The question usually comes up when the current system stops fitting the work. Production plans are kept in spreadsheets. Two systems hold two different lists of the same customers. At that point a mid-sized firm has to choose: a packaged ERP, a custom one, or a mix of the two.
Neither option is right in every case. A Turkish guide to the choice states the difference simply: with a packaged ERP the business adapts to the software, and with a custom ERP the software adapts to the business. This post goes through the points that decide it: fit to your process, total cost over several years, regulation such as e-invoicing, the accounting program you already use, and building in stages.
Fit to your process
Start with your processes, one at a time. If a process works the same way in your business as in most others, a ready-made product will usually do the job sooner and with less risk. Orders, stock, invoicing and collections are often in this group.
Custom software makes sense where your way of working differs from the standard. Buyer guides list signs such as these:
- products that are made to order or configured for each customer;
- production plans or sales commissions kept in spreadsheets, because the package cannot hold them;
- dealers or subcontractors who need a portal of their own;
- a requirement that the data stays on your own servers.
The guides add a second test: how much each process will change in the coming years. A useful first exercise is to write down where people keep side lists today. Each side list marks a place where the current software does not fit the work.
Total cost over several years
The licence or subscription fee is usually the first number in an ERP quote. It is rarely the whole cost. Compare both options over the same period of several years, and keep the costs of the first year apart from the costs that repeat every year.
For a packaged ERP, the cost lines usually include:
- licences or subscriptions;
- implementation and customisation;
- annual maintenance;
- fees for the e-invoicing integrator, where one is used;
- customisation that has to be redone after an upgrade.
For a custom ERP, they usually include:
- business analysis;
- development and testing;
- moving the data from the old system;
- hosting;
- annual support.
Put the totals for the same period side by side. A one-time project fee next to one year of a subscription tells you little. Gaps that are found after the contract is signed tend to become extra products, paid changes or new spreadsheets. That is why the processes should be mapped before either option is chosen.
Regulation, such as e-invoicing
An ERP that issues invoices has to follow the invoicing rules of the country where it is used. In Türkiye, buyer guides tell firms to check how a system handles e-invoices, e-archive invoices, e-waybills and the e-ledger: whether these are built in, sold as add-on modules, or handled through an e-invoicing integrator.
Someone also has to follow changes to these rules. With a packaged program, the vendor usually does that. With a custom system, you or your supplier do it. For many firms, this is a good reason to keep invoicing and accounting in a packaged program.
Keeping the accounting program you have
This leads to a mixed approach, which the Turkish guides quoted here recommend. Accounting and the regulated work stay in a packaged program. The part of the operation that makes the firm different is built as custom software. The two are connected through the interface the accounting program offers. One of the guides calls this the most common and economical choice for mid-sized firms in Türkiye.
Two conditions make the mix work. First, check what interface your accounting program offers before you plan around it. Some vendors license their interface separately, and some products offer none. Second, decide which system is the reference for each type of data, such as customers, products, prices and stock. Without that rule, one guide warns, a firm can end up with two different customer lists within months.
Build in modules and stages
Neither option has to arrive all at once. Guides recommend a pilot with real transactions in a limited scope, such as one warehouse, one product group or one branch. They also recommend running the new system next to the old one for a period before the old one is switched off.
A staged plan also limits the risk of the decision. When each stage has its own quote, you can stop after any one of them, and you learn early if a module does not fit. After go-live there is a simple test of fit: whether people stop keeping their own spreadsheets. If a team still runs a side list, the module does not fit their work yet. Our custom software page describes how we plan and quote work in stages.
A short way to decide
- Choose a packaged ERP for processes that work as they do in most firms. It suits a firm that wants to start quickly and wants the vendor to follow changes in regulation.
- Build custom software for the parts of the operation that set your firm apart, or where the data must stay on your own servers.
- When both are true, keep the accounting program, build the rest, and connect the two.
Where our ERP fits
Our ERP Built to Fit is modular. It covers sales, orders and invoicing; purchasing and stock; finance and accounting; and production and operations. You take the parts you need. The modules are redesigned for each customer and connected to the accounting program you keep. Nothing changes in that program without a named person's approval.
Before anything is configured, we sit with sales, the warehouse, finance and the floor, and we analyse the systems you run and the connections they offer. The board receives a short account each morning of what was done, with every figure opening its record. The ERP runs on your own servers or on our cloud, and you choose. Your data is yours, and terms are agreed per engagement.
If you are weighing the two options, tell us which systems you run and where the work gets stuck.