ERP has come a long way since its inception in the 1960’s, when ERP systems were a bespoke service tailored around an individual business’ needs. Whilst this did provide a solution that was specific to the organisation, it was time consuming and expensive to implement.
Decades have now passed , and technology has advanced significantly, resulting in “off the shelf” solutions becoming the norm. Whilst off-the-shelf products come pre-configured, they can still offer businesses “bespoke” or “custom made” functionality through settings or small tweaks. Off-the-shelf solutions have sped up the implementation process, saving customers time and money. This is not to say Bespoke Systems are dead as some companies still need that tailored approach. However, the rise in popularity of off-the-shelf solutions and Cloud Software suggests the market is changing.
The benefits of a Bespoke ERP system
- Well suited to complex and unique requirements
In some cases, an organisation’s requirements will be so complex or unique an off the shelf solution can’t provide the functionality needed.
- Highly flexible
As the system is set up specifically to meet the organisation’s needs, the system can be adapted to what the business requires.
- Minimal license costs or maintenance fees
With a Bespoke system, once you have paid for the system that is often your only cost. The next time you would need to spend money again is when you are looking to upgrade the system to work with modern technologies and IT platforms. However, unlike off the shelf you do not have to constantly renew licenses and pay annual maintenance fees
What are the drawbacks?
- Long (and expensive) implementations
As the system is being tailored to the organisation’s needs and often built from scratch, implementation timescales will generally run into years rather than months. Time is a precious resource for a business, and this is a substantial cost.
- Reliance on a small group or individual
Bespoke systems are often the brainchild of one individual or a single organisation – this places huge emphasis on this resource to either keep them within the business or to maintain an on-going business relationship.
- Updates are not included
Updates come at an additional cost and need to be designed planned and executed. This can take time and incur significant additional costs.
The benefits of a “Off the Shelf” ERP system?
- Wide range of ERP packages
The variety of packages available mean that although not fully bespoke, there is a good chance there will be package well suited to most businesses.
- Faster implementations
Due to packages being mostly pre-configured, your system can be up and running faster than with a bespoke option.
- Wide levels of support
There are often companies who can support and work on most off the shelf ERP systems
- Known costs
off the shelf systems are billed for on pre-defined pricing models and some include all version upgrades within the set monthly price
- Systems can accommodate substantial levels of change
With an Off the Shelf solution, functional change as well as personalisation and customisation is still available, providing a hybrid model of off the shelf and bespoke functionality
What are the drawbacks?
- Higher Licensing costs which are perpetual
When using a provider, you have to pay for a license, which is typically billed monthly. Since these licences are perpetual you will have to factor this into your budget every year.
- Difficult to influence the development of the product
When purchasing off the shelf software, an organisation has little input into its features and tools. This means the product might not be fully suitable and therefore may not be as ideally tailored to your individual needs
Whilst it is clear there are benefits and drawbacks to both Bespoke and Off the Shelf solutions. The fact that companies still use both suggest that Bespoke systems are not dead. The needs and size of a business dictate what ERP package they use. For smaller businesses, an Off the Shelf package is a more suitable option as it is ready to go and cheaper to initially set up. Research recently suggested that 64% of ERP customers use SaaS (Software as a service) , with only 15% using an on On-Prem solution. This is evidence that Off the Shelf solutions may be starting to overtake Bespoke systems, however it really depends on what works best for you and your company.