How Much Does It Cost to Develop an ERP Software
Realizing all the advantages of working with ERP, you decided to implement one of these systems in your business. But after analyzing various ready-made solutions that are offered online, you did not find a suitable option - sample programs do not meet the tasks, business processes and features of your company. What to do in this case? The answer is simple: develop ERP from scratch.
What are the benefits of developing your own ERP:
The latter advantage may seem dubious or even a fraud, but if you take into account the cost of a license and hidden costs of ready-made solutions (configuration, personnel training, technical support, etc.), then you will pay 20-30% of the total cost of developing the software used annually. And the development of ERP from scratch will pay for itself in several years, whereas you will be using it for 7–10 years.
Human Resource Management. The module contains tools and functions that automate and make a whole range of labor-intensive processes more efficient.
For example, management:
Inventory Management. It helps to maintain stable and optimal inventory levels. At the same time, the system allows you to quickly track each product from the moment it arrives at the warehouse to the point of sale (or transfer to the counterparty). Such information is available from any access point to the system at any time.
Customer Relationship Mismanagement (CRM). Aimed at improving the relationship between the service provider or product and customers. Here, customer needs are noted and explored to improve user scenarios, increase loyalty and increase sales. CRM-module is especially useful for medium and large companies.
Sales and Marketing. Usually this module complements the CRM module. It manages the export and local projects, which makes sales processes more manageable. The marketing module includes the management of orders, sales, invoices and the monitoring of these things.
Production. A set of functions and tools to improve and automate production planning, order management and optimize production management from order to delivery.
Finance and Accounting. Automates a significant portion of accounting and manages information related to finances, transactions, etc. Advanced modules of this type fill out tax returns themselves and post to them.
Planning. Usually presented in the form of a calendar, where you can create or schedule events and tasks, assign a responsible person, and then monitor and control the implementation. In some cases, the planning module integrates predictive tools that, based on a linear or more complex relationship, predict sales, costs, necessary actions, etc.
Reports. Allows for a few minutes to generate a report on the desired period, department, process, employee or task. Data is collected and automatically grouped and, as a rule, visualized using graphs and charts.
Since the cost of developing ERP depends on the business, let's look at this process on the example of a relatively small company that manufactures and distributes dairy products. For example, our company will purchase raw materials from various farmers and make yogurts, cheeses and other dairy products from it. Finished products will then be distributed to several stores for a specific order.
Thus, we will have several suppliers with different quantities, quality and price of raw materials, the production process and several buyers (stores) who buy our products as needed. For this example, we can identify such modules:
Human Resource Management Module. It is necessary for managing people, distributing tasks and planning production depending on the quantity of raw materials in warehouses and the needs of stores. In our company, this module will be responsible for:
Production management module. It is optional for a small production. But since we have several suppliers with different quality of raw materials, and the products need to be made the same (desirable high) quality and at the same time also plan production depending on supplies and orders, this module is necessary for our company. Its functions:
CRM module. It will track all interactions with suppliers, customers, and carriers. Help build more productive relationships and help with marketing.
Sales and Marketing. Required for planning and tracking the effectiveness of marketing tools and sales forecasting based on this efficiency.
The process of estimating the cost of developing a custom ERP is similar to the process of developing web applications in general: you need to understand how many professionals will be involved, calculate the time they spend, and multiply these numbers by the hourly rate of each specialist.
For example, consider the cost estimate for developing a personnel management module:
Migration and Data Verification. To transfer data from the old ERP to the new, you will need to extract the data, convert it to the desired format and then load it into the new system. If this task is of average complexity, we will need:
Thus, data transfer will cost $ 32,200.
Testing. To test our ERP of the five modules will require at least two testers who will work for two months at a rate of $ 25 per hour. It will cost $ 16,000.
Deployment and training. The training of instructors will require one expert who will work for one month at a rate of $ 70 per hour. As a result, we will pay 11,200 dollars.
Now you can calculate all costs: 430,000 for the development of modules + 46,200 for the development of API + 32,200 for data transfer + 16,000 for testing + 11,200 for deployment and training of personnel. Total: 535 000 dollars.
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#1. What determines the cost of development
#2. Stages and deadlines for developing ERP systems
#3. Elements of ERP-systems
#4. Approximate example of calculating the cost of developing an ERP system
#5. Identification of ERP-system modules
#6. Estimating the cost of developing ERP modules
#7. Estimating the cost of implementing an ERP system
#8. The total cost of developing an ERP system