In previous posts, we have talked about selecting an ERP system and how important it is that the system you choose is the right one for your business. There are lots of ERP products out there on the market, and as an independent ERP consultant, many of the most common questions we get asked are around the topic of whether to buy off the shelf ERP software to use as-is (or have customised a little to meet your needs) or develop your own. There is no straightforward answer to this question; it depends on a variety of factors – so let’s take a closer look:
Off the Shelf ERP System
As it says on the box, this is a system which comes pre-built and ready to go – although a degree of configuration may be required first. However, while most of these systems give you a great starter for ten, they are designed to appeal to the mass market and so may not have exactly the features that your business is looking for; and depending on the system you select, you may be unable to change, or add to, any of the features. Some of the other things to think about are:
- Cost. An off the shelf system will usually cost a lot less than building your own – but beware, some systems cost a lot more to implement than others and, of course, the more customisation you have, the more the system will cost. What’s more, people often fail to take into account costs such as the on-going license and support costs. Depending on the off the shelf system you are considering, once you have calculated all of these costs, you may realise that the total cost of ownership actually exceeds the cost of developing your own system.
- Change Management. With the introduction of any new system comes a period of change, and this will need to be taken into account whether the ERP system you buy is off the shelf or self-designed. For example, if you purchase an off the shelf system, you are more likely to need to adapt your work processes to align with the software (whereas an in-house system could be designed around your existing processes). Changing your processes means you will have to train your employees on the new way of working and could lead to a lowering of output while they adjust to the new processes.
- Growth. As an out of the box solution is not individual to your business, it may not be able to adapt to your business growth. In which case you may soon outgrow the system, undoing all your great work on getting it implemented. Also, during its lifespan, new technologies may develop faster than your ERP system, or vendors may move on and start supporting newer systems. This could also affect the usefulness of your system over time.
Own Developed ERP System
If you are a larger business, then you may decide that rather than making do with an off the shelf system you will design your own.
- Cost. For an in-house system, your up-front costs will tend to be higher as you will need to invest in software developers as it is unlikely you already have the skill set in-house. You may also have to test and make modifications to the system several times before you get to the right end result – which can also be costly regarding both time and money.
- Maintenance and upgrades. As you have designed the system yourself, and therefore have no ERP vendor support, you will have to ensure you have the right staff on board to oversee the operation and maintenance of your ERP system throughout its lifetime. You need to ensure that not only are your designated staff skilled enough to cope with operation issues but that more than one person has the knowledge of your system to cope with any problems that may arise – so that you are not restricted by employee holidays and so on.
As you can see, deciding on what Enterprise Resource Planning system to use – whether it be off the shelf or bespoke – can be difficult and will usually depend on the size of your business and what resources you have. If you need help with choosing the system that is right for you, please get in touch with us today as we will work with you to help you determine the system that is right for the business you want to become.