How To Build An ERP System From Scratch: A Clear Guide

Running a business can often feel like juggling a multitude of tasks, each demanding your attention and precision. You might find yourself overwhelmed by disconnected systems, inefficient processes, and a lack of real-time insights. It’s a common struggle that many business owners and managers face, which has given rise to the demand for ERP software or Enterprise Resource Planning systems.

ERP systems are designed to follow these exact challenges by integrating all the core processes needed to run a company into a single, united system. They help eliminate inefficiencies, reduce errors, and provide you with the data you need to make informed decisions.

Developing an ERP system from scratch might seem overwhelming, but this guide will help you through it step by step. From planning and designing to putting it into action and making it work best for you, we’ll explain each part clearly.

By the end of this blog, you’ll know how to develop an ERP system that fits your business perfectly, helping you run things smoothly, innovate, and grow.

Let’s explore:

What is an ERP system?

An ERP (Enterprise Resource Planning) system is an essential software that helps a company manage and integrate its core processes. An ERP system using integrated applications automates and streamlines business operations across all departments, creating a smooth, efficient workflow. It’s a powerful tool for organizing various business solutions.

Without an ERP system, it can be challenging for a company to function optimally. With an ERP system in place, everything within the business is synchronized, leading to increased visibility, operational efficiency, cost reduction, and improved productivity, ultimately driving comprehensive growth.

ERP Market Size and Trends

The global ERP software market was valued at $54.76 billion in 2022 and is expected to grow at a rate of 11.0% annually from 2023 to 2030. This growth is being driven by the need for businesses to grow their operational efficiency and transparency. Many companies are increasingly depending on data-driven decisions, and the rise of mobile and cloud applications is playing a big part in this.

What’s happening in the ERP Market

• ERP implementation can reduce inventory costs by 25-30% and raw material costs by around 15%, leading to increased profitability.
• The rising number of SMEs in developing economies like China, India, and Brazil increases demand for ERP software.
• IT technology penetration in these regions is shifting consumer behavior towards ERP over manual operations.
• Increased adoption of cloud and mobile applications is positively impacting the ERP market.
• Growing business applications and data generation through supply chains are leading companies to deploy centralized ERP platforms.
• Rising automation and technological advancements in supply chain management are contributing to ERP market growth.

7 Reasons Why You Must Invest In An ERP System

Investing in an ERP (Enterprise Resource Planning) system can significantly improve your business operations and pave the way for sustainable growth. Here are seven benefits of an ERP system that will give you reasons why every business should consider implementing an ERP system:

1. Improved Operational Efficiency:

One major advantage of using an ERP system is that it helps businesses work more efficiently. It combines different business processes into one system, making data more accurate, reducing manual work, and simplifying how tasks are done.

2. Better Productivity:

Another good thing about ERP systems is that they do routine tasks automatically. This gives employees more time to work on important plans. When data is in one place and processes are the same, teams can work together better. This makes the whole organization more productive.

Decision-Making with Real-Time Insights:

3. ERP systems help businesses make decisions quickly by giving them tools to see how well they’re doing in reports and analytics. They show accurate data so leaders can make smart choices fast when things change or new chances come.

4. Improved Customer Service:

Integrated CRM capabilities within ERP systems are another reason to invest in ERP as it allows businesses to deliver exceptional customer service. When all customer information and interactions are in one place, businesses can make each customer’s experience special, boost satisfaction, and build stronger relationships with them.

5. Cost Savings and Financial Management:

ERP systems help save money by managing inventory better, cutting operational costs, and reducing IT expenses by combining systems. An ERP system saves costs by improving financial management, ensuring compliance with rules, and reducing risks and fines.

6. Scalability and Adaptability:

As businesses grow, ERP systems offer scalability and flexibility to adjust to expanding operations and growing business needs. Modular architecture allows organizations to add new functionalities and users seamlessly, supporting long-term growth and scalability.

7. Compliance and Risk Management:

One benefit of ERP systems is that they help businesses follow to industry standards and regulations, mitigating risks and improving organizational resilience. ERP systems promote regulatory compliance by ensuring data integrity, traceability, and transparency across business processes.

Essential Features of an ERP System for Modern Businesses

Modern businesses require ERP systems that go beyond just data management. Here are some essential features to look for in an ERP system today:

1.Automation

ERP systems revolutionize daily operations by automating routine tasks such as financial reporting, inventory management, payroll processing, and more. This automation feature of an ERP system not only minimizes errors but also frees up valuable time for teams to focus on strategic initiatives. By using advanced algorithms, ERP systems ensure accuracy and reliability in day-to-day operations, thereby boosting overall efficiency.

2. Centralized Data Management

Another essential feature of an ERP system is centralizing data from diverse functions, which ensures consistency and accuracy throughout the organization. ERP systems allow real-time data access, promoting informed decision-making based on actionable insights. This centralized approach helps stakeholders to monitor key performance indicators (KPIs), track progress, and respond fast to emerging trends in the market.

3. Reporting and Analytics

Advanced reporting and analytics capabilities is an important feature of ERP systems, which provide stakeholders with deep insights into business performance, trends, and forecasts. Easy-to-read dashboards and customizable reports support confident decision-making. They help organizations improve strategies and seize opportunities in a competitive market.

4. Mobile Accessibility:

As the use of mobile devices is increasing day by day, this feature of the ERP system comes down to be the most profitable one. Modern ERP systems offer mobile access via apps or responsive web interfaces, allowing real-time data access, workflow approvals, and remote collaboration across devices. This mobile accessibility improves productivity and responsiveness, allowing teams to stay connected and agile.

5. Financial Management and Compliance

ERP systems optimize financial processes such as general ledger management, accounts payable/receivable, budgeting, and compliance with regulatory standards. By ensuring financial transparency and accurate reporting, ERP systems mitigate risks and improve regulatory compliance, thereby promoting trust among stakeholders.

6. Supply Chain Management

ERP systems streamline supply chain operations by managing inventory levels, forecasting demand, and coordinating logistics. This feature of an ERP system provides end-to-end visibility improves efficiency, reduces costs, and strengthens vendor relationships, positioning organizations for operational excellence and customer satisfaction.

7. People Management

This feature of ERP helps in automating HR functions like payroll, benefits administration, and compliance with labor laws. ERP systems help HR teams manage employee data in one place and stay compliant with regulations. This frees up HR to concentrate on developing talent and growing the organization.

8. Integrated CRM

By implementing CRM modules, ERP systems manage customer interactions, sales pipelines, marketing campaigns, and service delivery. Integrated CRM functionalities improve customer satisfaction, promote loyalty, and drive revenue growth by delivering personalized experiences and predicting customer requirements.

9. Compliance and Data Security

Data security is crucial for any application or software. Every ERP system prioritizes keeping data safe by following strict rules like GDPR and HIPAA. They track and control who accesses information, ensuring data is reliable and meets legal standards. This protects sensitive data and keeps businesses compliant with laws.

By considering these essential features, you can choose an ERP system that empowers your modern business for growth, efficiency, and data-driven decision-making.

10. Scalability

It is designed to grow with businesses, ERP systems offer scalability to accommodate increased transactions, users, and data volumes without compromising performance. This scalability ensures long-term viability and supports organizational expansion strategies, making ERP systems a cornerstone for sustainable growth.

How To Build A Custom ERP System- Step By Step Guide

Building a custom ERP system is a journey that demands careful planning and thoughtful execution. Here’s a step-by-step guide to help you guide through the process:

Step 1: Goals, Vision and Requirements

First things first, think of your ERP system as a tool to make your business perform at its best. To begin, sit down with your team and explore what you want to achieve. Are you aiming to increase efficiency in how things get done? Maybe you’re looking to tighten up security around your data, or you want to streamline how different parts of your business work together seamlessly.

Next,

• Requirements Gathering: Engage with stakeholders from different departments to gather specific functional and technical requirements. This involves understanding their pain points, existing workflows, and desired improvements.
• Data Management Needs: Specify how your ERP system should handle data flows across various activities such as sales, finance, HR, and supply chain management. You can think about whether you need live analytics, automatic reports, or compatibility with current systems.

Step 2: Choose the Right ERP Solution Type

Choosing the right ERP (Enterprise Resource Planning) solution involves considering various types tailored to different business needs:

• Cloud ERP: Ideal for scalability and flexibility, Cloud ERP offers accessibility from anywhere with internet, lower upfront costs, and automatic updates.
• On-Premises ERP: Best for businesses needing full control over data and customization options, On-Premises ERP requires upfront hardware investment and IT resources for maintenance.
• Hybrid ERP: Combining Cloud and On-Premises benefits, Hybrid ERP offers flexibility to balance data security and scalability needs, with some data hosted on-premises and others in the cloud.
• Industry-Specific ERP: Customized for specific industries like oil and gas ERP, automotive ERP, or healthcare ERP, these ERPs offer specialized features and compliance requirements suited to industry standards.
• Open-Source ERP: Provides flexibility and cost-effectiveness with customizable code, but requires technical expertise for setup, maintenance, and support.

Step 3: UI/UX Design for ERP

User interface (UI) and user experience (UX) design are crucial for ensuring your ERP system is intuitive and efficient:

• UI Design: Your collaboration with UI designers ensures a visually appealing interface that aligns with your brand and enhances user productivity. You should prioritize clarity, simplicity, and accessibility in designing essential functions.
• UX Design: You develop user personas and create wireframes to map out user journeys and interactions within the ERP system. Ensure that your navigation is intuitive, your role-based access controls are clear, and your data visualization meets the needs of different user roles.
• Iterative Design Process: You should implement feedback loops with stakeholders and end-users to refine UI/UX designs throughout the development process. This iterative approach helps in identifying usability issues early and ensures the final product meets user expectations.

Step 4: ERP Development and Testing

Now, let’s take a closer look into building and testing your ERP system to ensure it hits the mark:

• Agile Development Approach: Break down development into iterative sprints, typically lasting two weeks each. Each sprint delivers a functional part of the ERP system, allowing for continuous feedback and adjustments.
• Quality Assurance (QA): Engage QA engineers to conduct rigorous testing at each stage of development. This includes functional testing to validate system behavior, performance testing to assess scalability, and security testing to identify and mitigate vulnerabilities.
• User Acceptance Testing (UAT): Involve end-users and stakeholders in UAT to validate that the ERP system meets their operational needs and expectations. Gather feedback to make necessary adjustments and ensure a smooth transition to the live environment.
• Tech Stack Selection: Choose a tech stack based on your ERP requirements and platform preferences. For desktop application development, consider technologies like C++ or C# for Windows and Swift or Objective-C for macOS. Web-based ERP systems may use Angular, JavaScript, and Node.js for frontend and backend development, with integrations using third-party APIs for improved functionality.

Step 5: Integrate Third-Party Services

Integrating third-party services into your ERP system is key to streamlining operations and increasing functionality. Talk to a technology consultant to connect with established services like G Suite, Office 365, FreshBooks, Jira, Salesforce, and SAP. This ensures seamless data flow across platforms, reducing data duplication and loss.

Customize these software integrations to fit your business needs, like syncing customer data between Salesforce and your ERP or automating financial reports with FreshBooks. This way, everything works together smoothly, making your processes more efficient and effective.

Step 6: User Feedback Collection and Analysis

Gathering and analyzing user feedback is essential for refining your ERP system and ensuring it meets user expectations. Here’s how you can effectively collect and use feedback:

• Feedback Collection Methods: You can use various methods such as conducting user interviews, organizing focus groups, sending out surveys via email, and using social media platforms. These approaches help gather diverse perspectives on the ERP’s usability and performance.
• Analyzing Feedback: You should engage your ERP development team to analyze collected feedback systematically. Your team can identify recurring issues or user preferences to prioritize improvements and updates. This iterative process ensures continuous improvement of the ERP system’s features and usability.

Step 7: ERP Support and Maintenance

Even after the initial development phase, ongoing support and maintenance are essential for the long-term success of your ERP system. Here’s what you can expect:

• Continuous Improvement: Your ERP development vendor will provide regular updates and improvements based on user feedback and emerging business needs. These updates introduce advanced functionalities and address any performance issues identified during maintenance.
• Bug Fixing: A dedicated team of developers will perform thorough bug hunting to ensure smooth data processing and optimal system performance. This proactive approach minimizes disruptions and improves user experience.
• Technical Support: Access dedicated technical support from your ERP vendor to address any queries or issues. This support ensures that your ERP system operates seamlessly so that your team can focus on core business activities.

The Cost of Building an ERP System: What You Need to Know

When considering the cost of developing ERP software in 2024, it’s important to take a closer look at the specifics. The average cost typically ranges between $30,000 to $350,000 but can vary significantly based on various factors.

These factors that affect the cost of developing an ERP System include the

• Complexity of the ERP system
• Customization requirements
• Integration with existing systems,
• The geographical location of the software development company

For a more accurate estimate, it’s essential to consider these variables carefully and assess how they align with your business needs and operational scale. This approach ensures that the ERP system not only meets your current requirements but also supports future growth effectively.

How Zealous Can Help You Build A Custom ERP System

At Zealous System, we recognize the operational challenges businesses face daily. Managing diverse systems and accessing real-time data can be daunting. We specialize in developing custom ERP systems precisely customized to address these complexities head-on.

Our approach begins with a thorough understanding of your business needs. We design and implement ERP solutions that unify your processes, providing a cohesive view across all departments.

Whether you require improved inventory management, optimized supply chain logistics, or streamlined financial reporting, Zealous System ensures every aspect of your ERP system aligns seamlessly with your objectives.

Backed by our extensive experience in custom software development and a track record of over 1200 successful projects across diverse industries, our team is dedicated to delivering custom ERP solutions.