Enterprise resource planning (ERP) refers to a software system used to operate a complete business, including processes in manufacturing, procurement, services, supply chain, finances and other critical areas.
The system of integrated software applications aims to help companies manage complex processes and improve overall business operations to achieve greater efficiency. Businesses of all sizes depend on ERP systems to manage their day-to-day activities. Most ERP systems operate on a user-friendly software platform that uses common data definitions that run on a single database.
ERP software can deliver countless benefits to a business. It can empower a workforce, increase collaboration across departments and boost productivity among employees. Information in the system is accessible in real-time, allowing business leaders to make data-driven decisions quickly and strategically. Creating an agile ERP model can add value to a business and provide the scalability that companies need as they evolve.
When investing in ERP software solutions, businesses have two main options: custom or off-the-shelf. Although both options each have pros and cons, off-the-shelf ERP software tends to be much more limited.
Custom ERP Software vs. Off-the-Shelf ERP
One of the biggest decisions that a business will have to make relating to its operations is whether to invest in quality custom software or choose an off-the-shelf option.
The primary difference between the two is that custom ERP software is specifically tailored to meet the business’s unique needs. Unlike off-the-shelf software that offers a one-size-fits-all approach, which may or may not include the features and tools the business is looking for, custom software is designed to fit the business’s specific goals and needs. This can give companies a competitive edge as the system is built for the organization and not available anywhere else.
Cost is also a major difference between custom and off-the-shelf ERP software. Businesses can expect to pay more for custom software as significantly more work is required for creating custom software compared to mass-produced off-the-shelf options.
When software is personalized to fit a specific business’s needs, the costs can increase and any future upgrades must be carefully approached by an IT professional. However, custom software can provide an excellent return on investment.
Integration is an important component of ERP software. To ensure seamless integration with custom solutions, external system integration is thoroughly discussed between the software developer and client prior to development. Third-party integrations that are involved in off-the-shelf ERP solutions can be both costly and complicated.
In short, off-the-shelf ERP software may make sense for a small business that cannot yet afford a custom solution. However, it does not provide near the value of custom software and can be risky to use long-term.
Limitations Of Off-the-Shelf ERP Software
Off-the-shelf software has the benefit of being ready for use without any waiting period for design or development. This is due to those software products being developed for the mass market and containing a variety of features that aim to meet the needs of as many users as possible. Off-the-shelf ERP software is likely to contain many of the tools and features that a business needs and many that they do not need.
Unlike custom ERP software which can be tailored to a business’s specific needs, off-the-shelf ERP software is very limited. These limitations can lead to more frequent expenses which may significantly cost a business over time.
Creates More Costs Long-Term
Although off-the-shelf software may initially seem to be the more cost-effective solution, it can actually be more costly in the long run. Off-the-shelf software is often accompanied by ongoing fees for the use of the product, such as licensing costs or the expense of adding extra users to the platform. Depending on how long a business plans to use the software, these expenses can quickly add up and will usually cost the business more than a custom solution.
Changes Can Be Challenging, If Not Impossible
Making changes to off-the-shelf ERP software can also be challenging. With a custom solution, custom software updates and changes can be made as needed to meet the ongoing and evolving needs of the business.
However, this is generally not possible with off-the-shelf ERP solutions. This lack of flexibility can make it difficult for the software system to grow with the business. When businesses do not develop software themselves, they have little control over the product and its source code.
Upgrades Can Be Costly Or Unavailable
Many businesses rely on tech support to answer questions they may have about their new software or to investigate problems they may be encountering. Although many companies offer upfront IT support for new users, this support may be lost or unavailable over time as updated software options hit the market. Upgrades may also stop being made which can leave the software stagnant and unable to effectively accommodate users as the business grows. If upgrades are available, they may be available for purchase only.
Features & Tools Can Often Lack Functionality
Off-the-shelf software is designed to work for as many businesses as possible. When software solutions are made for the mass market, developers often try to fit in as many features and tools as possible in an attempt to satisfy all customers. Unfortunately, this can often have an adverse effect. Software solutions that are overly saturated with tools and features can be cumbersome to use and may be lacking in functionality. When there are too many settings and options, it can be difficult to navigate the platform which ultimately wastes time and lowers productivity.
Does Not Suit All Businesses Needs
While off-the-shelf ERP software aims to integrate into any existing business infrastructure, this is not always the case. Some businesses using mass marketed software may encounter integration issues or may have trouble getting the software to work with existing processes. When software is created with a one-size-fits-all approach, it can never be perfectly suited for every user. Businesses may be forced to reformat or change some of their current processes to get the software to properly function.
Does Not Scale With Needs & Requirements
Off-the-shelf ERP software is not as scalable as its custom counterparts. The newest and best mass marketed ERP software solution may meet the needs of the business now, but over time an organization may run into problems. Businesses are constantly evolving and not all software is able to keep pace. Custom software is naturally more responsive to ongoing business developments and can provide businesses with the tools and features needed to remain competitive in their industry.
Inability To Provide Feedback To Bring About Change
When purchasing off-the-shelf ERP software, businesses have little input about the features and tools they will receive. These solutions contain a variety of features that may or may not be useful to the business; by comparison, custom software provides the buyer with complete ownership of the bespoke software solution. This affords the buyer greater control of what features and tools the software contains. Buyers can also stay involved during the software development process and provide input as needed to ensure a satisfactory outcome.
Choosing ERP Software For A Business
There are many factors that a business should consider when making a decision between off-the-shelf ERP software and a custom solution. Start by carefully assessing the unique needs and challenges of the business to determine if there is an off-the-shelf solution that can meet all the business’s requirements. A generic solution may be suitable for small businesses or businesses that do not yet have the funds to invest in a custom ERP solution. Finances play a major role in a business’s ability to customize ERP software but it is important to think of custom software as an investment rather than an expense.
There are certain times when choosing a custom ERP software system is the best option for a business. If the business has specific requirements that must be met and there are no off-the-shelf solutions that will satisfy these requirements, custom software is the superior choice. Custom solutions are also best when businesses want to streamline their processes and stand out from the competition. Software that has been personalized to fit the needs of the business will always stand out when compared to software that is easily accessed by any business.
Businesses may also want to consider investing in custom software if they are searching for strategies to generate more revenue. Custom software can be leveraged to help the business perform more effectively and close more sales. The chosen solution should cater to the business’s current and future needs; however, a business must be able to meet the upfront costs and time commitments involved in creating custom ERP software.
ERP software is only a good investment if a business’s workforce is able to use it effectively to perform processes and generate income. If an off-the-shelf solution is leading to wasted money and time, it is not a good investment and the losses will only accumulate the longer the software is used. It is important to consider all aspects of the solution before making a purchase, including cost, customer support, hidden fees, ease of integration and availability of desired features and tools. Off-the-shelf ERP solutions can be used successfully, but do not underestimate the importance of having a custom solution for a business.
Speak with A Custom Software Development Company
Off-the-shelf ERP software is not always the best solution for every business, regardless of size or industry. Fortunately, modern businesses have the option to create custom ERP software that puts them a step beyond the competition.
Orases is one of the leading enterprise software development companies in the United States, developing custom software solutions for enterprise-grade organizations.To learn more about how a custom software solution can help your business, contact Orases today by calling 301.756.5527 or by requesting a consultation online.