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06 January, 2022

How to Build Your Own ERP System: All Questions Answered

Managing internal processes can be hard, but ERP software will make it way easier. Check out our article and find out how to develop a custom ERP system.

Mitya Smusin

Chief Executive Officer

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 successfully but also to collect and store large databases, make predictions, and readily adapt to changing conditions.

ERP helps businesses manage their daily processes while forming a strategic vision about 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. 

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ERP is like Lego meaning that you can build whatever you need and want. Does your company have a Procurement department? Go ahead and include it into your ERP system. 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. 

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Generally, CRM is focused on relationships and interactions with existing and potential customers, but the ERP system focuses on and enhances every aspect of your operation. So, while CRM helps boost sales, ERP helps reduce costs.

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

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: 

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  • 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. 

  • Business information is always available

Besides, it's available from any device if cloud-based ERP software is deployed.

  • Manual reporting is no longer necessary

Data from all modules is collected and transformed into charts and graphs that accurately indicate your status and performance. 

  • 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. 

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: 

  1. A cloud ERP lets the company access data from any device connected to the Internet. 

  2. An on-premise ERP is set up in physical space and is accessible only from the company’s computers and servers.

  3. A hybrid or flexible ERP is 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.

SoftwareCompany sizeTypeIndustriesPrice
NetSuiteLargeCloudRetail and Commerce, Education, Energy, Healthcare, Manufacturing, Media and Publishing, Beauty$999/mo. + $99/user for a base license with an annual subscription
Acumatica Cloud ERPSmall- and intermediate CloudRetail and Commerce, Construction, Manufacturing, DistributionOn request
Microsoft DynamicsMedium-sizedCloudDistribution, Construction, Retail and Commerce, Manufacturing~$200/user/mo. for a starter pack subscription
SageSmallCloudConstruction, Manufacturing, Food & Beverage, Wholesale Distribution, Nonprofits$2,075/user with a perpetual license
SAP Business OneSmall- and intermediateCloudManufacturing, Construction, Distribution, Consulting$410/year/user

Why Custom ERP App Development Is So Good

ERP lets today's 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 business needs. That's why a customized system can be a wise choice. Just as a made-to-measure suit will fit you best, a custom ERP system can help overcome your company’s challenges. So, despite the cost of custom ERP software, the advantages are numerous:

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  • Ongoing support

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-in 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

You may scale your ERP software alongside the company’s growth and adjust it as necessary. 

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. 

5. The purchasing module

Who purchased what, when, where, and at what price? The ERP system has the answers. 

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 

ERP software gathers customers’ preferences, creates purchasing profiles, and tracks customer orders. 

8. The supply-chain module

This 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. 

Building an ERP, 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. 

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1. Define your goals and expectations 

Decision-makers must answer the questions that will ultimately influence the ERP system's development process:

  • Which of your processes should be improved? 

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

  • Who’s going to be ERP users? 

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: The more information they have, the faster the development process will be. 

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

4. 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.

5. 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.

📝 What is an ERP?

An ERP is a software program that compiles and analyzes performance data company-wide so that all departments can interact smoothly.

📝 Do I need an ERP solution for my business?

Yes. If you want to increase collaboration and interaction within your company, limit the costs associated with the operation and have access to real-time business information, you'll need an ERP.

📝 Ready-made or custom-tailored ERP?

Depends on your requirements and needs. Custom-tailored solutions are often more expensive, mainly because they're designed to resolve specific types of issues.

📝 How much will I pay for a custom-developed ERP?

The cost is dependent on the requirements. You can send your project specifications, and we'll discuss them with you. The consultation is free.

Tags
How-to
ERP system
Web development
Cloud

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