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Getting Started with ERP Systems
If we think of the working mind of an organization, it would be the ERP or Enterprise Resource Planning System of company. From finance to inventory management to customer relationship management (CRM) and last but not the least human resource management are all the functions and features that an ERP system consists of – basically supports the company with their day-to-day business operations.
ERP systems do not just streamline the routine business activities such as in accounting, marketing, procurement etc. but also allow enhanced decision making and customer service.
Next question comes up as to what we should choose for our company: Custom built ERP or Off the Shelf ERP.
What is Custom ERP?
Imagine going to a store and on one hand you have a choice of purchasing a readymade suit which will initially seem to suit you and your style but gradually goes out of fashion and may be worn by many individuals who choose of the same shelf and on the other hand we have a suit that you personally get tailored according to your preferences, will always stand out and remain uniquely yours.
The same principle applies to Custom ERP systems – they are personalized and customized keeping all your requirements in mind so that the ERP system can align with your needs to perform the specific operational requirements of your company such as the compliance settings, email templates, workflow automation and many more.
What is Off the Shelf ERP?
Turning to Off the Shelf ERP – a software solution that is prebuilt for common business operations and claims to suit and adapt to all business types. They are provided by companies such as SAP, Oracle, Zoho etc. With thought of small and medium sized businesses, the initial cost of off the shelf ERP is low alongside faster deployment and demonstrates reliability as the model is evaluated and tried by many companies already.
But having said that, it also has its own limitations, for instance wastage of the extra inbuilt features, difficulty with adapting to a system that is not designed especially for the company linked with problems to fit into the workflow of company and has generalized features and mainly having dependency on a specific provider known as Vendor Lock-In.
How does Custom ERP differ from Off the Shelf ERP?
Outlined here are parameters which can be used as bullet points in your checklist to decide your preferred type of ERP system whether it is custom ERP or off the shelf ERP.
• Cost & ROI
• Ownership & Flexibility for Customization
• Implementation & Integration
• Scalability & Threat to Vendor Lock-In
• Maintenance & Reliability
Cost & ROI
Firstly, on the basis of cost alone, off the shelf ERP has a lower upfront cost compared to custom ERP which requires a high initial investment, but it includes the cost of tailored development, licenses, and implementation. Wherein off the shelf is mostly subscription based and predictable however due to constrained flexibility, it eventually requires additional third-party tools to perform tasks which are not available in the off the shelf ERP system but are required by the company. In regard to custom ERP, they have ongoing costs for infrastructure and upgrades, yet they aid in lowering the cost for future expansions.
Secondly though off the shelf ERP delivers faster ROI in small and medium sized businesses due to the faster implementation and deployment speed but it cannot adapt to the specific needs of the company resulting in lost opportunities for automation of workflow. Whereas custom ERP takes time for ROI, but it focusses more on long-term ROI as it boosts productivity, saves annual working hours, automates the workflow etc.
Ownership & Flexibility for Customization
Off the shelf ERP systems constrain the flexibility to customize along with limiting the owner. It can be visualized as the company is following a roadmap provided by the vendor. Shifting focus to custom ERP give full ownership with unlimited flexibility for customization to streamline the business administration and operations ideal for growth and freedom from vendor restrictions.
According to Ben Light in the Journal of Software Maintenance and Evolution: Research and Practice, he shared a case study that stated that a cable company reduced its dispatch process by customizing their ERP system where previously creating dispatch noted for each sales order took 20 minutes, through customizing a screen in the ERP system dedicated to that, this task was reduced the time to 5 minutes. Through the flexibility of customization, the company not only saved time and labor but also obtained better visibility of the process.
Implementation & Integration
To begin with, the off the shelf ERP systems are tried and tested multiple times and have a large user base of small and mid-size organizations that are faster to implement and deploy, however there can be issues with integration with the existing system of the company or to add new features in future. In contrast to which there are custom ERP systems that need time to be designed and curated to the demands of the company but the integration into the company’s current system is seamless and offers full control over it.
Scalability & Threat to Vendor Lock-In
With the aspect of growing the business, the off the shelf ERP systems are constrained to the vendor’s platform capabilities and features in addition to that the vendor infrastructure of the system can be limited and building on new features also depends on the vendor. Coming to Custom ERP, it can be developed and designed and tailored for the growth of the business volume and is fully flexible. A Custom ERP has the flexibility to add or subtract any features according to the exact requirements.
Off the shelf ERP system’s dependency on the vendor is very high and switching vendors in the middle of the process is even costlier, restricting companies to depend on a single vendor causing Vendor Lock-In situations. With custom ERP systems, we can update and upgrade the system with all control in-house and without any external limitations.
Maintenance & Reliability
Although the maintenance of off the shelf ERP systems is mostly backed by the vendors, there is lower amount of maintenance burden, but the updates completely rely on the vendor’s schedule so delays in their schedule can slow down the productivity of the system and affect the standard operational duties. But then we have custom ERP with flexible maintenance and full control over the system however the stability of the ERP system depends on the internal capability to develop the system. Therefore, while deciding to customize the ERP, keep in mind to select a company which is highly experienced in the development of the same.
| Parameters | Custom ERP | Off The Shelf ERP |
| Cost & ROI | High Initial Investment & Focus on Long Term ROI | Lower Upfront Cost with Faster ROI & Uncertainty on Long Term ROI |
| Ownership & Flexibility for Customization | Limited Control Over the System and Customization | Full Control in House and Highly Flexible to Customization |
| Implementation & Integration | Faster Implementation with Adaptability Risk | Time Intensive Implementation with Seamless Integration |
| Scalability & Threat to Vendor Lock-In | Constraints on Scalability with High Risk of Vendor Lock-In | Fully Scalable Without Any External Dependencies |
| Maintenance & Reliability | Dependency on the Vendor’s Schedule for Maintenance | Flexible Maintenance & Entire Control Along with Reliability |
Case Studies
Here is an in-house success story which will prove the worth of custom built and tailored ERP system. A leading corporate company which deals with numerous amounts of customer interactions and daily transactions was facing recurring IT challenges such that it was affecting its productivity and customer experience quality. They approached WhizKey – Enterprise Software Development Company seeking for a solution.
WhizKey provided them with Leo – IT Ticketing Software & Mobile App with integrated custom-built ERP system through which they were able to save more than 146,000 annual hours, saw increase in employee satisfaction by 45% and 83.2% success rate with first-time-right resolutions with AI-Driven guidance. The Custom-built ERP system ensures that the rules of the enterprise are adhered to by the resolutions provided by the AI engine.
Another in-house case study that indicates how custom-built ERP systems cater to the internal challenges faced by the company. A prominent Fortune 500 company in the refreshments sector realized the need for a more agile and integrated solution to address the limited mobility, isolated systems, and operational inefficiencies.
For this, WhizKey came up with Specter – Office Management Software & App that saved more than 132,000 annual hours, decreased the procurement and restocking time by 28%, reduced manual processing alongside resultant errors by 45% and finally but most importantly depicted a rise of 83% in the overall operational satisfaction. Specter gave the company an on-premises ERP aiding effortless synchronization of financial data with an added advantage of being powered with AI.
Safety Shield from Vendor Lock-In and Booster to Long-Term ROI: Custom ERP
Amid a rapidly advancing enterprise software ecosystem, where everyone wants to stand out and appear unique, Custom ERP delivers a pathway to serve the same ideology. While Off the Shelf seems cost effective initially but 5-10 years down the line they grow out of style and companies are trapped in vendor lock-in. However, coming to Custom ERP, it being tailored to our specifications eventually turns out to be highly flexible and fully scalable for the business.
In this fast-paced digital economy, in order to excel in the respective field, we should invest in systems that can accelerate your company’s growth. Let’s develop a tailored and customized ERP system for your organization that meets your requirements, automates the workflow process of the company, and accommodates the barriers faced by the company currently with WhizKey Information Technology. We have not only dealt with renowned organizations like DEWA, Government of Dubai, BMW, McKinsey etc. and Fortune 500 companies but also dealt with custom ERP system requests resulting in the production of Leo, Specter, Centurion (Document Management System with ERP Integration) etc. Therefore, contact us at WhizKey to schedule a consultation and get your ideal customized ERP system.
Frequently Asked Questions
What is custom built vs. off the shelf ERP?
Custom built ERP is a system that is customized and curated according to need of the client company to perform the routine business operations as in accounting, CRM, marketing etc. Whereas off the shelf ERP is a prebuilt software solution which is developed to adapt to the common business activities with the idea that one size suits all which is less practical and eventually the company may require more third-party tools.
What are the advantages of custom ERP?
Custom ERP being tailored to the needs of the company is fully scalable for businesses leaning towards long-term ROI and flexible to customization. It nullifies the requirement of additional third-party tools as all features are in one place for the organization and increases the speed of workflow due to the easy accessibility of all features customized according to the client needs.
What are the advantages of purchasing off the shelf software instead of custom-made software?
Off the shelf ERP software has a lower upfront cost alongside having a large user base as it is a tried and tested model but since it is software solution made with generalized feature it might not be compatible with the workflow procedures of the company, and the company may need additional third-party tools for automation and customized use.
What is the purpose of ERP customization?
ERP customization in order to make the ERP system suitable to the specific operational tasks of the company but customizing its system features to be relevant and fit to needs of the organization.
What is the difference between custom built and SaaS?
The main difference between the custom built and SaaS – Software as a Service is the ability to customize. Considering custom built software is made with the mindset to adapt to the specific procedures in the operational matters of the organization versus SaaS products that are developed with standardized features in order to cater to a larger range of audience.
What are the disadvantages of off the shelf ERP?
Some of the disadvantages of off the shelf is limited customization leading to requirement to purchase third-party tools for features not available or not compatible with the company preferences, then being trapped in vendor lock-in that is to depending on a single vendor till the use of their off the shelf ERP system for the purpose of upgrades and maintenance, and lastly wastage of the extra features prebuilt in the system which are not of use to the company such can result in cluttering. Furthermore, lack of scalability and control are also in the same list.
What are the disadvantages of customizing ERP?
The time taken to build the custom ERP system and one-time high investment cost can be the possible disadvantages of custom ERP systems which can be overlooked when it comes to their advantages that are long term ROI, scalability, reliability, flexibility for further customization etc.
Who uses off the shelf software?
The target audience for off the shelf software is the small and medium sized business with limited capital as they have lower upfront cost but instead of limiting yourselves only with sight of one parameter that is cost which will eventually increase by buying third-party tools for other tasks that are not compatible in the off the shelf ERP, we should tend towards custom built ERP for flexibility of customization, safety from vendor lock-in, scalability and many more such reasons.
