Implementing an ERP System: Buying versus Building

During the planning phase of an ERP implementation, many companies are faced with the dilemma of buying or building the software in-house. As new open source software packages often appear appealing, this becomes a tough choice. While building the software may give you complete control over the functionality, it may not have all the advantages assumed at first glance. Let’s take a look at 5 components of an ERP implementation and explore the costs and benefits of both options.

1. Upfront Costs
     a. Build: The cost of developing an ERP system in-house may appear straight forward at first in comparison to purchasing a comprehensive software solution. In reality, there’s a lot that goes into this process! Building requires gathering, analyzing, designing, programming, implementing, testing, training users, and performing maintenance.
     b. Buy: Purchasing a software system consists of licensing fees and often an installation fee. These terms are normally well-defined by the vendor.

2. Upfront Development Time
     a. Build: Building your own system can eat up a lot of time even before testing can take place. From the beginning stages of planning and design, the entire process can take numerous months or even a year to complete.
     b. Buy: When you buy an ERP solution, the only time investment is the training process for users because the product is already built.

3. Software Maintenance
     a. Build: Investing in a software solution is like buying a car: as soon as you purchase it, it becomes “old” or “outdated.” Just as cars require maintenance and care, so does your ERP system. This could tack on an overwhelming number of hours to the building option, since updating your software is critical for your company to be running at its utmost efficiency. Plus you have to “maintain” the software forever, in order to keep up with industry and technology advances.
     b. Buy: When you purchase an ERP solution from a vendor, it is their responsibility to provide you with the maintenance and updates.

4. Software Maturity
     a. Build: When building the system in-house, the “finished product” may not be as finished as you desire. This could add on more hours of development to get the system just right.
     b. Buy: With an ERP solution that you purchase, you should get a system that is fully mature.

5. Real-World Problems
     a. Build: Take step back and consider some bigger issues that could affect the development of your software solution. What if your software developer moves on or you experience sudden budget cuts? What if your business changes ever so slightly? What if the industry forces rapid change? What if your customers force change?
     b. Buy: Regardless of what happens to your business, it is our business to provide you with the best software. We are devoted to helping you run your company as efficiently and painlessly as possible.

Want some more details? Here's a great resource to check out:
Buying versus Building Software





 

Marc DiGiorgio

Marc DiGiorgio, VP, JustFoodERP, is part tech geek, part business guy. He has had the opportunity to manage the JustFoodERP team since helping conceive the product in 2004. Marc has a variety of experiences in the past 15 years including software implementation, sales, marketing, and product management. He is an avid runner, cyclist, and triathlete, and father of two boys and a girl. He can be reached at marc.digiorgio@justfooderp.com.