A Comprehensive Guide to ERP Software Development

If you’re dealing with disconnected systems, inefficient processes, or a lack of real-time insights, custom ERP software development can solve these issues. Integrating ERP software into your operations allows you to centralize everything from finance to supply chain management, eliminating manual inefficiencies and streamlining your processes.

According to Grand View Research, the global ERP software market size was valued at USD 54.76 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 11.0% from 2023 to 2030. 

ERP systems give you the control and visibility needed to make better decisions and scale your business effectively.

If you want to overcome operational roadblocks and achieve greater scalability, custom ERP software is the solution. In this guide, you learn about ERP fundamentals, the development process, and the costs of building a tailored ERP system.

What is ERP?

Enterprise Resource Planning (ERP) refers to a software system that integrates and automates core business processes such as finance, supply chain, human resources, procurement, manufacturing, and sales. ERP provides a centralized platform where data from all departments is managed and shared, improving efficiency, decision-making, and collaboration across the organization.

ERP software systems are the backbone of business operations, offering real-time insights, streamlining workflows, and enhancing overall productivity.

For example,

An ERP solution helps a manufacturing company manage inventory, track production schedules, and optimize supply chain workflows—all from one centralized system. This ERP solution allows different departments to access real-time information relevant to their roles, enhancing collaboration and decision-making across the organization.

Beyond ERP, businesses also leverage various other enterprise software solutions, such as Oracle and SAP, to streamline operations across different departments. To explore more examples of enterprise software that optimizes business processes, check out our enterprise software examples guide.

Let’s understand custom ERP software development.

What is Custom ERP Software Development?

Custom Enterprise Resource Planning (ERP) software development refers to developing a customized and scalable ERP system tailored to your business’s specific needs and workflows. 

Developing a custom ERP solution involves integrating the latest tools and technologies, such as AI and ML integration, microservices architecture, and cloud-based platforms, to meet the enterprise’s specific features, needs, and requirements. 

For example

A custom ERP system for a retail company could streamline inventory management, automate supply chain processes, and provide real-time sales insights, helping the business scale efficiently and improve decision-making.

By developing a custom ERP solution from the erp software development company, businesses can enhance workflow efficiency, improve operational processes, and centralize data management for better performance.

Let’s quickly understand how developing custom ERP software is better than off-the-shelf ERP.

What is the Difference Between Customized and Off-the-shelf ERP?

Here’s a comparison between customized ERP and off-the-shelf ERP.

Criteria	Customized ERP	Off-the-Shelf ERP
Tailored Fit	Built specifically to match your business’s unique processes and needs.	Pre-built with generalized features for broad industry use.
Flexibility	Highly flexible; can add/remove modules and integrate with other tools.	Limited flexibility; customization is often restricted to basic configurations.
Scalability	Scales with your business, allowing for future growth and additional features.	Scalability is limited to available modules and predefined system limits.
Implementation Time	Takes a longer time to develop and implement due to customization requirements.	Quick to implement as it’s pre-built and can be deployed with minimal adjustments.
Cost	Higher upfront cost but offers long-term value by eliminating the need for extensive future modifications.	Lower initial cost but may require additional fees for upgrades, third-party integrations, and workarounds.
Business Fit	Perfectly aligns with your business processes, ensuring efficient workflow management.	May require your business to adapt its processes to fit the software’s capabilities.
Competitive Advantage	Offers a competitive edge by giving you a unique system that aligns with your strategy.	Provides standard functionalities available to competitors using similar off-the-shelf solutions.
Support & Maintenance	Requires dedicated support for maintenance and updates, often done in-house or via a third-party developer.	Comes with vendor support, but updates and improvements are driven by the vendor’s development cycle.

7 ERP Features to Consider When Developing ERP Software

When developing an ERP software, deciding on the core features of your ERP system is crucial.  Here’s an overview of 7 key features to consider during the ERP software development process:

1. Integration

   The core feature of custom ERP system development makes integration easier across diverse business activities.ERP integration unites operations like financial, operational, and business data by providing a centralized view for better workflow efficiency.

2. Automation

   ERP system provides the ability to reduce manual effort, minimize errors, and enhance productivity. Automating such tasks, allows employees to focus on more value-added tasks resulting in improved operational efficiency.

3. Data management and analysis

   Custom ERP development with features like data management protocols supports better data integrity, security, and accessibility. This allows businesses to gather and manage information and find actionable insights to safeguard and manage potential data fraud.

4. Customer relationship management (CRM)

   ERP systems integrated with CRM features offer an overall view of business operations. It enables efficient management of customer interactions and automates key CRM processes, making customer information readily accessible while enhancing overall customer service and satisfaction.

5. Supply chain management (SCM)

   An ERP system offers insights into supply chain management by automating purchase orders, work orders, and inventory management. It allows for a set of inventory goals and improves distribution resource planning. Additionally, it provides real-time data to identify areas of inefficiencies.

6. Scalability

   Developing an ERP system from scratch needs scalable features to grow alongside the business and scale. Unlike pre-built options, scalable ERP systems can be tailored to meet evolving business needs according to size and complexity.

7. Support and maintenance

   A custom ERP system needs regular support and maintenance to keep up with the product’s functionality smoothly over time. Ongoing support and technical assistance ensure that the ERP system functions smoothly and remains reliable, efficient, and up-to-date.

Let’s quickly understand the development process of enterprise software.

ERP Development Process [6-Steps to Follow]

Following a well-defined approach is crucial to ensure a successful ERP development process. This structured process helps shape the final product, ensuring that all necessary features and customizations are integrated effectively.

If you’re new to enterprise software development or want a deeper understanding of the development lifecycle, the comprehensive enterprise software development guide provides a complete overview.

Here are six essential steps to make the ERP development process seamless:

Step 1: Defining your needs and goals

Developing an ERP is not just about coding; it requires a deep understanding of an organization’s needs and expectations. 

So, before developing an ERP system, your company must gather vital insights from the stakeholders to define clear goals and ideas.  

To ensure successful ERP implementation, you must ask the following:-   

• What is the primary purpose of implementing an ERP system?
• What are the existing challenges or painpoints in your business process? 
• Who will develop an ERP product for you? 

After you understand your purpose, challenges, and pain points currently freezing your business processes, the question of who can develop an ERP product for you remains unanswered.  

If your in-house team lacks the required expertise, partnering with an experienced ERP development company is essential. The right partner can help overcome technical challenges and ensure the ERP aligns with your business objectives.

Before engaging with a development partner, ensure you have well-documented requirements, including the scope and features of the ERP system. Clear communication and collaboration with the development team are crucial to ensure project success and realistic deliverables.

Step 2: Sketching UI/UX design 

UI/UX design is crucial in ERP software development to ensure ease of use and efficient module navigation. 

Key design elements include:

• Defining user roles and access levels for different departments
• Creating clear navigation paths between ERP modules (e.g., finance, HR, inventory)
• Designing charts and data visualization tools for real-time insights
• Incorporating interactive components for smooth workflow automation

A well-structured wireframe maps out the positioning of critical elements, ensuring the ERP system remains clean, intuitive, and functional. Here is a detailed explanation of wireframing.

Collaboration with designers and business analysts helps refine the design by selecting appropriate color schemes, fonts, and buttons to enhance user experience and align with the system’s business objectives.

Step 3: Choosing the right tech stack

The development company, with the required skilled team, chooses the appropriate tech stack based on your project goals and requirements. 

For choosing the right tech stack, there are several technical considerations to consider on their plate. The dedicated software development team decided on the technical aspects like:-

• Platform Selection: Choose the platform based on your target audience (e.g., Windows or MacOS for desktop platforms).
• Hardware Infrastructure: Ensure servers and systems can handle ERP workloads efficiently.
• Software Technologies: Frontend (e.g., React, Angular) and backend (e.g., Java, .NET) technologies are crucial for ERP application development.
• Database Choice: Select a database based on data storage and handling requirements (e.g., MySQL, PostgreSQL).
• Third-Party Integrations: For enhanced functionality, integrate tools like Google Workspace, Office 365, FreshBooks, Jira, or Salesforce.
• Cloud Providers: Leverage cloud platforms (e.g., AWS, Microsoft Azure, Google Cloud) to ensure scalability and storage.
• Programming Languages: Align the choice of programming languages (e.g., Python, Java, C#) with project goals.
• Extensions and APIs: Include APIs like Google, LinkedIn, and Salesforce for future customization and updates.
• Cloud Technologies: Use tools like Docker and Kubernetes for containerization, scalability, and microservices management.

Carefully selecting these technical components ensures your ERP software system is scalable, high-performing, and seamlessly integrated with your business processes.

Step 4: Development of ERP System 

Once the tech stack is finalized, the development team begins building the ERP system based on the product documentation, which includes requirements, design, and selected features.

The development process starts with creating a Minimum Viable Product (MVP), focusing on core functionalities and modules tailored to the business’s immediate needs. The scope, project size, and evolving requirements influence the deliverables and timeline.

Most ERP development teams follow an agile approach to adapt to changes during development, ensuring the final system supports the company’s operational and growth goals. Delivery timelines may vary depending on project complexity.

At Space-O, we go beyond technology, crafting ERP solutions tailored to your specific needs by:

• Using the latest tools and technologies
• Following a structured development process
• Leveraging agile methodologies to adapt to changes

Partnering with Space-O means implementing an ERP system and a transformation that will lead to long-term business success. 

Step 5: Achieving excellence through testing and QA

Testing begins after a module or feature is completed, while QA measures ensure that bugs, issues, and performance bottlenecks are identified and addressed early.

Due to the complexity of ERP systems, with multiple integrated modules, various testing methodologies are implemented, including:

• Black box, white box, and gray box testing
• Unit testing
• Integration testing

These testing practices ensure that the ERP software functions smoothly, efficiently, and securely and aligns with business needs and performance standards.

Considering all the above parameters of QA and testing ensures the ERP system runs smoothly. 

Step 6: ERP system deployment

ERP system deployment refers to moving the ERP software into a live production environment after thorough testing.

 It includes critical steps such as:

• Installation and Configuration: This involves setting up the ERP system on the selected platform (on-premises, cloud-based, or hybrid) and configuring it to meet organizational requirements.
• Data Migration: Transferring data from legacy systems to the new ERP system, ensuring data accuracy and integrity.
• Post-Deployment Monitoring: Continuously monitoring the system to identify and resolve any issues that may arise and ensure optimal performance.

A successful ERP deployment ensures minimal disruption to business operations and a smooth transition to the new system.

By following the above given 6 steps, businesses can navigate through ERP software development.  Let’s discuss some key challenges in developing ERP solutions and how Space-O can help mitigate these challenges.

What are the Benefits of Developing ERP Software?

Organizations across different industries can reap benefits from implementing ERP software. Here are six notable benefits of ERP system development:-

1. Increased productivity 
2. Collaboration 
3. Real-time information 
4. Scalability 
5. Data security 
6. Cost savings 

1. Increased productivity

Custom ERP development automates major business workflows, which gives a boost to productivity. It streamlines tasks like invoice generation to marketing automation, freeing up employees’ time to focus on more value-adding tasks. 

2. Collaboration

ERP software is a unified platform for continuous collaboration between teams. It enables seamless collaboration for users to coordinate tasks, share insights, and communicate efficiently resulting in better teamwork. 

3. Real-time information

With centralized data in the ERP system, businesses can gain access to real-time information about workflows. This will help to generate more accurate reports at every department level even in the case of large or complex data sets, resulting in informed decision-making.

4. Scalability

The ERP system is developed to scale alongside the company’s growing and evolving needs. If the business has growth plans, then a cloud ERP system can be adaptable to evolving business needs. 

5. Data security

ERP solution aims for enhanced data security, helping businesses with regulatory compliance while also maintaining sensitive data secure. The in-built reporting functions reduce auditing costs by ensuring data integrity and easy-to-compliance-related information. 

6. Cost savings- 

One of the core benefits of implementing an ERP solution is cost savings. It identifies cost-saving opportunities and optimizes resource allocation, resulting in significant cost savings for businesses.

What are the Key Challenges in Building a Custom ERP Solution?

Here are the top 4 challenges when building a custom ERP solution.

Challenge 1: Integration with legacy systems

Many organizations rely on outdated systems that don’t easily integrate with modern ERP solutions. Ensuring smooth data flow and compatibility between legacy systems and a new ERP can be technically challenging and may lead to system inefficiencies if not correctly handled.

How Space-O Can Help:

Space-O specializes in seamless integration, utilizing API connections and data migration tools to ensure a smooth transition. We also provide continuous testing and support to resolve compatibility issues early and avoid disruptions.

The tools that we use for better compatibility with existing infrastructure are:-

• API integration tools– Retool, Zapier, Postman, and Rapid API.
• Data migration tools– Adeptia Connect, Stitch, Skyvia, Airbyte.
• Continuous testing tools– Testim, Katalon Studio, Cypress, Applitools.
• Collaboration and Support tools– Slack, Microsoft Teams, Jira.

Challenge 2: Customization complexity

Customizing an ERP to fit specific business needs can create a complex system that is difficult to maintain and scale. Too much customization may also cause future problems with upgrades, performance, and integration with other standard ERP modules.

How Space-O Can Help:

At Space-O, we maintain a modular approach to ERP development, balancing customization with scalability. This ensures that your ERP system is flexible enough to meet business requirements and easy to upgrade and maintain in the long term.

Challenge 3: Data migration and accuracy

Migrating large amounts of data from legacy systems to a new ERP software is often error-prone, with risks of data loss, duplication, or inaccuracies. Ensuring data is clean, accurate, and transferred securely is a major challenge.

How Space-O Can Help:

Space-O implements a structured data migration process, which includes data cleansing, validation, and test migrations to ensure all data is accurately transferred. We ensure the data remains secure and intact throughout the migration.

Challenge 4: Security and compliance

Ensuring the ERP system is secure and compliant with industry-specific regulations (e.g., GDPR, HIPAA) is a critical challenge. With rising cyber threats, securing sensitive business and customer data is more important than ever.

How Space-O Can Help:

Space-O incorporates security features into ERP development, including encryption, role-based access, and compliance checks. We ensure your ERP system meets industry standards and remains secure against evolving threats.

How to Choose the Right Custom ERP Software Development Company?

When selecting the right custom ERP software development company, it is important to consider distinguishing factors of the best enterprise software development companies. Considering these factors ensures you choose the right one to meet your unique business needs. 

1. Define your ERP system requirements

Identify your business’s ERP needs, including specific modules, features, and integrations required to streamline your operations. Consider budget, timeline, and technical specifications to ensure the ERP system aligns with your business goals.

2. Look for ERP-specific experience

Choose a company with a proven track record in ERP software development. Experience in building and implementing ERP systems ensures that the company understands the complexity of integrating multiple business processes and can deliver tailored solutions.

3. Verify ERP project success through references

Check references, reviews, and case studies of ERP projects they’ve completed. This gives you insights into how well the company has delivered ERP systems, especially in industries similar to yours, and how they manage challenges in large-scale implementations.

4. Ensure effective ERP collaboration and communication

Look for a company emphasizing transparent communication and effective collaboration throughout the ERP software development process. This ensures your project runs smoothly and aligns with your evolving business needs.

Partnering with an ERP software development outsourcing team and having collaboration tools keeps project goals on track.

5. Assess ERP integration and technical capabilities

Ensure the company has expertise in integrating ERP systems with your existing platforms (e.g., CRM, HRM, and financial systems). Look for proficiency in ERP technologies, cloud infrastructure, AI, and machine learning to enhance the system’s scalability and efficiency.

6. Evaluate ERP implementation strategy

Ensure the company follows a well-structured ERP implementation strategy with defined timelines, milestones, and deliverables. A clear roadmap is essential for managing complex ERP projects and ensuring timely delivery that meets your business objectives.

7. Evaluate ERP pricing, ROI, and contract terms

Review the company’s pricing models for ERP development and ensure transparency. Consider the long-term ROI of the ERP system and ensure the contract covers a clear scope of work, deliverables, and support terms.

Since you have an idea of how to choose the right software development company, let’s discuss how much it costs to build ERP software.

How Much Does it Cost to Build a Customized ERP Software Solution?

The cost to build a customized ERP solution starts from $40,000. The cost depends on the size of the business, required features, and level of customization. Below is a table that breaks down the cost estimates for small, mid-sized, and large companies and the features typically included at each level.

Business Size	Cost Range	Features of ERP software
Small Business	$40,000 to $150,000	– Basic financial management – Inventory tracking – CRM – Cloud-based Deployment – Minimal customization
Mid-Sized Business	$150,000 to $325,000	– Full financial management – Supply chain management – HR and payroll systems – Advanced CRM – Integration with third-party applications
Large Enterprise	$1 million to $10 million	– Multi-currency financial management – Advanced manufacturing and supply chain modules – Cross-department integrations – Custom CRM with advanced analytics – AI-powered insights – Comprehensive security and compliance

However, the final cost of custom ERP development depends on various factors, such as:

• Scope and complexity
• Technology stack
• Development team
• Integration requirements
• User interface (UI) and User experience (UX)
• Maintenance and support
• Deployment and scalability
• Compliance and security

For example, SMEs may need fewer modules with limited customization, while large enterprises require multi-departmental integrations and advanced reporting, which leads to higher costs.

Geographic location also impacts pricing. Outsourcing to regions with lower development costs can affect your budget significantly.

The overall cost may increase if your business requires additional features or specific functionalities. Depending on the business needs, the pricing packages vary from SMEs’ level enterprise plans to large enterprise ERP plans.

Ready for Custom ERP Software Development for Your Business?

At Space-O, we specialize in delivering custom ERP solutions that align with your specific business needs. Whether you aim to streamline your operations or scale for future growth, our tailored ERP systems can help you achieve operational efficiency and long-term success.

Partner with Space-O today to bring your ERP vision to life. Contact us to discuss your project and get a personalized quote.