How to Build an ERP System: Steps to Start from Scratch

Last Updated: October 20th, 2023
Researched and Written by: Lexi Wood

Businesses can build their own ERP with the applications they choose in order to get complete control over what the software does, how it works, and how much it costs.

Building an ERP from scratch gives you complete control over what the software does and how it works. Follow 6 simple steps to create your own ERP from scratch.

How to Create an ERP in 6 Steps

1 Identify Business Needs

Start the process by reviewing your existing workflows. What processes work? Which ones don’t? How can they be automated with an ERP? While it’s tempting to automate everything, some work processes might be better handled manually.

Once you know your objectives, you might want to research top ERP software options to find what they have to offer. Review the available features to see what sort of functionality your ERP should have. A few basic modules include:

  • Accounting
  • Budgeting and forecasting
  • Customer relationship management (CRM)
  • Human resources (HR)
  • Inventory management
  • Supply chain management

Last, remember to address any industry-specific needs, legacy systems, or integrations. By building a custom solution, this is your chance to include extra functionality not found in generic ERP software. Now is the time to think about all the features you’d want included in your new system.

2 Choose the Tech Stack

After knowing what your business needs, it’s time to evaluate the benefits of different programming languages and frameworks to make that custom ERP software a reality. Popular choices for web-based ERPs include Angular, React, or Vue.js for the frontend, and Django, Ruby on Rails, or Laravel for backend development. If you have other software in place, check for what is most compatible with your existing system.

With that decision made, there’s another: cloud or on-premise deployment. The first offers access through any web browser. However, the second can increase security by keeping your new ERP entirely on your own servers.

If you plan on having an internal team develop the ERP, this will likely be the most important step for them to consider. If you go with an outside software development company, they should handle this step, although their decision should be based on your input and preferences.

3 Build a Database Structure and Design UI

The next step is to build the actual database structure. At this stage, it’s important to consider future scalability alongside ways to protect data integrity. You don’t want to build a full ERP only to have to start over whenever your company experiences growth.

While designing the user interface, make sure it’s user-friendly and easy to navigate. During this step, be sure to consider the limitations of your actual users. Do they have any preferences when it comes to navigation? How tech-savvy are they?

4 Test and Test Again

Now is the time to start testing the software to identify potential issues before going live. Detailed quality assurance practices during this stage ensures optimized performance once the software is fully implemented.

5 Deploy and Transition

With the system thoroughly tested, it’s time to migrate data from legacy systems or start manually uploading information from physical files.

Ensure a smooth transition to the new ERP by giving users thorough training. Even the most basic tasks should get covered so there’s no confusion amongst your employees about how to navigate the new system. This is your chance to establish any new workflow processes as well.

6 Grow

Once your new ERP system is up and running, the work has only just begun. You need to stay up-to-date with technology trends so your ERP continues to operate as safely and efficiently as possible.

After the system is fully set up, establish a basic support and maintenance schedule. Make sure to collect user feedback to find ways to continually improve your ERP.

How to Design an ERP

After all the technical aspects of building an ERP, it’s important to remember the design aspect. The suer interface needs to be visually appealing and the navigation intuitive. As described above, involve the actual users to get feedback on what works and what doesn’t.

Benefits of Creating an ERP

The main benefit of building an ERP from scratch is the ability to completely control how it functions. Creating a fully custom ERP means you have complete control over the finished software. No extra, expensive add-ons, no pre-installed bloatware. Just what you need.

Building from the ground up also means you can leave plenty of room for growth. Many ERP vendors used tiered pricing to charge per user or based on data usage. Keeping your system internal means you can expand at any time without negotiating a new contract.

FInally, creating a custom ERP can reduce chances of implementation failure. According to Gartner research, up to 75% of ERP implementations fail even when working with established, professional vendors.

Downside of Building an ERP from Scratch

Despite the benefits of creating your own custom ERP, there are important drawbacks to consider:

  • Costs and time limits: Software takes plenty of time to develop. Whether you go with an in-house development team or hire outside consultants, every hour of work needs to be paid for. The cost of a custom ERP can quickly add up to be more than the monthly subscription or perpetual license fee of a pre-built ERP.
  • IT stress: The limits of your IT department can also make building your own ERP difficult. Whatever time they’re spending on building the new ERP is time taken away from regular maintenance and bug fixing.
  • Sole responsibility: Having complete control over your ERP also means you are entirely responsible for any problems. If anything goes wrong it’s on your IT team to fix it.

In some cases, it’s better to buy a pre-built ERP software and work with a vendor to customize the solution. In those cases, you first need to follow the five steps of ERP implementation to get started.

Can I create my own ERP?

Yes, you can create your own ERP system. Businesses opt to build their own software when they want greater control over their data, increased security, or custom functionality.

How do I set up an ERP system?

Set up an ERP system following these steps:

  1. Identify your business needs and which business processes to automate
  2. Choose the technology stack
  3. Build a database and user interface
  4. Begin quality assurance testing
  5. Deploy the software and transition users to the new system
  6. Keep up with the latest technologies and provide regular updates

How much does it cost to build an ERP?

The cost to build ERP solutions from scratch is largely dependent on how many employees are working on it and their respective hourly rates.

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