Since many of us are natural problem-solvers, it may often be tempting to identify and create our own solutions when we encounter a new demand in our business. Can our problem be resolved by using a macro? Should we ask our technology team to create a new software application for this specific issue? Can we alter our existing ERP system for a temporary resolution?
As the development of ERP solutions continues to advance, many organizations struggle with the practicality of building their own software applications to meet evolving business requirements. Following are some pros and cons to this approach that organizations should consider before giving in to the temptation:
Pros of Building
- Control – organization has internal support for future fixes and enhancements
- Unique Fit – applications are custom-developed for specific business needs
- Lower Immediate Costs – applications are created on an as-needed basis
Cons of Building
- Outdated Software – applications need to be flexible to meet new changes in technology
- Long Development Time – internal staffing limitations may place the project at a low priority resulting in long periods of development, configuration and testing.
- Limited Training and Support – lack of specialized training to transition employees to the new ERP system components or related business process changes
- Risks – turnover in software developer team, disjointed data and reporting, and challenges with integrating different applications
Despite the potential challenges of custom-building applications, purchasing ERP software can often be just as – or more – intimidating. The decision to buy software from an ERP vendor or VAR typically raises concerns around compatibility as well as implementation cost and duration. Below are some pros and cons of buying ERP software:
Pros of Buying
- Software Sophistication – extensive research and development, industry-specific solutions and fewer complications or “bugs”
- Stable Knowledge Base – many experts on the software who can provide long-term training and support
- Continuous Improvement – flexible and adaptable to integrate with new technology and software applications as well as an ability to adopt future enhancements
- Streamlined Functionality – collective data analysis and reporting
Cons of Buying
- Higher Upfront Cost – ERP system acquisition typically results in more upfront money out of pocket than in-house development
- Less Control – software vendor holds the rights to the code so implementing organizations are dependent on external technical support
If buying ERP software seems to be most appropriate to meet the needs of your business, many resources exist to help you and your organization decide which software is most compatible. Consider engaging the services of a third-party ERP consultant such as Panorama to ensure due diligence during the process in order to maximize benefits and success.
Written by Christine Thai, Associate Business Analyst at Panorama Consulting Solutions.
ERP Systems: Build vs. Buy,