Build vs. Buy? 5 Myths About Choosing ERP Systems — Busted!

Picking the right ERP system for your company is a big deal. It can really make or break how smoothly things run and how much you grow. If you’re currently using a mishmash of different software and spreadsheets, it’s probably a nightmare trying to keep everything in sync—but what if the alternative is worse?! 

Sometimes, the better the devil you know.

According to a recent report, 14% of companies moved from smaller solutions that were either homegrown or unsuitable for their needs as they grew. 

When businesses find themselves at this crossroads, they often wonder whether they should build their own custom ERP from scratch or buy one that’s ready to go. It’s not an easy choice, and there’s a lot of confusing info out there. So let’s break down some of the myths and get to the truth.

The 5 Biggest Myths About Choosing an ERP Solution

Choosing the type of ERP your business needs isn’t easy (in fact, it can take some companies up to 17 weeks to decide)—it’s made even harder by a series of common myths that plight the industry. Let’s debunk some of the most prolific. 

Myth 1: Custom ERP Systems Are Always Better

It’s tempting to think a custom-made ERP is the way to go—after all, something built especially for your business will be better than something more generic. 

But here’s the thing—custom systems come with their fair share of negatives. For starters, they can cost an arm and a leg. You’re paying for someone to build a whole system from scratch, and that isn’t always cheap. It can also take a while to create a system that maps to all your business use cases and needs, especially if you’ve got, say, complex sales forecasts and production schedules to incorporate.

On the other hand, off-the-shelf ERPs have already been tried and tested by other companies. There’s enough data to show what works and what doesn’t, which means the companies behind them can constantly improve them. 

Myth 2: Off-the-Shelf ERPs Are Cheaper

At first glance, off-the-shelf ERPs look like they’ll be easier on the wallet, but looks can be deceiving. The bare bones of an off-the-shelf ERP can be very cost-effective, but as soon as you start adding integrations and customizing it, the costs can quickly add up. 

Then there’s the learning curve involved. Your team needs to learn how to use this new system, and that’s not free either. You might need to bring in experts or host sessions—and this might not be a one-off thing either. There’s a good chance you’ll need to implement training with every new add-on or customization. 

Don’t forget about ongoing support, too. These systems need updates and maintenance, and sometimes you’ll run into issues that you can’t figure out on your own. 

So, while custom systems might cost more upfront, the overall costs can sometimes even out because you don’t need to spend as much on customizations later down the line. 

Myth 3: All ERPs Are the Same

On the surface, ERP systems can look and feel very similar—just scan a handful of ERP landing pages and you’ll probably notice a ton of similar features. 

In reality, ERPs come in all shapes and sizes and can differ a fair bit when it comes to features. Some systems might have great tools for managing inventory, while others might shine in customer relationship management or finance. 

Look at scalability and integrations too. These can play a huge role in whether your business grows smoothly or whether it experiences uncomfortable growing pains. 

Some ERPs are designed for small businesses and might struggle if you suddenly expand. Others are built to handle large organizations and huge numbers of integrations. If you pick one that can’t keep up, you could find yourself needing to switch systems sooner than you’d like. This can set you back both cost- and time-wise. 

Read our complete guide to ecommerce and ERP integration.

Myth 4: You Can Implement ERP Quickly

Whether you’re going for a custom ERP or an off-the-shelf option, you can’t just plug it in and expect it to work perfectly right away. You have to figure out what your business needs, what features will help you the most, and how the new system will fit into your existing processes and tech stack. This planning phase can take weeks or even months.

Even with off-the-shelf systems, you often need to tweak things to make them work for your specific business. 

If you go into the implementation process expecting a quick turnaround, you might make rushed decisions. This can lead to poor choices about features, customization, or even which system to choose. 

Myth 5: ERP Is a One-Time Investment

Unfortunately, you can’t just “set and forget” an ERP system. Because they’re complex pieces of tech, they require ongoing maintenance and updates to continue playing well with your existing software. 

The costs of this ongoing management can be costly, whether it’s paying for new software versions or hiring experts to help with the process.

So, it’s important to think about the bigger picture. When you invest in an ERP system, you’re not just buying software; you’re making a long-term commitment to keep it running well and to adapt it as your business grows. 

Build vs Buy: How to Decide What’s Best for You

Still not sure whether building an ERP or buying one out of the box is right for you? Here are some helpful tips to guide you in the right direction. 

1. Figure Out What Your Business Really Needs

Before you choose an ERP system, take a step back and consider both your long-term and short-term needs. 

Take a good, hard look at how your business runs day-to-day. What tasks do you do all the time? What’s causing headaches for your team? Maybe you’re struggling to keep track of your money, or you can’t seem to manage your inventory properly. Or perhaps you’re having trouble keeping up with customer information or dealing with employee data. 

If your main goal is to get real-time visibility into stock levels across multiple warehouses or track raw materials and finished goods, you’ll need an ERP that’s adept at handling these. 

2. Get Support From Your Leaders and Your Team

One of the hardest parts of implementing an ERP system is getting everyone on board. Not only do you need to convince decision-makers, but you also need to get the approval of the people who will be using the system every day. 

Research shows that up to 26% of employees actively use their company’s ERP system, so it’s important that you demonstrate how the new system will slot into their workloads. 

When stakeholders believe in the project and show their support, it makes it much easier to organize training and lay out money for extra customizations or add-ons. To get buy-in, you might:

• Highlight how the ERP aligns with the overall business strategy
• Present case studies of similar companies that benefitted from an ERP 
• Quantity potential ROI for specific departments
• Use real-world scenarios relevant to each department
• Break down the total cost of ownership, including implementation and ongoing costs

3. Write a Formal Request for Proposal (RFP)

Writing a clear and detailed RFP helps you define what you want and gives vendors the information they need to create highly tailored proposals. 

Include important details about your business processes, the features you want in the ERP system, how you want it to work with other tools you already use, and your timeline for when you need everything done.

By providing this information, you’ll help vendors understand exactly what you’re looking for, which will make it easier for them to come up with the best solutions for your business.

4. Make Sure Your New ERP Works Well With Your Current Software

If an ERP will become part of your wider tech stack, it’s important to consider how it’ll work with existing tools, whether that’s your CRM, ecommerce platform, or your accounting software. Experlogix’s library of powerful integrations makes this not just possible, but easy. 

When everything plays nicely together, it creates a seamless ecosystem where information can travel freely across your business. This eliminates silos and speeds up processes that often need input from multiple departments. 

There are several ways you can make sure your ERP works well with your existing software: 

• Use APIs to exchange real-time data between systems
• Employ middleware to act as a bridge between software
• Use iPaaS for cloud-based integrations or if you’re connecting ERP with SaaS apps

If you’re a particularly large organization with many systems, consider an enterprise service bus (ESB). 

5. Make Sure the ERP Fits With Your Business

An ERP can quickly become an integral part of your business operations. It sits at the core of everything—from accounting and sales to marketing and inventory—so it needs to fit with your current workflows. Bear in mind that these might adapt and change as you grow, and your ERP will need to evolve with them. 

Start by documenting your current workflows and identifying which existing systems need to interface with the ERP. You can then develop custom integrations or use middleware to connect up those systems. 

If it helps, you can focus on the core functionalities that closely mimic your existing processes and gradually introduce more complex or customized features. 

Build or Buy? The Advantages and Disadvantages

Build: Advantages

• When you build your own ERP system, you can make sure it’s perfectly suited to your unique business processes. 
• A custom-built ERP system can be modified as your business grows and evolves without being constrained by the limitations of a pre-built solution. 
• A custom ERP gives you complete control over the development and deployment of new features and updates. 

Build: Disadvantages

• Building a custom ERP system can be expensive, particularly in the initial development phase. You’ll need to invest in skilled developers and project management resources, which can add up quickly.
• Developing a custom ERP system from scratch takes time. This can result in delayed implementation and a longer wait before you can start reaping the benefits of your new system.
• You’re responsible for maintaining and updating the software. This requires ongoing investment in technical resources and can be a burden for your IT team.

Buy: Advantages

• Off-the-shelf ERP systems are designed to be implemented quickly, allowing you to start using the system ASAP. 
• You typically receive ongoing support and updates from the vendor. This makes sure your system remains current and that any issues are addressed quickly. 
• Off-the-shelf ERP systems generally have lower upfront costs compared to custom-built solutions. This can make them more accessible for small and medium-sized businesses.

Buy: Disadvantages

• Off-the-shelf ERP systems may not offer the same level of customization as a custom-built solution. You might have to compromise on features and functionality that are critical to your business.
• You’re dependent on the vendor for ongoing support and updates. This can be a risk if the vendor goes out of business or discontinues support for your specific system.
• Off-the-shelf ERP systems are designed to be broadly applicable, which means they may not fit perfectly with your unique business processes. 

Check Out the Reputation of Potential Vendors

Choosing a vendor is about more than just features and price. You’re looking for a partner you can trust. A whopping 87% of companies express the need for guidance during the ERP implementation process, so a helpful vendor is critical. 

Look for reviews, forums, and case studies online—particularly those written by or about companies similar to yours. If you can’t find any relevant reviews or case studies, ask the vendor directly. The good ones will be able to connect you with previous happy customers or share a handful of testimonials. 

Understanding the Costs and Associated Expenses

While you obviously have to consider the upfront cost of an ERP solution, don’t underestimate the other expenses that can (and most likely will) come with it.  

Some companies charge per user, while others have a flat fee. Take a look at the licensing fees for all vendors you’re considering so you know exactly what you’ll be paying and how often. Check support costs here too. Most vendors charge for this, either as a yearly fee or on a per-incident basis. 

There’s also the implementation process to bear in mind. It can be a big job and often costs more than people expect, especially if you need to hire consultants or dedicate a team of your own people to the project for a while. Don’t forget to account for your and your team’s time here too. It’s not just money you need here, it’s hours out of the day. 

Customization is another big one. Most businesses need to tweak their ERP system to fit their specific needs. In fact, 10% of businesses need minor customizations, 33% need some customization, and 37% need significant customization. This can range from small changes to major overhauls, and it all costs money. Be realistic about how much customization you’ll need.

Once your ERP is up and running, your team will need to learn how to use the new system—which, you guessed it, takes time and money. You might need to bring in trainers or send your staff to classes. This isn’t a one-time thing either—you’ll probably need ongoing training as the system updates or as you hire new people.

Cleaning Up Data Before Implementation

If you’ve been in business for even a small amount of time, you’ll already have mountains of data to contend with. Before you go ahead and lay an entirely new system over the top, take a look at your existing data—customer info, inventory records, financial data, all of it. Chances are, it could do with a bit of a tidy-up. 

Here’s a quick guide to cleaning up your data in preparation. 

• Delete outdated and incorrect information. Start by going through this data and getting rid of anything that’s obviously wrong or outdated. If you’ve got customers in your system who haven’t bought anything in 10 years, maybe it’s time to let them go. Same goes for products you don’t sell any more or vendors you don’t use.
• Merge duplicates. Next, look for duplicates. Maybe you’ve got the same customer listed twice with slightly different spellings. 
• Check formatting. Make sure all your data is in the right format. If your new system wants phone numbers in a certain format, now’s the time to fix that. It’s a pain to do it manually later.

Mapping Out the Implementation Process

Unfortunately, implementing a new ERP takes time. There are no shortcuts and you’ll need a detailed plan if you want it to go as smoothly as possible.

Start by breaking the whole project into phases. Maybe you start with setting up the basic system, then move on to customizing it, then training your team, and finally going live. Whatever makes sense for your business.

For each of these phases, you need to figure out what needs to happen and when. Set deadlines, but be realistic. ERP implementations almost always take longer than you think they will.

Now, you need to decide who’s responsible for what. Bob from accounting can’t just assume someone else is handling the financial data migration. You need to spell out exactly who’s doing what.

Make sure you identify some key milestones along the way, too. Maybe it’s getting all your data cleaned up, or finishing the initial setup of the system. Whatever they are, make them clear and make sure everyone knows about them. You need to get all stakeholders involved in the planning process. Think department heads, key users, IT folks—everyone who’s going to be affected by this new system. 

Once you’ve got your plan, communicate it. Have meetings, create visual timelines, and do whatever it takes to make sure everyone understands what’s happening and when. Remember, this plan isn’t set in stone. Things will change as you go along, and that’s okay. The important thing is to have a roadmap to follow and to keep everyone in the loop when things do change.

Assessing Your Ongoing Support Requirements

As we’ve mentioned before, implementing an ERP system isn’t a one-time thing and there will be occasions where things go wrong or don’t work as they should. Consider your support needs and what you may or may not need help with moving forward.

Here are some starting points to think about. 

• How often does the vendor release updates? Are they included in your contract?
• What kind of help can you get when things go wrong? Is there a 24/7 helpline?
• Does the vendor offer ongoing training for new features or new employees?
• Do you have people on staff who can handle day-to-day issues?
• Can your team make changes to the system as your business needs evolve? 
• Do you need to pay for major upgrades? How much and how often? 

Plan to review your ERP system annually to make sure it’s meeting your needs. Use this opportunity to record any changes or issues and create a clear system for how employees can report problems or request help. 

What Happens When You Pick the Wrong ERP? 

Choosing the wrong ERP system can be nothing short of a disaster—especially if you’re relying on it to hold together your entire operating system. 

• Disrupted operations: A poor system fit can disrupt your business operations and drastically slow things down. You might end up wasting time and money trying to make things work.
• Increased costs: You might have to spend extra money trying to make the system fit your needs. Customizations aren’t always cheap, and these extra costs can really add up and eat into your budget. 
• Reduced employee productivity: A difficult-to-use interface can lead to employee frustration and cause them to work slower. You might even lose good employees who get fed up with using a difficult system. 
• Missed business opportunities: You might fall behind competitors with better systems and miss out on new business opportunities if your system can do everything you need it to. 

What Could Possible Go Wrong? The Importance of Choosing the Right System

Your business isn’t going to stay the same forever. You want to grow, to expand, to try new things. The right ERP system can take all the separate (sometimes disparate) parts of your business—sales, inventory, accounting, you name it—and get them working together smoothly. That means less time wasted, fewer mistakes, and getting more done. 

A good ERP system can help you make better decisions too. It gives you a clear picture of what’s going on in your business in real-time. You can spot problems before they become disasters, and see opportunities you might have missed.

Tip: don’t just focus on what your business needs right now. Think about where your business will be in five years, in ten years, and beyond. You want a system that can handle your needs today and tomorrow. 

Long-Term Thinking: Choosing an ERP System for Future Growth

Deciding whether to build or buy an ERP system isn’t an easy choice. Whether you choose to create a custom system or buy a ready-made one, it’s important to make sure it fits your business processes and goals.

Now that you know what to consider when choosing an ERP system, why not take action today? Contact vendors, ask for demos, and start looking at your options. The right ERP system is available to you, and with careful planning, you can make a choice that will benefit your business for many years.

See how Experlogix can help you choose the right ERP. Book a demo today.