ERP Development From Scratch: Tips, Costs, and Challenges

Data is the lifeblood of every company.

But managing that data across various departments can be overwhelming without the right tools.

That’s where ERP software comes in.

It centralizes everything — finance, HR, supply chain, and more — into a single system to make it easier to collect, organize, analyze, and distribute information.

If you or your clients are struggling with disconnected data sources or inefficient processes, a well-designed ERP software can streamline business operations and boost productivity.

In this article, we’ll walk you through the key steps of ERP development so that you can better understand how to create a solution tailored to your business needs.

We will also explore the ERP software market, the benefits of ERP systems, key features companies are looking for, as well as challenges of ERP software development.

You can also explore these practical app development tips to keep your project on track and on budget.

Let’s go!

What is ERP Software Development?

ERP stands for enterprise resource planning.

This is a type of software that companies use to manage their daily business activities.

ERP systems allow to manage procurement, accounting, project management, compliance, risk management, supply chain operations, and more.

A complete ERP suite also includes enterprise performance management, and software that helps plan, budget, predict, and report on an organization’s financial results.

Overall, ERP systems tie together a multitude of business processes and enable the flow of data between them.

This is what makes enterprise resource planning software a must-have for many organizations.

ERP systems collect an organization’s shared transactional data from multiple sources. This way, the software eliminates data duplication and provides integrity with a single source of truth.

Today, ERP systems help to manage thousands of businesses of all sizes and in all industries.

To these companies, ERP is as indispensable as the electricity that keeps the lights on.

Let’s see what are the market predictions for ERP software.

ERP Software Market Size

According to the recent Market.Us report, the ERP software market is experiencing significant growth.

It is projected to reach $136.1 billion by 2032, growing at an impressive 10.5% annually.

This growth is fueled by several factors.

Among them are the rising popularity of cloud-based app development and mobile app integration.

These technological advancements help businesses operate more efficiently.

Another factor is business automation.

Many companies, especially in manufacturing, are automating their processes to stay competitive.

ERP systems help streamline everything from inventory management to logistics management software for supply chain logistics. This helps to improve the efficiency of business operations and reduces the chances of human error.

Automation is particularly important in emerging markets like Asia-Pacific, where industries are rapidly modernizing.

The research highlights that custom ERP software development is in high demand across the finance sector and large enterprises.

The finance industry holds 26% of the market, while enterprises make up 39% of the ERP software user base.

It is important to note that cloud-based ERP is also gaining traction in medium-sized businesses as it offers cost savings and quicker delivery times.

So, if you have been wondering if ERP software is in demand now and whether there is a growing need for innovative ERP solutions, the answer to both questions is YES.

Now, let’s explore the features that will make a great ERP software that will be competitive.

Must-have Features and Modules of Custom ERP Software

As we’ve mentioned above, ERP systems are designed around a single data structure that typically has a common database.

This way, you can make sure that the information used across the enterprise is set and based on common definitions and user experiences.

Then, these core constructs are interconnected with business processes driven by workflows across business departments (e.g. HR, accounting, marketing, operations, etc).

This way, all these systems and the people who use them are connected.

Simply put, ERP is the vehicle for integrating people, processes, and technologies across a modern enterprise.

If you’re looking to build custom ERP software, it’s essential to include certain key features that will streamline your business operations.

Here’s what a great ERP software should offer to its customers:

Financial Management

This feature gives you a clear view of your company’s finances, from income and expenses to assets and liabilities.

It centralizes all financial data, making it easier to track budgets, manage cash flow, and oversee expenses across different departments.

With integrated financial management, businesses can create real-time reports that support quicker, data-driven decisions and financial transparency.

This module also automates repetitive tasks like payroll, invoicing, and reconciliation.

Overall, financial management in ERP ensures that all financial operations align with business goals, providing a clear and accurate financial picture at any moment.

Inventory Management

Inventory management makes sure you never overstock or run out of key items.

It gives you real time stock levels so you can get the balance right.

McKinsey Research shows that using inventory software can reduce excess stock by 15-30%.

So instead of guessing, your ERP system can tell you when to reorder products so you can always have enough for customers without tying up too much cash in extra stock.

Customer Relationship Management (CRM)

It can help you identify sales opportunities and build stronger relationships.

Businesses using CRM see a boost in sales and an increase in customer satisfaction.

With a CRM, your team has instant access to customer preferences and purchase history, so they can offer more personalized service — something customers really appreciate.

If you’re interested in how to build CRM from scratch, our guide will give you all the tools and insights you need.

Human Resource Management (HRM)

Managing employee records, payroll, and benefits is a breeze with HRM.

It automates time-consuming tasks like time tracking and performance reviews, giving you more time to focus on your people.

According to PwC, automating HR processes can cut administrative costs by 30%.

Plus, it ensures you’re staying compliant with labor laws and simplifies complex processes like hiring or promotions.

We have explored the benefits of human resource management systems in our recent article. There, we’ve highlighted the importance of HRMS, what are the core functions and must-have features.

Supply Chain Management (SCM)

Supply chain management makes sure every step, from purchasing to production to logistics, runs like clockwork.

With SCM, you can reduce lead times, streamline production, and build stronger relationships with suppliers.

This means you’ll be better positioned to meet customer demands without delays, all while cutting down on unnecessary expenses.

Business Intelligence (BI) and Reporting

With BI tools like Power BI and Tableau, companies can analyze patterns and trends.

This helps them to make better, data-driven decisions about everything from inventory to sales strategy.

Real-time reporting, in its turn, allows teams to access up-to-date metrics, so they can react quickly to changes in the market or within the organization.

This feature helps identify areas for improvement, predict future demands, and optimize operations.

BI and Reporting empower businesses to stay competitive and proactive.

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Integrations

A good ERP system connects with the other tools you use — like e-commerce platforms, payment systems, or 3rd party logistics providers.

This integration means data flows between systems without manual input, and it saves time and helps to reduce human errors.

With everything working together, you can focus on growing your business, not managing data transfers.

Mobile App Solution

Having a mobile ERP app keeps your team connected wherever they are.

Whether someone is on the road or in a meeting, they can still access information, approve transactions, or update records in real-time.

Businesses with a mobile ERP system report a 34% increase in workforce productivity (TechJury).

ERP Software Development Process: Step-by-Step Guide

Custom ERP software development is a complex process that involves multiple stages.

Here, we explore 8 stages of ERP software development, such as to help you better understand the process.

Find out how long it really takes to develop an app with our comprehensive guide on how long it takes to develop an app.

Take your time through each of these steps.

Make sure that the ERP system you develop isn’t just functional — it’s a tool that truly makes life easier for your team and helps the business run more efficiently.

Start small, test thoroughly, and constantly improve based on feedback.

This will help you build an enterprise resource planning ERP that’s perfectly tailored to your organization.

What’s the Average Cost of Custom ERP Solutions?

The answer to this question is rather complex.

The thing is that the ERP development cost depends on multiple factors such as app complexity, the location of the development team, the number of developers you need, the tech stack you choose, and so on.

Let’s unwrap what is the average price to develop enterprise resource planning software.

Custom ERP solutions for small businesses range between $25,000 and $150,000.

The cost is lower due to fewer users, simpler functionality, and shorter development times.

For medium-sized businesses, custom ERP software tends to cost between $150,000 and $500,000.

These systems are more complex and often involve integrations with other business systems like CRM, HR, and supply chain management.

For large enterprises, the ERP software development cost can be over $500,000.

These systems often need to be highly customized, support thousands of users and require extensive integrations with various systems across different departments.

Need a reliable development team? Here’s your step-by-step guide to hiring a dedicated team in Ukraine.

Breakdown of ERP Development Costs

ERP development is much more than just coding and design.

Here are other factors that influence the final price of your solution to handle business processes:

Software Development

A significant portion of the cost comes from the custom development process itself.

This typically includes planning, design, development, testing, and deployment.

Licensing

If you’re integrating third-party tools, licensing fees can add up.

For example, an ERP solution might require integrations with cloud platforms, databases, or specific APIs.

Implementation & Training

ERP systems often require substantial time and effort for implementation, including data migration, setting up workflows, and training employees.

Implementation costs can range from 50-100% of the software costs, according to Panorama Consulting Group.

Maintenance & Support

Ongoing costs to maintain, update, and support your ERP system usually fall between 15-20% of the initial implementation costs per year.

If you still hesitate whether you need to build your own ERP software or use an already existing one, here are a few things to take into consideration.

Custom vs Off the Shelf ERP Systems: Which One to Choose?

When making your choice between custom and off-the-shelf ERP software, it really comes down to two things:

• What are your business needs?
• How much flexibility are you looking for?

A custom ERP is built to match your business processes perfectly.

That means it can adapt as your company grows or evolves.

But ERP system development takes more time and money than pre-made solution.

Plus, you’ll need to keep it updated regularly to make sure it keeps working smoothly, that can be a hurdle.

Overall, a custom ERP system is an ideal option if your business has unique needs that generic solutions can’t cover.

On the flip side, off-the-shelf ERP is ready to go right away, often cheaper, and quicker to implement.

But it may not fit your business perfectly, which means you might have to adjust how you work to fit the software.

This option is great for companies looking for a quicker, more budget-friendly solution that doesn’t require a lot of customization.

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Challenges of Building a Custom ERP Solution

Beyond the money matters, custom ERP software development comes with several challenges.

Here are some of the key difficulties you might want to keep in mind:

ERP Software is Complex to Develop

ERP systems integrate multiple functions like finance, HR, inventory, and supply chain management all into one platform.

If your software development partner hasn’t built such type of systems before, it can be hard for them to coordinate these diverse areas.

That is why you need to check their expertise before signing a contract.

Picking the right partner is crucial — here’s how to choose an app development company that fits your needs.

Also, when collaboraintg with an outsourcing partner, be involved in the feature planning to make sure your future custom ERP system will meet all your needs.

Discover the benefits of IT outsourcing and why it’s popular for scaling tech needs.

User Adoption and Training Can Take a While

Once your ERP software is built, it can be difficult to get employees to fully adopt the system.

ERPs often require significant training, and employees may resist using a new system, especially if it’s complex or disrupts their routine.

In general, it can take teams a few days to several weeks to master the ERP software.

Everything depends on the complexity of the system and the specific roles of the employees.

Data Migration

Moving all your existing business data into a new ERP system is a major task.

It can be challenging to ensure all data is properly transferred, clean, and formatted correctly without losing anything critical.

Integration with Other Systems

ERP software often needs to integrate with other tools, such as CRM, e-commerce platforms, or third-party APIs.

It can be technically hard to ensure a smooth integration, especially if the external systems are outdated or complex.

Want to join the booming eCommerce market? Learn how to develop an eCommerce app that meets customer needs.

Customization Overload

While customization is a major benefit of building your own ERP, over-customization can lead to feature bloat and performance issues.

It can also make future updates or scaling more complicated and expensive.

Security Concerns

ERPs handle sensitive data, from financial records to employee information.

You want to make sure your ERP software is secure and reliable.

To do so, we implement encryption and access controls, among other security measures.

However, it might be challenging to maintain the system security without specialists who know the system well.

Explore our guide to cybersecurity trends and see what your organization needs to stay secure.

How to Choose a Custom ERP Software Development Company?

The key to business success is a great idea plus top-notch implementation.

You have an idea for ERP software, now it is time to find a team that can make it real.

Dreaming of creating a unicorn? Here’s how to find an idea for a unicorn startup.

At SpdLoad, we have been developing software across multiple industries for over ten years.

We know the struggle when it comes to a software development partnership.

Here are a few things you want to keep in mind when deciding on your IT outsourcing provider:

You can also check out our guide on how to hire a dedicated remote team. There, we explore the remote hiring step by step.