Custom ERP Solutions vs. Off-the-Shelf Software: Pros and Cons
Whether you are a new startup or a well-established organisation, there’s one tool that is essential to streamline your business operations– Enterprise Resource Planning (ERP) software.
From accounting to customer service, ERPs can handle everything for your business. However, implementing ERP software requires a significant financial investment, and choosing the right one is a tough call to make.
This decision becomes even more complicated when business owners have to choose between a custom ERP solution and off-the-shelf software.
To make this decision-making process easy, we have created this ultimate guide that will walk you through what custom and off-the-shelf ERP software are, what are their pros and cons, and which one is best for your business.
What are Custom ERP Solutions?
Custom ERP solutions, as the name suggests, are enterprise resource planning systems that are specially designed and developed from scratch to meet the unique requirements of a business.
Such ERP systems are built from the ground up, providing a tailored fit for a business’s operations, workflows, and objectives. These systems can be precisely adjusted to work with existing platforms, taking into account day-to-day operations and the unique aspects of your industry.
By offering tailored solutions, custom ERPs provide benefits that apply to almost any industry.
Pros of Custom ERP Solutions
Let’s look at some significant pros of using custom ERP solutions for your business.
Unmatch Customization and Flexibility
One of the most prominent advantages of custom ERP solutions is undoubtedly the level of customization and unparalleled flexibility they offer. This means that you can create an ERP system that matches your unique business requirements and goals, ensuring a perfect fit.
Better Scalability
As your business grows and evolves, so should your ERP system. Custom ERP solutions are designed while keeping this in mind. These systems can be easily scaled and modified to accommodate increasing data loads, new functionalities, and user requirements.
Seamless Integration
With custom ERP solutions, integration with existing systems, software, and applications becomes an ultimately easy task. Seamless integration of these solutions improves data flow across all systems, enhances operational efficiency, and future-proofs the expansion of your business operations.
Cons of Custom ERP Solutions
Custom ERP solutions offer enormous benefits to your business. However, they also have some cons as well. Such as:
Higher Initial Cost
One of the main drawbacks of custom ERP solutions is their higher initial cost. Developing a custom ERP system requires significant investment in terms of time, resources, and expertise, which could be a barrier for new or smaller businesses. However, it is more cost-effective in the long term.
Extensive Development Time
Custom ERP solutions take more time to develop and implement as they are built from scratch. For businesses that need a quick solution, the extensive development timeline of custom ERP solutions can be a disadvantage, but it gives a more sophisticated and functional solution.
Upkeep and Maintenance
Ongoing maintenance and updates are necessary for a custom ERP solution to keep it functional, secure, and up-to-date with the latest technologies. All these require a dedicated support team or an external service provider, increasing the overall cost. However, you don’t have to rely on a vendor or supplier for that.
What is Off-the-Shelf Software?
Off-the-shelf ERP software is a pre-built solution designed to address the common needs of businesses across various industries. It comes with standard features and functionalities that can be deployed relatively quickly.
Such software is provided by numerous suppliers and companies as readily available software packages that can be purchased as a whole or on a subscription-based model.
Businesses with basic operational structures or those who need minimal customization prefer off-the-shelf software, as they are developed with consideration for industry best practices and conventional processes.
Pros of Off-the-Shelf Software
Off-the-shelf software comes with the following pros for your business:
Faster Implementation
The quick and easy implementation of off-the-shelf software is one of the most prominent advantages. Since these systems come pre-built and pre-configured out of the box, it is easier for businesses to implement and deploy them.
Lower Initial Costs
Off-the-shelf software generally has a lower initial cost as compared to custom ERP solutions. This is because the development cost is usually spread across multiple customers, making it affordable for small and medium-sized enterprises (SMEs).
Regular Updates and Support
The vendors that offer off-the-shelf software regularly release updates to ensure that the system remains compliant and secure. Furthermore, businesses can rely on the vendors for extended support and assistance for their off-the-shelf software.
Cons of Off-the-Shelf Software
Apart from all the advantages that off-the-shelf software offers, it also comes with certain limitations. The cons of off-the-shelf software are:
Limited Customization
A significant reason for businesses to not choose an off-the-shelf software is its limited customization options. As these software are designed for the needs of a wide range of businesses, they may not align with a business’s specific operations.
Scalability Issues
Scalability is a major issue with off-the-shelf software. These software are not designed to accompany the growth of your business. As a result, businesses have to often switch between different software over time as their company grows.
Unnecessary Features
Off-the-shelf software is often packed with features that cater to a wide range of industries and businesses. However, all these features may not be useful. Unnecessary features may complicate the system, decreasing its usability.
Which One to Choose?
We believe that every business is unique in terms of its nature, size, and operations. Whether it is a small local startup or a well-established global organization, each business has unique requirements and faces different problems.
Keeping these things in mind, a custom ERP solution is always a better option for businesses to streamline their operations. A tailored system that aligns with your business needs is always more cost-efficient and beneficial in the long term.
The endless benefits that custom ERP solutions offer make them a primary choice for businesses. Statistics also support this fact– a report by Panorama Consulting mentions that about 51% of global businesses use custom ERP solutions and these systems have helped them to save up to 30% in operational costs in the long term.
Final Thoughts
After going through the ins and outs of both custom ERP solutions and off-the-shelf software in this guide, we believe that you have got your answer. Custom ERP solutions have proved to be more beneficial in several aspects in the long term when compared to off-the-shelf software.
As the popularity of custom ERP solutions is growing, businesses around the globe are rapidly adopting this new, more efficient solution. We believe that it is the prime time for every business to take the big step and get a custom ERP solution for themselves to gain a competitive advantage in today’s fast-paced world.
