Do we build or buy our ERP?

The choice of building your own solution of buying something off-the-self is like any other choice in a business...complicated. By now you understand there is no silver bullet nor magical wand. There is however a process to ensure your business needs are met. The following is a breakdown of the two options and how to go about making your decision.

Choices?

Custom software: When you build custom software it means that the code, features, and functionality are specifically designed for your company. The upside is that it can be tailored exactly to what you need which can save time and money in the long run. The downside is that it can be expensive and time-consuming to build.

Off-the-shelf software: When you buy off-the-shelf software it means that the code, features, and functionality are already designed and built by someone else. The upside is that it's usually less expensive and can be up and running quickly. The downside is that the features may not be exactly what you need.

How do we choose? I think a great place to start is by looking at your business needs, goals, and budget. Once you understand those three things it will help guide your decision on whether to build or buy the software.

Here are some areas to think about:

What are the objectives of your business?

The software you choose is a tool for your business, no more, no less. You would select a CNC machine or specific expertise in an employee based on how it helps your business. Your software is not different.

What are the short-term and long-term goals of your business?

Are you in a start-up or high-growth mode? Does this software need to adapt over time as your company grows? How mature are your business processes and how much work will be required to get it to a place that can support new features/functions?

There are some of the questions you should ask yourself. The choices are many but the equation is simple: Will the implementation of this software bring me more profit than it cost me? This is perhaps a more important point than "I need to renew my software". Without a goal software projects have little success. Our experience is businesses can use 10, 20, 30, and yes even 40-year-old software and succeed.

"I need to renew my software" is not a goal it's an event. If you do find yourself in the position of replacing your management system or adding one, be sure to take time and have a clear picture of what success looks like before embarking on this journey.

"We had a management change" or "We acquired a business" or "We expanded to a new market". These are all great reasons to upgrade your software, but you still need a goal. Upgrading for the sake of upgrading is not a good enough reason. You might as well just guess what will make you successful and hope it works out! If you don't have the expertise in-house, it might be a good idea to seek out an expert. Get some advice and create your plan before you start building or buying. It's like having a road map for where you are going instead of just jumping in the car and driving! Your business is unique, and so are your processes. Your software should reflect that uniqueness.

How does it impact the delivery of your products and services to customers?

This is one of the most important things to consider when you are deciding what software to use. It can be easy to get caught up in all the details and forget why you're doing it! The software should make your business better at delivering products or services, not just for its own sake. Be sure that whatever system you choose is going to help your company do its job better than it does without one.

What are the core processes of your business?

Are they well-defined and do they work? Do you have a process for defining new processes? How will the software impact them (positively or negatively)? It's important to remember that software is not a magic bullet. If your core processes are bad, no software in the world is going to fix that! The goal should be to leverage the software to improve those core processes. The most important thing is to remember that your business always comes first!

Will any software fix your processes? No. Don't believe that person telling you otherwise. We have yet to meet a company fixed through software alone. It is personal ingenuity and hard work that brings success. The software accelerates the process.

How efficient and effective are your core processes currently?

What is the return on investment (ROI) of improving these processes? If they aren't well-defined or don't work, can you fix them before implementing new software? If not, should you wait until they are fixed before implementing a new solution?

What is the cost of maintaining your current system vs. upgrading it or replacing it with a new one? Is it more expensive to keep things as-is versus investing in something better for long-term success and growth potential? In most cases, companies find that it's more expensive to maintain the status quo than it is to upgrade their software.

What changes or improvements do you need to make to better meet customer needs or increase efficiency?

Consider the impact on your business. Can you make any changes now that will help with future growth? Are there ways to streamline processes before implementing new software so they will be more efficient after implementation? You should always consider how an upgrade or replacement could affect your employees and their roles within the company as well. Do these changes have any potential negative impacts that need to be considered?

What are the risks and rewards associated with each path?

This is a question that you and your team need to answer. It's important to weigh the pros and cons of each decision before making a final one. There are no guarantees in life, but by considering all of the factors involved, you can make the best choice for your business!

Keep evaluating choices.

You might need to change your mind along the way. Remember, this is a decision that will impact your business for years to come! Don't rush into anything without thinking it through carefully. There are many factors to consider and no one right answer. The best thing you can do is make a decision that you feel good about and then stick to it!

So, do we build or buy our ERP? The answer is: it depends. Every business is different and will have different needs. What's most important is that you make a decision that reflects the unique nature of your company and its core processes.