Off-the-shelf ERP or a custom system: how to decide

“Off-the-shelf or custom?” is often asked as if there were one right answer. There isn’t. For some companies a packaged ERP is the right choice. Others need a system built around the way they work. And a large group in between is best served by a mix of the two.

We build custom systems, so read this with that in mind. Even so, we won’t advise a company that fits a packaged product well to build its own. That would be a bad deal for both sides.

How off-the-shelf ERP works

A packaged ERP is a product built for many companies at once. The vendor has already decided what an order looks like, how the warehouse is run and how documents move through the system. Implementation mostly means setting parameters, loading master data and training people. Larger changes are possible, usually through add-on modules or custom work done by the vendor’s partner.

The upside is that you get something already running in other companies. The downside is that your process adapts to the software, not the other way round.

When off-the-shelf makes sense

A packaged product is a sensible choice when most of the following is true:

• Your processes are standard. You buy, store, sell and invoice much like other companies in your industry.
• You want to get going quickly and don’t have the capacity for detailed analysis and design.
• Accounting and legal compliance are the main reason for a new system. Packaged products usually handle this well and keep up with regulatory changes.
• You’re willing to change some of the way you work to fit the software, and your customers won’t notice.

If that sounds like you, look at several products. Ask for a demo using your own examples, not the vendor’s sample data, and talk to companies similar to yours that already use the product.

When a custom system makes sense

A custom system is justified when the company has processes that matter to the business, and a packaged product either doesn’t cover them or covers them poorly. A few typical situations:

• A metalworking shop costs every inquiry separately, from a drawing, with material, cutting, welding and certificates. The software has a product and a price. The real work happens in a spreadsheet next to it.
• A distributor has complex discount rules, delivery routes, and drivers who need to see delivery notes and collect a customer signature on the spot.
• A construction company tracks costs by project and site, issues progress bills, and wants to see what a project really cost against the bill of quantities.
• A service company schedules technicians into time slots, and work orders are opened and closed in the field.

What these have in common is that the most valuable part of the work happens outside the software, in spreadsheets, e-mails and people’s heads. The system exists on paper, and the business runs around it.

Custom has its own costs. Analysis and design take time, you need a vendor you trust, and someone inside the company has to take part seriously in describing how things work. Without that, the result won’t be good, whatever the technology.

A third option: keep what works, build what’s missing

Many companies don’t have to choose at all. Their accounting software or existing ERP handles bookkeeping, VAT and statutory reporting perfectly well. That’s not where the problem is. The problem is everything that happens before the invoice: inquiries, quotes, costing, orders, work orders, warehouse, delivery.

In that case it makes sense to keep the existing software for what it does well and build a custom system for operations. The two are connected so that data flows automatically. Customers and products stay aligned on both sides, and documents from operations reach accounting without being typed in again. E-invoices can keep going through the channel you already use.

This approach has some practical advantages:

• accounting keeps the tool it’s used to
• legal compliance stays in software that already handles it
• the custom part covers only what’s specific to you, so it’s smaller
• not everything changes at once, which lowers the risk of rollout

The condition is that your existing software can exchange data. Most can in some form, but check this at the very start, before anything else is planned.

Making the decision

Before you look at any product or quote, write down how work gets done today. Sketch the path of a typical order from inquiry to paid invoice and mark which tool is used at each step.

Then answer a few questions:

• Which part of the work creates the most manual effort and the most mistakes?
• Is that part standard, or specific to us?
• Does our current accounting software work well for us?
• Would we change how we work if the software required it, and would customers notice?

If what hurts is standard, look at packaged products. If it’s specific and accounting works fine, consider the combination. If your process is unusual and your current tools don’t support it, a custom system is probably the right direction.

A bad choice rarely comes from bad software. It usually comes from picking the software before it’s clear what it needs to do.

Not sure where you fit

Describe your process to us: how an order moves through the company today, which tools you use and where problems come up. We’ll tell you plainly whether it fits a packaged product, whether you need a custom system, or whether a combination with the tools you already have is the better route.