Custom ERP system for SMEs: what does implementation involve?

As a business grows or its processes become more complex, an off-the-shelf enterprise resource planning system may no longer meet all its needs. A custom ERP system can be a practical alternative. AI-assisted software development has also changed how much businesses need to invest in building an ERP system tailored to their operations.

We recently developed a custom ERP system for a food production company, with the first functional version going live in just a few months. At this stage, the project costs have been in the tens of thousands of euros. Just a few years ago, we would not have been able to deliver a comparable solution within the same budget.

The project is a good example of how a custom ERP system can be developed in stages around a company’s actual needs. It also demonstrates how AI-assisted development can make ERP projects more efficient without compromising requirements definition, testing, or system quality.

When does a business need a custom ERP system?

An enterprise resource planning (ERP) system brings a company’s key business functions and data together in one place. It can support processes such as order management, production, inventory, deliveries, financial management, and reporting.

However, small and medium-sized businesses (SMBs) often rely on multiple separate applications, Excel spreadsheets, and paper forms to manage their operations. Information is transferred manually between systems, and employees have to check several places to find the information they need.

Business processes often evolve over the years to meet a company’s specific needs. They may involve customer-specific pricing rules, specialized production processes, or industry-specific reporting requirements.

An off-the-shelf ERP system can be a good solution when its features match a company’s needs. However, if adopting the system would require significant changes to established processes or extensive customization, a custom-built alternative is worth considering.

One of the main advantages of a custom ERP system is that it can be designed around a company’s existing workflows and unique business requirements. Implementing an off-the-shelf ERP system, on the other hand, may require a business to change its processes to fit the way the software works. A custom ERP allows businesses to preserve proven ways of working while improving processes that could benefit from simplification or automation.

Case study: a custom ERP system for a food production company

We developed an ERP system for a food production company to bring the information and workflows essential to its daily operations together in one place.

The company receives raw materials from dozens of small producers across Finland. Previously, much of its operations relied on paper forms and separate Excel spreadsheets. Information was recorded and transferred manually, while the company also had to manage complex pricing, producer payments, and regulatory reporting.

The new ERP system includes:

• Producer management
• Delivery processing
• Weight and origin data management
• Producer-specific and raw material-specific pricing
• Handling of exceptions and returns
• Producer-specific payment settlements
• Regulatory reporting

The ERP system now supports the entire process, from receiving raw materials to pricing, payments, and reporting. As information moves from one stage of the process to the next, employees no longer need to enter the same data in multiple places. This reduces manual work, the risk of data transfer errors, and the need to maintain separate spreadsheets.

The value of an ERP system comes from these practical improvements. Employees can spend more time on other tasks, information is easier to manage, and the company can coordinate its daily operations more effectively.

A successful ERP project starts with understanding business processes

The success of a custom ERP system largely depends on how well the company’s operations are understood before technical development begins.

In this project, we worked with the customer’s production and office staff to review the entire process step by step. We examined how deliveries are handled, what information is needed at each stage, and how pricing and producer payments are calculated.

We also identified where the most manual work occurred and which exceptions the system would need to handle. Pricing, in particular, involved a significant amount of business-specific logic. The ERP system had to account for producer-specific price lists, raw material prices, volume-based pricing tiers, additions and deductions, returns, and precise rounding rules.

Several rules could apply to the same delivery, so their combined effects had to be considered during both development and testing. In situations like these, thorough requirements definition is essential. Before building the system, developers need to understand how the process works and which scenarios the software must be able to handle.

Requirements can be defined through activities such as a service design workshop, where business objectives, user needs, and the system’s most important features are clarified. This creates a stronger foundation for technical implementation and AI-assisted software development. The more clearly the requirements are defined, the more effectively AI can be used in development and testing.

For an SMB, investing in an ERP system is a significant decision. Planning should therefore focus on the features that will have the greatest impact on daily operations and business efficiency.

Read also: Good software isn’t created by chance – a service design workshop can help

Read more: AI-enhanced system modernization brings speed and cost efficiency

A custom ERP system can be developed in stages

A company planning an ERP project may assume that the new system needs to cover every possible requirement from day one. However, the entire system does not have to be built at once.

In our project, we selected the functions the customer needed to run its daily operations for the first development phase. The first production-ready version of the ERP system was completed in just a few months.

Since then, the system has been developed based on real user experience. Later phases have introduced features such as role-based access control, a producer portal, and mobile functionality.

A phased approach to ERP development offers several advantages:

• The investment can be spread across multiple phases. The company does not need to commit to developing every planned feature immediately.
• Essential functionality becomes available sooner. The system can start delivering value before all development phases are complete.
• Further development is guided by actual user experience. The need for new features can be assessed based on how the system performs in daily use.
• Unnecessary features can be avoided. Development efforts can focus on functionality that delivers the greatest business value.

A phased approach also makes the project easier to manage. The company can evaluate future development needs and costs as the ERP system is put into use.

How much does a custom ERP system cost for an SMB?

The cost of a custom ERP system depends on factors such as the scope of its features, business logic, integrations, and technical requirements. Data migration, employee training, and the adoption of new workflows also affect the overall ERP project.

In the ERP system we developed for the food production company, the initial production version cost tens of thousands of euros. The result was a company-specific system incorporating complex pricing logic and other functions tailored to the customer’s operations.

We would not have been able to build a comparable solution within the same budget just a few years ago. A major reason for this change is the efficiency gained through AI-assisted software development.

This does not mean that every custom ERP system can be developed for the same price. A large enterprise resource planning system covering multiple business functions can still require a substantial investment.

For SMBs, the important point is that the cost of custom ERP development should be assessed based on today’s implementation capabilities. Previous assumptions about the price of custom software may no longer reflect what can be achieved with a given budget.

Beyond the initial development cost, businesses should also consider the total cost of ownership, including maintenance, potential licensing fees, ongoing development, and implementation.

How can you determine whether your business needs a custom ERP?

An ERP investment should be evaluated primarily from a business perspective. The system needs to solve problems that deliver measurable value when addressed.

A custom ERP system may be a good option when:

• Essential business processes are managed using Excel spreadsheets and separate applications.
• Large amounts of data are entered or transferred manually between systems.
• Pricing, production, or other operations involve complex business-specific rules.
• Customizing an off-the-shelf ERP system would require significant effort.
• The company’s established ways of working are an important competitive advantage.
• Existing systems need to be integrated into a unified solution.
• Licensing costs for the current ERP system are high or increase with factors such as user count or revenue.
• The company wants to grow without a proportional increase in administrative work.

Building an entirely new ERP system is not always necessary. If existing software largely meets the company’s needs, integrating those systems or automating individual processes may be a more practical solution.

That is why ERP project planning should begin by identifying which current processes need improvement and what kind of technical solution would best support the company’s goals.

Business value determines whether an ERP investment pays off

Price is naturally an important factor when investing in a custom ERP system, but the cost should always be considered in relation to the expected benefits. One practical way to evaluate the investment is to calculate its payback period.

For example, if a €50,000 system reduces manual work, prevents errors, and frees up employee time, generating net savings of approximately €2,500 per month after maintenance costs, the investment would pay for itself in around 20 months. After that, the savings continue to benefit the company. By contrast, a €30,000 system that fails to solve the company’s actual problems may never pay for itself, making it an expensive investment despite its lower price.

The value delivered by an ERP system can be assessed by considering how much working time it saves, how it improves information flow, which errors it helps prevent, and how it supports business growth.

Thanks to AI-assisted software development, building custom ERP systems now requires less development work than before. This creates new opportunities for small and medium-sized businesses that need systems tailored to their specific processes.

Are you planning to invest in a new ERP system or replace your existing one? We can help you determine whether your business would benefit most from a custom ERP system, improvements to existing software, or integrations between your current systems.

Together, we can assess which features should be included in the first development phase, what investment would be required, and what business benefits the solution could deliver. Contact us to discuss your company’s ERP and business process management needs.