Custom ERP Software Development: Guide for Businesses
Enterprise Resource Planning Software (ERP) is a system that helps companies centralize the management of their business processes and have them all accessible in one place.
That can be finance, inventory, warehouses, logistics, human resources, and so on.
95% of companies say that ERP software implementation helped them improve their overall business processes.
Regardless of the fact that such a system has a lot of benefits, 55-75% of ERP implementations fail.
So it’s not enough to simply develop and implement — it’s essential that you do it the right way.
If you’re interested in finding answers, hold the line — we’ll walk you through the key points of ERP software development.
🔁 ERP vs. CRM: What Is The Difference?
Before diving into details of ERP software development and implementation, we’ll review the main difference between ERP and CRM (Customer Relationship Management).
If you’re already familiar with this information, feel free to jump right to the next section 🎓
As it was already mentioned, ERP stands for Enterprise Resource Planning and is intended to centralize information and automate business processes.
This is a bit confusing since CRM which is Customer Relationship Management has quite a similar concept — centralizing and automating.
If you’d like to learn more about CRM software, you can check out our article on the relative topic:
Speaking of CRM, its main function is bringing various processes under one roof.
Imagine having orders that are automatically transferred to the warehouse, kept a record of, distributed to a client whose payment goes to the system with all the needed data, structured, and sent to the financial or whichever other department.
Apparently, that's one of the things the software can offer. ERP system design focuses on connecting separate workflows with one another.
CRM software, on the contrary, focuses on improving front-office tasks (tasks of receptionists, sales managers, marketers, customer support workers, etc., meaning, it concentrates on client-related processes) and optimizing cooperation between different departments in most cases.
To better understand the difference through visualized content, check out this video:
To sum up, both ERP and CRM systems are intended to improve business processes’ efficiency and effectiveness.
However, ERP software’s main purpose is to reduce costs by automating mostly inner business processes. But of course, ERP can include parts from CRM to facilitate front-office flows.
It’s just that CRM is more suitable to increase sales and improve customer interactions.
❗ How Not to Fail ERP Software Implementation
As we’ve already mentioned, more than half of ERP implementation cases don’t bring expected results. Eventually, that results in massive revenue losses and long-term backlogs.
Thus, you should be well-prepared to avoid such failure, and there are several things you can do to ensure successful ERP development.
# 1: Define goals 🎯
Let’s start from afar. Every action has a purpose :)
And so does website ERP software implementation. You should neither underestimate the importance of this step nor try to do it quickly — clear goals define a huge part of ERP system development.
There's a great SMART technique for setting goals.
In this case, SMART isn’t an adjective but an acronym which stands for:
- S — Specific.
Trying to “improve communication between the accounting and logistics departments” isn’t a SMART goal. In fact, it is quite a blurred thing to achieve.
A proper goal should include the goal itself, all its participants, resources, as well as limits.
- M — Measurable.
To comply with the SMART goal setting method, the goal has to have a clear numeric target and/or time limit like:
- "Shorten the time of order processing from 25 to 10 minutes by the 21st of April."
- "Increase paperwork automation by 15% by the 5th of May."
- A — Achievable.
Your goals should be realistic and actually reachable.
In addition, make sure that your goals are reachable with the ERP since such software can’t cover all business processes in the company alone.
- R — Relevant.
Your goals should comply with the general development direction of your company and its current goals, as well as be truly essential for it.
You should ensure that there’s a motivation for every potential ERP user to actually use it.
- T — Time-bound.
The “T” part is all about deadlines and time limits.
It really helps to focus on goals and better structure the way to achieving them.
To visualize this newly received information, you can watch this video on the SMART goal setting criteria:
The next essential step at this stage is choosing objectives to reach the goal.
Think of it this way:
My goal is to cook a salad. I have to take vegetables out of the fridge and prepare the cutlery needed. Then, I should cut the vegetables and put them into the bowl. After that, I should add the dressing and mix.
The goal was to make a salad, and those little steps were the objectives. Same thing with ERP implementation — objectives are actions you take to reach certain goals.
There are no rules as such to follow when defining objectives. However, they should comply with your long- or short-term business strategy, be derived from your goals, and have particular timeframes.
# 2: Take stakeholders’ opinions into account 👆
Another step you should take to create an ERP platform is questioning all potential users and those who might have something to do with it.
It can be difficult to consider each and every person and foresee such things. But to help yourself not forget about crucial participants of the workflow, ask yourself:
Who will use the system and who will pay for the development?
Your respondents can be top managers, front-office workers, investors, and so on.
Opinions of all these participants will be essential since they might know about things you simply couldn’t notice from your point of view — and if you find out some things when the ERP’s already implemented, it won’t be easy to make changes without money losses and backlogs.
In fact, Avon taught us a lesson that ignoring this step can cost a pretty penny.
|🧴 Avon Case Study|
|Avon is a giant corporation in the cosmetics & beauty industry.
They worked on their ERP software for 4! years, testing it on employees and constantly making improvements.
However, things didn’t go as planned once the system reached the branch in Canada.
After some time, they reported that the software was giving extra workload to sales representatives, rather than automating the tasks which it was intended to do.
Without further hesitation, representatives refused to use the system in other regions which led to losses in mass numbers.
The development was fully stopped and everything had gone for nothing, leaving the ERP in Canada merely to prevent further disruption.
What we can learn from this case is that if you don’t get your employees to use ERP software by making it useful for them, there won’t be any reason for you to develop it. Makes sense, doesn’t it?
# 3: Optimize current processes 😃
Think about building a mall on raw ground. No cement, no slabs — just ground.
Most likely, with such a foundation, the building won’t last very long, will it?
Same thing with ERP software implementation. If the manual processes that are to be automated don’t work properly at their core, automation won’t fix it. More likely, it’ll make things worse.
To automate something with the help of ERP, you first have to show the system how you want it to happen. Thus, if you aren’t able to do so, the system won’t be either.
So, if you know that something isn’t organized well enough, think about enhancing it before the system implementation.
There’s a great example that gives us a lesson on why current processes should be optimized before ERP implementation.
|🖥 HP (Hewlett-Packard) Case Study|
|HP is a multinational IT company headquartered in California, USA.
It’s quite an old situation which took place in 2004, but still extremely teachable. The company wanted to simplify the workflow of a couple of branches by implementing ERP as a cooperation tool.
However, the communication between two teams and the system as the potential part of the workflow turned out to have been not organized enough.
It resulted in both teams working separately and huge data losses. It practically meant that the ERP system had no use.
It cost them over 160M dollars to fix the consequences and cover the losses.
This story proves that to create an ERP platform, all processes should work well by performing it manually and be structured. Otherwise, the software will most likely do nothing but harm.
Taking that into account, one could say that the ERP implementation isn’t the lifeline. It’s a tool that helps companies move forward once they overgrow their current state.
# 4: Divide the development into several parts ➗
This point explains why successful ERPs take no less than half a year to develop and fully implement into the workflow.
The development time strongly depends on the scope of flows you want to automate and the size of the company itself.
To understand if the system is something you truly need to reach your business goals, you have to actually use it.
So, if you want to prevent unnecessary money losses, our recommendation would be to implement an ERP software piece by piece.
You can either start by developing the core functionality or even do it feature by feature.
However, most importantly, each part of the development process should be tested before the whole solution is ready.
Besides, taking_ a quick look, making a couple of clicks, and then going to the next step most likely isn’t the right way to do it_.
You should temporarily implement each separate part into your actual workflow with real resources, real data, and real users. That’s the only way to get to know all the nuances.
# 5: Communicate with your development team 📢
When you work with someone on one particular thing, communication is really important.
Think of yourself as an investor.
Imagine someone asking you for a certain amount of money without presenting you the business plan or showing you the numbers.
All you know is that this start-up develops games. Not much information at all, right?
This is approximately how developers feel when working on a project without having a clear picture of it.
The only thing is that here “the extra money for food” will be on you — developers aren’t the ones to cover losses in case something goes wrong due to a lack of communication from your side.
Thus, to prevent such situations, educate your developers on your business goals; it’s also a great idea to invite a representative from the team to show them the workflow and see everything in action.
Just do your best to get the development team to know your business well enough to offer you the most suitable ERP solution they can.
|🗑 Waste Management Case Study|
|WM is a (comprehensive) waste management and environmental care services company in North America.
They had bought an 18-month ERP implementation program from another company.
Eventually, WM messed it all up. As a result, they pressed charges against the development company. They claimed to have been deceived by sales reps and that the software was never going to work.
The development team counterclaimed this statement saying that the failure was because of WM’s inability to deliver the information and their wishes properly.
This proves to us that the communication between you and your dev team is truly important to create an ERP system that will work well.
Ask for reports, set deadlines, provide the information and feedback at every step, formally confirm your wishes and guidance regarding the development — and you’ll be fine with this part.
✅ Top Features of ERP Software
Depending on what goals you pursue while developing a custom ERP solution, features may and most likely will vary.
Imagine how many features you could possibly add to cover all business needs that ERP allows you to.
So, we thought that the best way to structure this section will be to divide the workflow into several flows and talk about the features from this point of view.
Financial Management Flow 💲
The financial part of running a business is something that often takes much time and effort. It can also be rather confusing since it has a lot of details that are hard to keep a record of.
At the same time, it’s an integral part of any business. By automating it, you can save a lot of time and focus on other more important things for you as a business owner.
To facilitate this flow, you can create an ERP system with financial management features.
So, the features can include automation of:
- Tracking of transactions (including info like name, date, amount of money, etc.).
- Reporting (in the form of data dashboards, infographics like charts and graphs, recommendations, etc.).
- Data analysis (demand predictions, budgetary planning, productivity checks, and so on).
- Accounts payable & accounts receivable.
- Financial forecasting.
- Tax management (including calculation, reporting, etc.).
- Risk management (production, financial, human resource risks) & others.
Looks pretty overwhelming, doesn't it? That’s exactly why custom ERP development processes can take so long.
But don’t worry as:
- There’s no need to use every feature listed. You can choose to only use the ones that meet your business goals.
- You don’t have to go through it alone. Your Tech Partner will fill you in on all the details.
Human Resource Management Flow 👫
Normally, the HR department puts a lot of effort into efficiently uniting the staff recruitment by regularly checking on the current employees’ workflow.
ERP software significantly helps to make it easier and faster.
This part of the workflow can include:
- Scheduling of working hours. You should be able to manage time when employees are required to be on duty (if the working system or contract implies such a thing) and leave comments.
- Managing wages.
- Improving sick leaves, business trips, vacations, and “paid time off.”
- Project management. Within this feature, you can control the project progress, access the info about the responsible employees, and allocate additional people as well as give recommendations yourself if there’s help needed.
Sure thing, ERP for HR management doesn’t necessarily mean a tool for the relative department.
It can be developed to help top managers regulate the work of their subordinates, help and contact them on time, as well as improve the efficiency of cooperation and provide better control over all processes in the company through employees.
You as a business owner could make good use of it as well.
First of all, you can track what’s happening in your company real-time as well as access reports and stats. This basically means that you have 24/7 access to your business from wherever you are.
Customer Relationship Management (CRM) Flow 👐
Basically, the ERP and CRM softwares aren’t mutually exclusive. It’s absolutely common that the first solution has features of the second one.
However, they might not be that advanced since customer experience isn’t the main focus of the ERP software implementation.
Regardless, the features that the ERP software offers for this purpose are more than enough to cover most needs.
It serves for:
- Centralizing customer information and accessing it and its parts whenever needed.
- Marketing automation (emailing, SMM posting, etc.).
- Creating campaigns within the software.
- Customer behavior tracking.
All these features make it easier to provide a more personalized customer experience which leads to an increase in sales, better feedback, and client base extension.
Besides, they can help you to get rid of several manual time-consuming tasks like emailing which can then give you more time to focus on other processes.
Inventory Management Flow 📝
To properly run any business that includes selling goods, you most likely need to take good care of your inventory control first.
Moreover, it’s pretty time-consuming, and if and when things don’t add up — ugh, a complete mess. Tons of papers and spreadsheets to go over.
Long story short, not the best experience either for employees or business owners since it can cause backlogs.
ERP software is just the catch to keep inventory structured and centralized with related data.
Functionality can include:
- Stock control. That is the number of items left, notifications in case the stock level is low, new supplies, etc.
- Supply control.
- Payment gateway. It can be used to pay for new supplies, make refunds, etc.
Most often, Inventory Management isn’t something that just works by itself though.
It can include features to manage warehouses, distribution processes, supply, manufacturing, and other flows which makes it a bit more complex yet much more functional.
By automating these processes, you save a lot of time — it gives you an opportunity to concentrate on other things that are more important for you as a business owner or member of top management.
Supply Chain Management Flow 📦
This part of the workflow is quite functional which makes it useful and challenging to develop properly at the same time.
We highly recommend watching a video where the future of SCM is explained.
Why? Because you’ll see that to keep up with the competition in the near future, you will most likely need to digitize your supply chain system.
So, the functionality of Supply Chain Management can include:
- Purchase order management.
Basically, it’s the automation of tracking supplies, so tools that help to improve cooperation with suppliers, structure replenishments, control cash flow, and digitize the red tape.
- Inventory management.
We’ve covered this part in the previous subsection, but practically IM is a part of SCM.
- Shipping/receiving management.
It includes monitoring incoming and outcoming orders, tracking the supply of raw materials, accessing all data regarding orders, and so on.
- Warehouse management.
These features are intended to automate and optimize packing, replenishment, shipping, and other warehouse-related processes.
Generally, ERP for Supply Chain Management can help companies digitize relationships with their suppliers and automate all product-related processes from the supply of raw materials to delivery.
Third-party integrations 🤖
You can already use third-party services to automate business processes which isn’t a problem — you don’t have to give up on that because of ERP development.
What’s great about custom CRM software, however, is that you don’t have to give up using these services but rather integrate them into the CRM.
That can be:
- Data analysis tools.
- eCommerce applications.
- Other solutions like CRM.
Another important thing to highlight is that neither of these flows are mutually exclusive — they’re rather complementary.
Think about how Financial Management Flow can be combined with Supply Chain Management Flow. This shows us that finding the perfect mix of features to cover all business goals is key to a functional, yet financially optimal custom ERP software solution.
ERP software is truly a great tool for companies to be able to automate processes that will eventually take off a good chunk of workload.
However, it’s not a magic pill that will “cure” your business — it’s more like a calcium supplement that helps children support their bodies during natural growth.
As soon as you reach a certain point in your company’s life and feel like it isn’t enough — shoot your shot and use ERP software.
There are quite a lot of things to keep in mind and work out; plus, there is always the chance of failure during implementation.
Don’t worry though; if you have a well-built plan and an understanding of why you need a website ERP software, there’s nothing to be afraid of.
To sum up, let’s recall the main steps of ERP software development:
- Clearly set your business goals.
- Make sure that the current processes in your company are functioning well.
- Decide on what features you need for ERP software based on your goals.
- Find a Tech Partner and start the development.
If you still have any questions about ERP software development, feel free to contact us! We’ll see how our expertise can help you.