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How to Build Your Own ERP System: Essence, Cost, and Development Steps

Updated 26 May 2022

11 Min

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Building an ERP software or enterprise resource planning system lets companies manage multiple business processes from one place. ERP systems aim to regulate and streamline processes that directly affect enterprise performance. It can be accounting, logistics, inventory management, human resources, or whatever else.

However, lack of technical understanding is one of the main obstacles to successful ERP system implementation. To assist you, we’ve created a complete guide on how to build an ERP system from scratch, its benefits for businesses, and cost.

Before diving into details, here is the quick overview of steps to create ERP:

  • Step 1. Consider why you need to build a custom ERP software.
  • Step 2. Develop your vision of the system.
  • Step 3. Meet with department chiefs to create a list of the required functionality.
  • Step 4. Make a decision where to host your custom ERP solution.
  • Step 5. Get a software development company to help you develop the ERP system.
  • Step 6. Calculate the required time and cost to build the solution.
  • Step 7. Start the development phase.
  • Step 8. Test how well it integrates with the company’s business processes.
  • Step 9. Deploy and enjoy.

What Is ERP System?

Enterprise resource planning or ERP stands for dedicated software (web or mobile apps) that encompasses features made for managing business components and departments. ERP systems make interactions between core processes easily manageable.

ERP assists businesses in handling their daily operations while creating a strategic vision about the future of their enterprises. It does so by making an unified system that can engage every department in the operation. The software gathers data from interconnected systems and makes it operate to boost the enterprise’s efficiency and reduce costs.

Does your organization have a Sales department? Go ahead and integrate it into your ERP system. Does your HR department experience difficulties while hiring and onboarding the raised number of employees? ERP can simplify this process.

How to build ERP system

ERP

There are two approaches to developing ERP software (we'll talk about them in detail below) — out-of-the-box and custom. The first type stands for software built for the mass market offering no or little customization opportunities. It means that every company would have to adjust such software for their processes and spend time and money to train employees. As for custom ERP, this solution is modified by an organization’s software engineers to better fit into the company's processes and become more convenient to work with.

Many companies develop ERP systems for internal use. The primary benefit of using a custom ERP system is an opportunity to link a variety of processes and deliver better efficiency to the entire company. For example, the ERP system can let users track the full revenue cycle — from invoices to cash recipients.

Reasons to Use ERP Systems

With ERP software companies can optimize their workflows, reducing time and expenses.

Here are several benefits of ERP for business:

  • Business process automation. ERP allows putting internal company processes on autopilot. Human resource management, financial management, customer relationship management and the list goes on.
  • Data-driven decisions. ERP offers real-time data that is profitable for marketing, management, and accounting. For instance, it’s possible to add a precise lead analysis feature for your sales department. As a result, it’s possible to make balanced decisions faster.
  • Improved collaboration. Employees can collaborate more effectively having access to all necessary company data instead of using separate databases for each department.

How to Design ERP System: Out-of-the-Box Solutions

If you run a small business or startup and pre-built ERP does a great job for you, there may be little sense in a bespoke solution. But as your business scales, you require some level of customization to get a scalable solution satisfying your workflow logic.

Software as a service providers offer various ERP systems for businesses of any size. For example, Acumatica, Sage Intacct, and SAP Business One are perfect for small and middle businesses. Also, there are solutions like Oracle NetSuite, SAP S/4 HANA, and Microsoft Dynamics for larger companies.

The issue is that out-of-the-box ERP solutions cannot address your unique business need. Besides, ready-made solutions are harder (in some cases, impossible) to integrate with the existing systems, while managing business parts separately isn’t efficient. So it’s better to create ERP from scratch to make the most out of this business decision.

Out-of-the-Box ERP: Benefits and Drawbacks

Benefits:

  • Budget-friendly. Third-party ERP systems tend to have a monthly or yearly fee. For example, SAP ERP charges $94 per user, per month and $3,000 for the license. If the company has 100 employees, the ERP system will cost $12,400 per month.
  • Proven quality. SaaS providers pay attention to product quality and continuously update the product.
  • Faster to deploy. Having a small or middle company, you can integrate the software quite fast. However, enterprises can face integration difficulties due to many parts of the product. Your developers can customize parts of the system, manipulating with source code and APIs (this process is usually time-consuming).

Drawbacks:

  • Functionality gaps. Out-of-the-box ERPs usually can’t fulfill all business requirements. That’s because they’re built for a mass market rather than a specific company.
  • Licensing fees. To use the third-party ERP system, you need to buy a license that can be quite expensive. For example, the Netsuite base license costs $1,000 per month.

I’ve already touched the SaaS app development topic and revealed its price. Follow the link to learn more.

How to Build Your Own ERP System: Custom Approach

More and more enterprises opt to build ERP from scratch to improve their business KPI. Creating a personalized app entails getting a solution highly adaptable to your company's business logic, its processes, and departments, including unique product functionality. Moreover, bespoke applications can adjust to ever-changing business objectives and requirements, while out-of-the-box ones only address short-term needs.

Developing ERP software, you can create organization-specific software and avoid rebuilding workflows just to use software from vendors. It’s possible to add any features you need for finance management, supply chain management, or whatever else. Custom solutions are specifically designed to link to your existing programs and databases, and even with legacy systems. In addition, building ERP from scratch, you get a high-security solution since programmers are free to implement any security features requested.

Custom-Made ERP Software: Benefits and Drawbacks

Benefits:

  • Customization. Third-party solutions can have features that you don’t need. In the case of custom development, you only add the necessary functionality.
  • Required features. It’s possible to develop features for each department. For example, you can create a precise lead analysis feature for your sales department.

Drawbacks:

  • High cost. Custom ERP development might cost you a pretty penny. It’s complicated to calculate the final price because it depends on requirements and the project’s overall complexity.
  • Development time. As ERP systems cover the entire company’s work, they’re pretty large. So, the development time is extensive. Not talking about continuous support.

ERP software development consulting

Get a thorough consultation from our experts to discuss the details on your project development

How to Make an ERP Steps By Step

Building an ERP from scratch seems to be the right investment for many companies. Out-of-the-box software can’t provide the set of features every company in the world needs to do their business effectively. That’s why building ERP software can save a lot of money in the long-term.

Let’s find out how to make an ERP software step by step.

How to build ERP

How to develop ERP from scratch

Step #1. Define Your Company’s Goals and Requirements

To get a quality and useful product, you need to describe your goals and requirements for the development team. It'd be good to communicate with employees from different departments to figure out their problems and think of how to solve them with ERP.

A quality custom ERP system should be able to manage data flows of different activities (like sales, planning) and automate routine processes. Some enterprises have specific requirements, while the majority want to include such business activities as:

  • Sales
  • Financing
  • HR
  • Distribution or delivery

Step #2. Dive into UI/UX Design

Design is a significant part of any project. Speaking about an ERP system, UI/UX design should be user-friendly and straight-forward. ERP software usually has several user roles and multiple navigation buttons, charts, and other elements. It’d be a good idea to craft wireframes and think over the user flow before getting to UI design. Once ready, it’s time to move on with fonts, buttons, and other details. Your design team shouldn’t overload the ERP software with unnecessary details. It’s better to lay on simplicity.

Step #3. Consider the Tech Stack

How to create an ERP system and make it stable? You need to choose a robust tech stack. The tech stack depends on the chosen platforms. So, if you create an ERP for desktop platforms, developers will use C++ or C# (Windows) and Swift or Objective-C (macOS). For the web version, software engineers use Angular, Bootstrap, JavaScript, and Node.js. Morover, during the development, it's common to use various third-party integrations. Developers can integrate services like G Suite, Office 365, and others into your ERP system. Software engineers use different APIs from third-party services to access the data and display it in the ERP system.

Note: The final toolset always depends on your technical needs and project requirements. You can book a consultation with our senior level developers to choose best-fitting tech stack for your project.

Step #4. Integrate ERP Modules

You should also integrate established business processes into your ERP systems. This will allow you to centralize and interconnect all your business tools and prevent data duplication and loss. Here is the popular third-party services to integrate into ERP:

  • G Suite
  • Office 365
  • FreshBooks
  • Jira
  • Salesforce
  • SAP

Step #5. Review the Final Product

Building ERP from scratch, you need to test each part of your product. The development team should have several QA engineers to test the system. They test the system to find and fix all the bugs. It’s a good idea to involve your employees in testing ERP software. They’re the best beta-testers who’d tell you weak sides of the system.

Make ERP system

ERP system example by Cleveroad (Source: Dribbble)

How Much Does It Cost to Build Your Own ERP?

The ERP cost may vary between $25,000 and $350,000. In some cases, it may take even more to build a custom ERP system. Everything depends on its complexity and your requirements. If you have a team of in-house developers, it won’t be hard to calculate the price to build an ERP. So, it's better to contact the IT service provider to specify details and request more precise numbers.

The cost of ERP is impressive. So, the question arises: what does this cost form? Here’s a list:

  • Project complexity. It’s obvious that complicated projects cost more. Developers need more time to build the required features not talking about a higher qualification.
  • Development team. There are three options to cooperate with software developers — cooperate with freelance developers, create an in-house team, or find a reliable vendor. In our experience, in-house developers or outsourcing software development companies are the most suitable option for ERP building. Freelancers tend to fail deadlines. Also, it’s quite complicated to check the code unless you're a tech guru.
  • Region. Software development cost varies depending on the region. However, the qualification depends on the region. For example, companies from North America charge the highest rates. On the contrary, Asian software companies have the lowest rates, but the product’s quality and customer service are often questionable.
  • Seniority level. It’s common to divide mobile app developers into three categories depending on their work experience — junior, middle, and senior ones. Creating an ERP system, it’s better to hire middle or senior developers. They are experienced in various technologies.

Find out the cost of ERP

Tell us more about your project idea and get a tech consultation from domain experts

Build Your Own ERP With Cleveroad

Cleveroad is a skilfull IT company from Estonia (Central/Northern Europe) with 10+ years of experience in the software development market. Our specialization is any-scale custom digital products architecture and delivery for multiple business domains.

By cooperating with us, you’ll get:

  • Multi-domain app development expertise — healthcare, retail, financial services, logistics, etc. — we apply personal approach to each client.
  • End-to-end service development, including enterprise app development, database development, cloud app development, software consulting and maintenance, and much more.
  • An expert IT team encircling agile-oriented, certified, and goal-driven professionals.
  • Cutting-edge tool set and progressive software creation methods.
  • Full-cycle app testing, QA consulting, and QA automation services to ensure your product fully complies with its requirements and security standards.

For this time, our team has delivered many custom software solutions across the industries. Here is one of our latest projects — SaaS retail operations platform (RetailOps). We’ve developed this project for two platforms — iOS and desktop. RetailOps is a powerful SaaS solution for retail. It offers a bunch of cool tools for retail companies like warehouse and inventory management.

SaaS retail operations platform

RetailOps

Frequently Asked Questions
  • Step 1. Consider why you need to build a custom ERP software.
  • Step 2. Develop your vision of the system.
  • Step 3. Meet with department chiefs to create a list of the required functionality.
  • Step 4. Make a decision where to host your custom ERP solution.
  • Step 5. Form an in-house team or get a software development company to help you develop the ERP system.
  • Step 6. Calculate the required time and cost to build the solution.
  • Step 7. Start the development phase.
  • Step 8. Test how well it integrates with the company’s business processes.
  • Step 9. Deploy and enjoy.

Software as a service providers offer various ERP systems for businesses of any size. For example, Acumatica, Sage Intacct, and SAP Business One are perfect for small and middle businesses. Also, there are solutions like Oracle NetSuite, SAP S/4 HANA, and Microsoft Dynamics for larger companies.

Enterprise resource planning or ERP is the process of managing all business components and departments. ERP systems make interactions between core processes easily manageable.

Where to use ERP:

  • Marketing
  • Human resource management
  • Finance management
  • Project management
  • Compliance monitoring
  • Business intelligence
  • Automated reporting

With ERP software companies can optimize their workflows, reducing time and expenses.

Here are several benefits of ERP for business:

  • Business process automation
  • Data-driven decisions
  • Improved collaboration

The tech stack depends on the chosen platforms. So, if you create an ERP for desktop platforms, developers will use C++ or C# (Windows) and Swift or Objective-C (macOS).

For the web version, software engineers use Angular, Bootstrap, JavaScript, and Node.js.

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Comments

6 comments
RM
Russell Mahmud
09.03.2022 at 08:40

What a fantastic article!

MT
Mas technology
01.12.2021 at 07:29

Informative article

AN
A. Nusair
25.03.2021 at 09:00

which tech stack can be used to develop ERP software that can be multi portable which mean can be install on desktop and on any other devices such as on mobile or tablet and also can be a web-based as well

avatar
Katherine Orekhova
26.04.2021 at 04:21

Please contact out managers and development team to discuss tech stack based on your requirements

TS
Tanvi Shukla
19.03.2021 at 06:34

Such a nice article. thanks for sharing. the best ERP software is one which fulfill organizations need.

P
peopleux
16.02.2021 at 08:37

Really enjoyed your article as its highly informative

B
Ben
07.10.2020 at 05:06

Hi I'm hopefully opening soon a new business and my vision and aim is the systemized processes so it'll be capable to scale up in no time, I'm now working on my ERP structure and bumped into this article wouldn't mind to clarify a point or 2 with someone. Thanks Ben

avatar
Vitaly Kuprenko
12.10.2020 at 02:41

Hi, Ben! Please, fill in this form and we'll contact you back soon.

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