August 6, 2024
If you plan to implement an ERP solution to streamline accounting, procurement, and other day-to-day business processes, you have to decide whether to purchase it or develop one from the ground up. Understanding the differences between both options is essential for making a sound choice.
To help you clear things up, we highlight the key differences between custom ERP platforms and off-the-shelf ERP solutions, guiding you in selecting the most suitable option based on your specific business case.
Off-the-shelf ERP software solutions are distributed by vendors to many different companies through either subscription-based or one-time purchase models, with examples including NetSuite, Odoo, and Dynamics 365 Business Central. In turn, custom ERP software is a solution that is tailor-built for one particular company and used individually by that organisation. To uncover core distinctions between these types of software, we evaluate both options from multiple perspectives.
A functional set provided by an off-the-shelf ERP solution is predefined by its vendor, and this functionality can be insufficient or excessive for your company. Meanwhile, the functionality of custom ERP software will match the unique functional requirements of your company 100% since the solution is initially built around them.
The process of implementing a custom ERP system can be lengthy and time-consuming, as such a solution must be designed, developed, and tested first. Since off-the-shelf ERP solutions are ready-made and do not require development from scratch, companies typically implement them quicker.
The initial costs of adopting a platform-based ERP system are typically lower compared to custom ERP implementation since your company does not need to spend resources on full-fledged development. However, financial expenses can increase over time due to recurring licensing fees. In this context, custom ERP adoption can be more cost-efficient in the long term, as your company does not need to pay for user licences.
Custom ERP software developers study your employees' workflows and consider their needs, expectations, and digital maturity during the development making it easier for your business users to adopt the new solution. With platform-based ERP solutions, users may require additional time to get used to the new platform and be able to use its functionality to the fullest extent.
Off-the-shelf ERP systems offer various customisation capabilities, depending on a particular vendor, but still, they are always limited. At the same time, companies can customise and modify custom ERP solutions in alignment with evolving business needs with almost no limitations (as long as a company possesses the required financial, human, and infrastructure resources).
The scalability of a platform-based ERP solution is determined by its vendor and is limited by the capabilities of a vendor's IT infrastructure. Meanwhile, custom ERP software can be scaled without restrictions if a company's infrastructure can support this scale.
Typically, first-line support is included in all basic pricing and subscription plans of turnkey ERP software, but you will have to pay an additional fee for more advanced support services. The support and maintenance of a custom ERP system are controlled and done by your company's internal IT team or a third-party developer.
A company initiating custom ERP development has complete freedom of choice regarding where and how to host its ERP system (whether to host it on-premises, in the cloud (private or public), or use a hybrid approach). In turn, when a company implements an off-the-shelf ERP system, it can only choose among the deployment options provided by the vendor.
To decide which type of ERP software is best to choose, you should take into account the specifics of your unique business case.
If you are considering implementing an ERP system, you will inevitably have to decide - to buy a ready-made solution on the market or to build your own system from scratch. You should carefully compare both options and weigh the strengths and weaknesses of ready-made vs. custom-built ERP solutions to make a grounded decision. You should also consider the specifics of your business case, as both types of solutions may be better suited to different scenarios.
If you have difficulty making the final choice, consider consulting with third-party ERP experts. They will study the unique requirements of your business, map out your work processes, and help you define the most relevant ERP solution based on the business analysis results. If necessary, experts can also provide you with technical implementation support, whether customising an off-the-shelf ERP system or engineering and testing a bespoke ERP system.
