ERP Development: Definition, Features & Guide In 2024

ERP software is a critical tool for effectively controlling core business processes in today’s organizations. ERP implementation entails creating, modifying and deploying ERP systems to suit organizational requirements. This guide is meant for those interested in ERP development and gives a basic understanding of the process. This article is the more detailed about ERP Development compared to our Custom ERP Software Development article.

ERP Development

Understanding ERP Systems

ERP development is the process of creating, customizing, and implementing Enterprise Resource Planning (ERP) software systems to streamline and optimize business operations. An ERP system is a software application that links different business processes into a single system. Some of the most common ERP modules are financials, human resource management, supply chain management, manufacturing, inventory, sales, and customer relationship management. ERP integrates the company data and operations, eradicating data conversion and manual procedures.

The integrated nature of ERP software gives organizations that wish to develop ERP software or integrate it with a better chance of having more oversight and control. Managers can monitor KPIs and metrics of different departments in real time. It results in decision making based on data that supports the achievement of strategic objectives.

ERP development can also reduce costs and increase an organization’s efficiency and productivity by automating repetitive tasks and manual data entry. Teams can work in synergy with access to the most recent information, which saves time and costs.

Key Components of ERP Development:

• Business Analysis: Understanding the client’s needs, goals, and challenges.
• Design and Planning: Creating a detailed blueprint of the ERP system.
• Development and Customization: Building and customizing the ERP software.
• Testing and Quality Assurance: Ensuring the ERP system functions correctly.
• Deployment and Training: Implementing the ERP system and training employees.

Why Customize an ERP System?

Off-the-shelf solutions from ERP software development services provide extensive pre-built capabilities. However, every business has unique processes, workflows and objectives that necessitate customization.

Reasons organizations customize ERP systems include:

• Industry-Specific Requirements – Pre-configured ERP software won’t include niche industry practices without customization. For example, manufacturing ERP systems require quality control and shop floor functionality.
• Competitive Differentiation – Tailoring the ERP platform to support innovative business strategies is key to gaining an edge. Custom functionality can enable new offerings or revenue models.
• Compliance – Regulations differ across states, countries and industries. Customization adapts the ERP to meet specific compliance needs. This includes audit traceability, controlled access and data encryption.
• Legacy System Replacement – Transitioning from legacy platforms often requires mimicking existing workflows within the new ERP interface to minimize business disruption during implementation.

According to an IT decision-maker survey, 53% of respondents consider ERP to be a priority investment, along with customer relationship management (CRM).

ERP Development Process Overview

Standard ERP Flow Chart. Source: Researchgate

ERP development typically follows these key phases:

Planning

This first phase focuses on clearly defining business requirements and identifying ERP software development process improvements upfront. Key activities include:

• Gathering inputs from stakeholders
• Documenting existing workflows and pain points
• Prioritizing feature requests
• Finalizing scope and timelines

Careful planning at this stage allows the project team to configure the ERP platform efficiently in later phases.

Design

The design process maps out the future state based on the agreed-upon requirements. This involves:

• Configuring ERP modules, fields and workflows
• Modeling integrations with other enterprise systems
• Creating mockups for custom interfaces and reports
• Developing ERP software security rules and access controls

The result is a comprehensive design document that guides the development of ERP.

Development

Now, it’s time to bring the design to life. Skilled technical resources perform the actual system setup and customization, including:

• Installing and configuring the ERP platform
• Building custom applications and extensions
• Coding integrations with external systems
• Constructing custom dashboards, workflows and forms

The goal is to deliver a test version that meets all documented requirements.

Testing

The testing phase of ERP systems development puts the ERP solution through its paces to identify any defects before going live. Structured test cases validate critical processes and functionality. Types of testing include:

• Unit testing – Isolates code components
• Integration testing – Evaluates end-to-end processes
• User acceptance testing – Confirms usability for end users
• Performance testing – Assesses responsiveness under load

Issues uncovered during testing are logged, prioritized and addressed by the development team.

Deployment

Once testing concludes, it’s time to roll out the ERP system development product. Organizations should allocate ample time for:

• Migrating cloud data into the new system
• Providing user training and support
• Transitioning business operations department by department

An incremental rollout helps manage risk. Support continues post-implementation to resolve any lingering issues.

ERP Development Models

Organizations can leverage a few different approaches for ERP software development:

On-Premise ERP Platform

On-premise ERP software is installed directly onto infrastructure owned and managed internally. The organization’s IT team leads the development of ERP system by customizing capabilities within the licensed vendor solution.

This model provides the highest degree of control and customization for complex implementations. However, it also demands significant capital investment in infrastructure and dedicated development resources.

Cloud ERP Solutions

Cloud-based ERP platforms are hosted externally and accessed via the web. Many cloud ERP vendors provide intuitive configuration wizards for straightforward customization.

Cloud outsourcing solutions are quicker to implement and scale flexibly with usage. However, extensive customization still requires involvement from vendor professional services or third-party integrators.

ERP Development Outsourcing

Some organizations outsource part or all of their ERP app development initiatives. Outsourced models include:

Offshore Outsourcing – An offshore third-party provider customizes the ERP solution based on documented direction. This can reduce costs substantially, but communication gaps often hinder effectiveness.

Domestic Outsourcers / SIs – Local systems integrators (SIs) also offer custom ERP services with proximity and cultural alignment as advantages over offshore groups.

Independent Contractors – Highly skilled freelance developers design and build custom ERP extensions on demand. This provides targeted expertise without fixed overhead.

Conclusion

ERP software development requires careful planning, skilled resources and robust processes to customize systems successfully. While complex, the level of efficiency and visibility delivered by ERP makes the investment well worth the effort for most growing businesses. With a phased rollout and change management, organizations can minimize disruption during implementation.

This guide provided a high-level overview of key phases, approaches, and considerations regarding custom ERP implementations. Each journey is unique, but the strategies outlined here help set any ERP development project up for success. Leveraging these best practices will lead to an ERP solution tailored to specific strategic objectives and optimized to deliver value across the business.