to increase the company's sufficiency and save on costs. 

In other words, an ERP system uses data from different departments, analyzes it, and helps to streamline day-to-day business activities. The core advantage of it is in transparency and coherence it brings to multiple business processes. ERP system can also include enterprise performance management, a software that helps plan, budget, predict, and report on an organization’s financial results.

ERP is like Lego meaning that you can build whatever you need and want for your business needs. Does your company have a Procurement department? Go ahead and include it into your ERP system. It will help your Procurement team place and specify orders much easier, make contract management, supply chain management, and vendor audit transparent, etc. Is it growing so rapidly that HR departments feel overwhelmed by the number of new employees and struggle with hiring and onboarding them? ERP can make the process easier.

The ERP system for your company will be tailored to solve your company’s specific problems. 

You might also want to know what distinguishes a CRM (Customer Relationship Management) system and an ERP system. Both are popular types of business software, and each is intended to boost an organization's profitability. However, while there is some mutual compatibility—an ERP can even contain a kind of "CRM lite"—there are differences in their respective functionalities. 

Generally, a CRM system is focused on relationships and interactions with existing and potential customers, but the ERP system focuses on and enhances every aspect of your business. So, while CRM helps boost sales and improve relationships with existing clients, ERP helps reduce costs, streamline business operations, collect and analyze data to facilitate decision-making.

CRM also tends to benefit small and intermediate businesses, while ERP may be extremely useful for large and complex organizations with multiple departments involved. How to choose the only one? Well, you don’t have to since many organizations have a mix of it: an integrated CRM and ERP system.

ERP Statistics & Facts

You might be interested in how ERP systems impact businesses around the globe. Let’s look at some points from the data collected by Selecthub and Softwarepath in 2020 and 2021: 

• According to Selecthub, 88% of organizations think of ERP implementation as a great decision that helped their businesses succeed. 

• Softwarepath reported that 20% of organizations implemented ERP in order to support growth. Another 20% did so to increase functionality and 10% sought to consolidate disparate functionalities. 

• Increased sufficiency (35%) and cost advantages (29%) are among the top reasons to implement ERP solutions, according to Softwarepath's 2021 survey report.

• Finance and Accounting department employees (23%) have the most influence on the decision to purchase an ERP (source: Oracle Netsuite 2021). 

• ERP reduces operational costs by 23% and administrative costs by 22% (according to Softwarepath 2021).

• Companies spend an average of 17 weeks on the selection of ERP software (Softwarepath 2021).

• Statistically, 62.7% of companies choose cloud-based ERP software (source: Panorama Consulting Group, 2020).

• Approximately 28% of organizations achieved ROI (Return on Investment) within a year, and 58% did so in less than two years. However, 15% took longer than three years (source: Oracle Netsuite 2021). 

What are the benefits of an ERP business solution?

Today's businesses love ERP software because it empowers them with data-driven decision-making. However, the right ERP system can do much more than that. Here's a list of the benefits your company can enjoy with a custom ERP implementation: 

• Increased integration, interaction, and collaboration

Because all departments are involved and the state of affairs within each of them becomes visible, it's much easier to collaborate. It often occurs that tasks have been completed the certain way just because everyone got used to it, and not because it’s the best possible option. ERP systems make business processes visible and transparent, and allow managers to find the optimal approach to making things done and cut out unnecessary steps.

• Business information is always available

Besides, it's available from any device if cloud-based ERP software is deployed. This benefit is inseparably linked with the increased integration, interaction, and collaboration that ERP systems offer to businesses. Real-time reporting allows you to see the state of business and also compare the performance of various departments to understand which of them needs more attention or organization.

• Manual reporting is no longer necessary

Data from all modules is collected and transformed into charts and graphs that accurately indicate business status and performance. So, you can say “Adieu!” to spreadsheets. Moreover, having crystal clear reports lets you plan better.

• Automated business processes

Routine and repeatable operations, such as payroll and invoicing, can be automated to reduce errors and eliminate repetitive man-hours so that employees focus on more creative tasks.  

• Operational costs reduction 

ERP software makes so-called bottlenecks visible, so the team could react quickly and adjust their strategy. Moreover, since the amount of paperwork is significantly reduced and many routine tasks are automated, administrative expenses may be reduced as well. 

• Data security

Data has become the new gold for businesses from various industries, and it goes without saying that keeping it safe and sound is among the top priorities for a company. Not only because data leakage can damage a company's reputation, but also because data provides valuable insights and facilitates decision-making. 

ERP systems help protect that priceless asset. How? Usually, ERP systems keep data in one place rather than spreading it across multiple systems and devices and assigning different levels of access to employees involved. 

Checklist Out-of-the-box vs. Custom-made ERP Systems: How to Choose the Right One

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What Industries Can Benefit from Integrating ERP Modules? 

Building an ERP system can benefit various industries. The list includes:

• IT

• Manufacturing

• Construction

• Electronics and Technology

• Automotive

• Aerospace and Defense

• Healthcare

• Agriculture

• Food and Beverage

• Fashion 

• Tourism and Hospitality

• Retail

At that point, one important clarification should be made. The list is not limited by these industries since ERP software development is adaptive to specific business needs and can be tailored to solve particular business problems.

Types of ERP Systems

We know that ERP solutions can be tailored to resolve specific challenges. So, in order to make the best match, you can choose among different types of ERP software. There are three groups, based on deployment options: 

Cloud ERP systems 

Cloud ERP system is a software application that is accessed and run over the internet, rather than being installed on a company's own servers and computers. This means that the software is maintained and updated by the cloud ERP provider, and companies pay a subscription fee to use the service.

On-premise ERP systems 

These are software applications that are installed and run on a company's own servers and computers, rather than being accessed over the internet through a cloud-based system. This means that the company is responsible for maintaining and updating the software, as well as providing the hardware and infrastructure necessary to run it.

Hybrid or flexible ERP systems  

Are a combination of both types. This group of ERP software allows companies to migrate between delivery models and integrate specific benefits.

Tip for Small Businesses: Small and intermediate enterprises (SMEs) don't operate on the same scale that large or multinational companies do. Nevertheless, they have problems to overcome. In comparison to typical ERP solutions, the software for small businesses tends to offer fewer features and modules. That makes it more affordable.

Popular Ready-Made ERP Solutions 

The high demand for business optimization created the worldwide ERP software market that grows 10-20% every year. So that dozens of ERP software were created. Now let’s take a closer look at the 5 most popular ERP solutions.

Why Own ERP System Development Is So Good

ERP lets businesses perform better and achieve the desired results. It can be a life-saver. Often, though, off-the-shelf ERP solutions won't fully align with your specific business needs. That's why a customized system can be a wise choice. Just as a made-to-measure suit will fit you best, your own ERP system can help overcome your company’s challenges. So, despite the cost of custom ERP software, the advantages are numerous:

• Ongoing support

The business environment changes, and so do your business needs. You may need to integrate new modules, remove existing ones, or migrate data. The development team will help you adapt to new software and answer all questions that may appear.

• Control 

A custom ERP system provides only what you need, so you pay only for the modules you’ll use in daily business operations. Popular software, on the other hand, might charge you for features you don’t actually need. With customization, you can build your own software with a range of functionality that suits your business. 

• Integration with third-party plugins and programs

A custom-tailored ERP solution gives you a logical progression of control. For example, you can include and integrate any side programs or plug-ins that you need for your business. 

• Adaptation to your workflow 

Many of the standard tools might seem confusing or even counterintuitive, but a custom-developed ERP solution will adapt to your workflow and your level of skills with a computer. 

• Flexibility

This is actually one of the greater advantages of having your own ERP system. You may scale your ERP software alongside the company’s growth and adjust it as necessary, which is impossible with ready-made solutions.

• Cost savings

Although there is typically a larger upfront investment required to purchase and implement an on-premise ERP system, it can lead to cost savings over time. This is because you won't have to pay ongoing subscription fees to use a cloud-based system.

The Key Features of ERP Software

The decision-makers within your company will determine which features are most important for your custom-tailored ERP system. So, let's look at the modules they'll need to consider:

1. Automation

Why let your talented employees waste time on routine tasks that could be automated to run quickly and reliably? 

2. Reporting

Reporting is a vital part of any business operation. With it, one can identify problems before they can damage the business. 

3. Data analysis

Rough data doesn’t matter if there’s no way to analyze it. The magic of data analysis is its ability to generate actionable insights that can build efficiency and growth. 

4. The HR module

Within the ERP system, a complex employee profile includes hiring, onboarding, compensation management, and timekeeping as well as tax and benefits deductions. It allows your HR department to have a complex and complete picture of the department's activities and never miss a thing (yes, you can even set up notifications and alerts).

5. The purchasing module

Who purchased what, when, where, and at what price? The ERP system has the answers and helps take care of this critical day-to-day process. The purchasing module is often integrated with supply chain, production planning and procurement modules.

6. The finance and accounting modules

Statistics show that finance and accounting departments have the greatest influence on the purchase of ERPs. Of course, the data such departments manage is critically important and must be recorded without errors. That’s why the ability to track and analyze the data from a single location is so useful.

7. The CRM module 

Customer relationship management module is designed to help businesses manage and analyze customer interactions and data throughout the customer lifecycle. It helps them automate and streamline various customer-related tasks, such as tracking customer interactions, managing customer accounts and contact information, and analyzing customer data to identify trends and patterns. This leads to improved customer satisfaction and loyalty rates, as well as increased sales and revenue.

8. The supply-chain module

The supply chain management module is particularly useful for manufacturing businesses that interact with numerous suppliers and stakeholders throughout the production process, from raw-material procurement to the delivery of the finished goods. The ERP system makes it much easier because each step is trackable and transparent. 

9. The sales-and-marketing module

The data thus collected reveals insights about customers’ behavior, whereby it's possible to predict and analyze sales activity during a given period. Again, the magic of custom-developed ERP solutions is that you can include just the modules you want. Need to strengthen the processes in the Procurement department? Got it, the team will tailor this module to your requirements. Everything is going well in Finance? Great, let’s keep this module basic. 

ERP software development, from Start to Finish

It's safe to assume that you've decided to get custom-tailored ERP software. However, if you’re reading this guide, it might be your first exposure to the world of resource planning. Because we've promised to cover every aspect of ERP development, we'll start with the ERP development life cycle so that you'll have an idea of what everything looks like. 

These are five must-follow steps that will guide you through ERP software development. 

1. Define your goals and expectations 

Decision-makers must answer the questions that will ultimately influence the ERP software development process. It all starts with asking yourself the right questions:

• Which of your processes should be improved? 

• Why do we need an ERP system within our company? 

• Who’s going to be ERP users?

Of course, these are just three basic questions. The more complex ERP system you need, the more questions you’ll need to answer. They will be a starter point for developing your own ERP system.

2. Share them with the ERP development team

Your goals and expectations will help the development team fully understand your company’s state of affairs, define what programming language will suit best, and propose the design for your future ERP system. Remember: When you need to develop an ERP system and integrate ERP units, the more information you have, the better.

3. Start wireframing 

You now have common ground with the development team and have agreed on the type of ERP software you'll need. So, it’s time to start wireframing, which begins with a few fundamental decisions: 

• The exact number of modules

• Resources needed, i.e., the size of the team and the estimated man-hours

• The timeframe

At this point, you’ll have a pretty clear estimate of the number of hours and tech stack needed.

4. Design

The name speaks for itself. This is the main step of the whole ERP creation process since it will result in the final version of your solution. Designers will provide you with a perfect user experience and smooth visuals and software engineers will write the code. Then, if everything is fine and approved by you, the ERP will go to the next stage. Remember, when we talked about the importance of asking yourself the right questions? Here’s the reason why it also applies to design: Beautifully designed menus and buttons are only the tip of the iceberg called UX/UI design. You know that the design team did a great job when people that are supposed to use an ERP system within your company interact with it easily and intuitively. That’s what UX/UI designers need the information for–to build great and easy-to-interact-with interfaces. 

5. Develop

When the tech stack and features are determined, the development team is ready to develop an ERP system.

6. Test, test, test

This stage involves a process by which you'll finesse and tweak, revamp and rework, but all of that is part of building high-performance software. Excellent ERP software is the result of collaboration between you and the development team, and therefore testing is essential.

7. Deploy

When feedback is collected, bugs are fixed and changes are made, your business starts to benefit from the ERP system implementation. 

ERP Software Requirements

An enterprise resource planning solution is a complex, multilayer software program that consists of blocks, modules, extensions, and supporting elements. However, the configuration of any given ERP depends on the complexity of the ERP app and the structure of your project. So, everything—such as the development speed, security level, and cost of development—begins with the programming language you choose. The best technologies for ERP development are Java, .Net, and Python. 

ERP development with Java

Java supports cloud computing and encompasses every business function. It can also serve as a cross-platform development tool, and that makes Java the most frequently used programming language for ERP development. 

ERP development with .Net

.Net is used by developers to program the server side of the enterprise solution for reusable code and object-oriented programming. Moreover, the apps developed on .Net are easily scalable and extendable to fulfill your company’s growing needs. 

ERP development with Python 

Python’s strength is its ability to reveal solutions. So, Python developers can dedicate their time to problem-solving in massive data instead of being hampered by technical difficulties. Python is a top-notch programming language for web-based ERP apps.

The added advantage of custom-developed ERP software is that modules, blocks, and databases can be designed to function in the way most comfortable to your company.

What does it cost to develop ERP software? 

It’s difficult to calculate the final cost because it depends on many factors such as the number of modules, the project’s requirements, and the team’s hourly rate. It will vary geographically from $15 per hour in Asia and Latin America to $100 per hour in a tier 1 country. On average, an MVP will cost between $25K and $50K, but a complex solution can cost anywhere from $100K up to millions of dollars. 

We at Yellow can help with ERP development. Send us your project specifications, and our team of experts will provide a detailed estimate of the final cost. 

It’s free of cost and commitment. 

Wrapping up: Reasons to Hire an ERP Developer 

A great ERP solution can help your business flourish, perform better, achieve more, make the right decisions, and make all processes run smoothly. The reason to hire an ERP developer is to customize resource planning software to reliably answer your needs. We at Yellow will gladly help with the process. We're dedicated professionals who will have your back throughout the development and implementation of your ERP system.