Custom ERP System Benefits, Requirements & Cost of ERP Development

  • Saurabh Sharma
  • Sep 20, 2023
  • 13 Min Read

Article posted by

Saurabh Sharma

VP of Engineering

VP of Engineering at Closeloop, a seasoned technology guru and a rational individual, who we call the captain of the Closeloop team. He writes about technology, software tools, trends, and everything in between. He is brilliant at the coding game and a go-to person for software strategy and development. He is proactive, analytical, and responsible. Besides accomplishing his duties, you can find him conversing with people, sharing ideas, and solving puzzles.

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ERP stands for Enterprise Resource Planning and is a complex system that involves using one platform across an organization with one database, a user-friendly interface, and broad functionality. The cost to develop custom ERP solutions ranges anywhere between thousands to hundreds of millions depending on the person-hours spent planning, developing testing, and implementation processes.

ERP (Enterprise Resource Planning) systems form the core of modern digital businesses, promising seamless integration of information across an industry vertical. Their implementation has already transformed various companies from supply chains, finance, healthcare delivery systems, and customer management - to human resource departments, customer relations managers and more.

ERP software was originally intended to increase company profitability and enhance operational efficiencies by streamlining procedures and automating mundane tasks, with the primary objective of improving profitability and increasing efficiencies within an enterprise.

What Is a Custom ERP System

Custom Enterprise Resource Planning software was specifically tailored to meet industry-specific requirements in order to increase workflow efficiency, streamline data management and effectively connect business processes.

Building custom ERP software gives organizations an effective means of improving the efficiency of daily business activities like project management, accounting, and order fulfillment. Custom ERP solutions have proven themselves effective at consolidating data while streamlining business processes through automation and integrations.

Benefits of Custom ERP System

Custom software offers numerous advantages to businesses, particularly their specific needs and resources. One advantage lies in understanding how best to incorporate and monitor all data management and workflow activities from within a single platform. These benefits of custom ERP include:

Benefit 1: Improved System Performance and Accessibility

A custom ERP is intended to be as cost-efficient and accessible as possible while offering more applications than comparable systems. Businesses may easily adjust their modular structure to their ever-evolving business requirements while saving money by purchasing less effective items.

Benefit 2: Balancing Integration and Specification

Businesses can gain from an ERP system designed specifically for their company. It integrates workflow across departments for improved relationships between buyers and suppliers. Custom ERPs can meet each business' specific requirements perfectly as each department or team can enjoy having their tailored system to use for efficiency purposes.

Software developers can ensure a system fits perfectly to meet the exacting specifications and circumstances of a company's many internal divisions and departments by creating and customizing an ERP specifically adapted to their organization's particular system needs, workflow processes, and applications.

Benefit 3: No Need for Modifications

Businesses may reduce time and effort by selecting custom ERP systems over traditional ones to facilitate the easy transition of databases, applications, and tech stacks to their new system.

Web development services provider offers plug-and-play systems designed specifically to the company's current infrastructure, networks, capabilities, and resources so enterprises can rapidly adopt this new tool and start taking advantage of its features quickly.

Benefit 4: Custom ERP Solutions to Meet Business Needs

Custom ERP systems offer businesses solutions to common business challenges. Their developers create strategies to address them based on feedback received from past customers - which provides multiple perspectives from which knowledge may be drawn for custom development of specific features or functionalities within these custom ERPs. It is thus an enormous resource.

Benefit 5: Automation Without Workflow Changes

Custom ERP allows companies to automate multiple processes within existing systems, databases, infrastructure networks, and applications without extensive changes and modifications being necessary - thus guaranteeing seamless integration without creating gaps between their current system and custom ERP. A key duty that could be automated with custom ERP is its periodic report generation feature, which makes keeping track of business activities much simpler for business leaders.

Benefit 6: Improved User Experience and Customer Interface

Many companies that do not implement custom ERP solutions experience inconsistency between their front-end website, database, middleware, and application systems. Even with such systems installed on-site, plug-and-play functionality for productivity applications or workflow systems may not always be accessible.

Software development companies offer solutions for this problem by designing custom ERP frameworks and systems that easily integrate existing infrastructure, workflow processes, and productivity applications.

Benefit 7: Use One Reporting System to Monitor Performance

Take control of every business process - from Finance and Accounts Management and Human Resources to Manufacturing, Marketing, and sales, as well as Supply Chain and Warehouse Management. Automate departmental workflow while tracking all activities using one reporting system so as not to overlook anything in terms of analysis of performance statistics or assurance that no detail goes overlooked.

Benefit 8: Customized Reports & BI

Business is all about understanding past decisions to inform better ones in the present and using this knowledge for informed choices today. Statistics and analytics play a pivotal role here by giving us data that informs our decisions as we integrate business intelligence tools for even deeper insight. By customizing reports specifically tailored to meet our individual needs and using business intelligence tools as necessary for even deeper statistics analysis, we can make smarter choices today than in years gone by.

Benefit 9: Increase Sales Through Custom CRM

Businesses may leverage our customer ERP solution to design a personalized CRM to suit their unique demands and operations, providing greater sales force efficiency thanks to custom CRM development solutions. Furthermore, many are exploring consumer-grade ERP solutions, which may boost their revenues further.

The company can boost marketing initiatives and accelerate the conversion of leads into sales by creating an ERP system that integrates customer and CRM data. A custom ERP will facilitate seamless cooperation among sales departments thanks to seamless integration between all sales platforms and assets of their organization. With such technology in place, sales teams may more efficiently leverage customer behavior analysis data or purchase history knowledge for effective selling practices.

Requirements of Custom ERP Development

Below are several necessary components needed to develop a tailor-made ERP system tailored specifically for you and your business requirements. Use this information as the cornerstone for designing the perfect custom system with confidence for your organization.


When looking at an ERP implementation project, the functionality required of it must be carefully considered. You can review what your current system offers as an indication of what could be improved upon. Additionally, it would be advantageous if team discussions occurred where questions such as:

  • Which processes need to be automated for resource optimization?
  • What visibility or reporting does each department require?
  • Which information do different departments need access to?
  • Why should a customized ERP system even be considered at this point?

Answering these questions will enable you to accurately establish which functionality must be included and create user experience in the future.

Industry Research

Success depends upon staying abreast of developments within your industry, from researching top competitors and top-performing apps for your sector to exploring their benefits and possible drawbacks through watching demos or reading reviews.

To ensure your expectations are realistic and that the custom ERP system you need meets the unique needs of your business, it is wise to hire an experienced team of custom ERP development experts for an exhaustive market assessment.

Integration Requirements

Integrating Your ERP With External Applications Integration requirements are integral to successful development; your development team can gain a clear picture of the project scope by collecting all software applications used across your company departments.

Applications designed to manage client relations, inventories, online storefronts, project management tools, accounting software, and more should all be prioritized on your list of applications to develop. Doing so will enable your development team to give more accurate time and cost estimates when planning their development plans.

Deployment Type

Businesses considering custom ERP development must choose between an on-premises and cloud-based ERP software development. On-premise software installs onto company servers, while cloud solutions reside on vendor servers for online access. While in the past, most companies opted for on-premise systems, cloud solutions have increasingly gained in popularity because they provide

  • faster implementation times
  • lower initial costs
  • less responsibility for security concerns
  • easier team collaboration capabilities
  • automatic updates from vendors.

Cost of ERP Software Development

Custom ERP solutions can range in costs depending on their complexity and scope, including factors like team members needed for development, features required, and duration of project completion.

Custom ERP development projects usually run anywhere between $25,000 to $5 Million, making this option the more expensive choice when compared with third-party resource planning systems, which typically range between $9,000 per user for midsized and large enterprises respectively—key Factors in Selection Process of Custom ERP Development Solution Solutions.

Size of Company

Your business' size will have an effect on how long and effort is expended on developing an ERP system, with larger enterprises necessitating more comprehensive custom systems with complex organizational structures, processes, and the requirement to integrate multiple software products across departments.

To meet these demands, an experienced ERP development provider must be hired to develop a custom ERP system with all of the modules, integrations, and features your business requires - this way, your customized system is sure to suit its specific requirements no matter its size.

Tech Stack

When considering custom ERP development, there is an essential distinction between open-source software and proprietary solutions. Open source is freely accessible, while proprietary platforms require subscription fees from providers; as technology becomes more complicated and demanding of developers' time, costs rise accordingly.

When selecting an ERP solution for your business, it is crucial that you carefully weigh both its financial implications as well as its technological complexity in selecting an open-source or proprietary option that meets all of your specific business requirements. By considering these details carefully, you will ensure you find a tailor-made system tailored specifically for you!

Development Team

A comprehensive and versatile custom ERP system requires hiring an expert team, which will reduce the implementation timeline. On average, medium complexity custom ERP solutions cost between $40K-40k per module for testing, deployment, and data migration costs. So, for 5 modules, it would cost approximately $250,000.

For your custom ERP system to be cost-efficient, an accurate estimation must be provided of both the time and resources needed for its creation.

Factors Affecting ERP Development Cost

Many factors impact ERP system development costs directly. Unfortunately, no single answer fits every situation exactly - thus, here is an ERP software development cost breakdown including all factors involved.

Let's go into more depth on each factor below.

Factor 1: Number of Users and Features

When considering whether an ERP system is affordable for your organization, please take into account how many users will initially gain access to it. Many vendors charge per-user pricing, which means as your user count increases, so will its cost. Furthermore, you must also take into account the potential expenses of adding more users as you expand. Additionally, be mindful that adding users could cost significantly more as your company scales further along.

Apart from considering how many users your ERP system needs to support, you also must assess which features should be integrated. ERP software stands out from its peers with several stand-out features like common databases, automation processes, interaction between modules, and data analysis tools - these add extra cost when developing an ERP system development project. As more features are added, the higher the overall cost associated with its creation.

Therefore, it's vitally important that you accurately assess your needs prior to investing in solutions that meet them. An accurate estimation can play an instrumental role in increasing the return on investment of any system you deploy.

Factor 2: Add-Ons and Customization

In order to provide your employees with a full suite of services and functionalities, third-party add-ons like enterprise instant messenger (IMs) tools or social media logins may be added for increased functionality in your system. Supply chain management modules could also add enhanced capability; their cost will vary based on what modules or vendors you decide upon.

Factor 3: Implementation

ERPs are complex software applications, so to implement one successfully, you may require making modifications to operating systems, hardware, and software systems as part of its setup and configuration process. For best results, it may be beneficial to consult and hire dedicated ERP developers who specialize in ERP to install and configure it properly from day one.

Implementation costs should also be included when pricing out ERP solutions; some vendors even provide extra consulting assistance at additional expense.

Factor 4: Maintenance

Your on-premise ERP will need regular and scheduled maintenance in order to keep running optimally. Typically, between 15-20% of its purchase/implementation price should go toward maintenance expenses.

Factor 5: Training

Your employees might require additional training on their new ERP system in order to use it efficiently from day one, which should be available through your ERP vendor at a standardized hourly rate; you should consider these additional costs in your analysis when reviewing systems available for sale or evaluating custom ERP implementation solutions.

Factor 6: Upgrades

As soon as a new version of your ERP solution is announced, planning upgrades becomes an immediate necessity to avoid becoming outdated and inviting new issues or bugs into your system. When speaking to vendors regarding updates for their ERP solutions development pricing plan. Make sure they include upgrade costs within this price.

Factor 7: Process Redesign

Transitioning from legacy systems to ERPs for organizational growth often necessitates process redesign efforts. Similarly, when changing ERP solutions altogether. Even within each software platform itself, you may still require adjustments that align your company processes with those offered by its user-friendly features - adding to additional costs and ultimately impacting final costs associated with ERP implementation.

Factor 8: Support

Over the lifespan of any ERP system, issues, and bugs will arise that need resolving as part of providing support services - an expense.

Factor 9: Addition of Technologies

Your ERP system costs will rise incrementally by including cutting-edge technologies into it; as soon as more, such as enterprise blockchain or artificial intelligence, are incorporated into it, or IoT is integrated, so will its estimated total price.

Factor 10: Development Hours

Developer time plays an integral part in the cost of developing ERP software. Development times directly relate to developer numbers - complex projects may need more professionals and money spent for quicker completion times, and this means spending more.

Conversely, suppose your software development project is simpler. In that case, its costs should be less expensive compared to what was discussed previously.

Factor 11: Locate of Software Developers

Location is another critical factor that influences the cost of ERP software development. For example, costs vary significantly across North American software development companies from those located in Ukraine or India due to significant variations between services around the globe both regarding price and quality of delivery.

Price Models Available in ERP Software Development

Alongside these factors, pricing models also play a key part in determining an ERP price tag. So, let's examine some of these different models available on the market today.

Perpetual licensing

Perpetual licensing applies to organizations looking to host ERP software on-premise. Under such arrangements, companies pay one up-front cost of purchasing the license for the use of its entire functionality indefinitely based on customization levels and number of users.

One key benefit of perpetual licenses for companies is not having to incur ongoing support, maintenance, and upgrade expenses.

Subscription Plans

Companies looking to leverage cloud servers for ERP software implementation may want to consider subscription plans as one method for hosting and maintaining their ERP system on an outside server. In such a plan, vendors host and keep it themselves on behalf of their client company.

Companies selecting subscription plans typically pay monthly/annual charges against their software solution subscription plan and often commit for at least the minimum contract length period.


Custom ERP development allows companies to implement tailored systems tailored specifically for them and meet all their business requirements, helping to manage resources more effectively while streamlining workflows and modernizing operations across their enterprise.

Companies investing in tailored solutions can ensure their unique requirements are addressed while making staff transition easier and avoiding overspending on unnecessary features. You can contact our team of experts for further queries regarding custom ERP.

No one knows for certain the price tag associated with any particular ERP solution; its costs rely heavily on factors like features used, number of end-users, and custom solutions compared with off-the-shelf options that might better meet their needs. As custom-made solutions can have both strengths and drawbacks, make sure to research each module of ERP solutions carefully in order to ensure long-term returns from investment decisions made today.

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Customers are the most important part or lifeblood of a business. The way you onboard customers…

eCommerce store development With Shopify

Ultimate Guide to Build Profitable eCommerce Store With Shopify

To start an eCommerce business that becomes successful, the first step is to develop an enticin…

How to Start a Fintech Startup

Ultimate Guide on How to Start a Fintech Startup

Fintech or financial technology has become one of the most popular ideas for startups today. In…

Recruiting Software Development

Is Your Recruiting Software Ready for the Future of Work?

Recruiting software is a critical part of Human Resources Management (HRM). Basic functionality…

Top 5 Roles in Your Software Engineering Team

Are These 5 (Minimum) Roles On Your Engineering Team? They Should Be!

It can be very challenging and overwhelming to develop technology and software for a non-tech o…

Being Cheaper is Not a Competitive Advantage

Being Cheaper is Not a Competitive Advantage

As someone who attends dozens of startup pitches a month, “our product is cheaper” is a phrase …

Case Study: 6-Months in and Software Vendor Causes $160,000 Loss

Case Study: 6-Months in and Software Vendor Causes $160,000 Loss

PACEfunding’s Business Executive Is Shocked When The Vendor He Hired Fails To Deliver The Softw…

Control and Fear Aren't Your Company's Only Growth Problem

Control and Fear Aren't Your Company's Only Growth Problem

The Invisible Crushing Power of Software Why are companies afraid to partner with the vendors …

Software Bugs Risk $1.7 Trillion in Assets

Software Bugs Risk $1.7 Trillion in Assets

Painful Lawsuits: Huge Toll Taken on Executives at Uber, Equifax, St.Jude, and Provident Financ…

Startup Pitch Event, November 9th, 2017

Startup Pitch Event, November 9th, 2017

As my regular readers know, I frequently serve as a panelist in pitch events. Recently, I decid…

Startup Pitch Event, October 30th, 2017

Startup Pitch Event, October 30th, 2017

As my regular readers know, I frequently serve as a panelist in pitch events. Recently, I decid…

Startup Pitch Event, October 11TH, 2017

Startup Pitch Event, October 11TH, 2017

As my regular readers know, I frequently serve as a panelist in pitch events. Recently, I decid…

Startup Pitch Event September 26th, 2017

Startup Pitch Event September 26th, 2017

As my regular readers know, I frequently serve as a panelist in pitch events. Recently, I decid…

How Can MoviePass Be So Cheap?

How Can MoviePass Be So Cheap?

MoviePass caused major shifts in the movie industry when they lowered their monthly unlimited m…

User Experience is Key

User Experience is Key

There is nothing more tragic than a company with a great product that is hampered by poor user …

Investors Aren't Afraid of Smart Tech Outsourcing

Investors Aren't Afraid of Smart Tech Outsourcing

One of the most misunderstood fears entrepreneurs and startups have is that investors won’t inv…

Three Software Mistakes That Strangle Startups

Three Software Mistakes That Strangle Startups

I love meeting people who launch startups. Their energy and ambition inspire me. One of my life…