ERP guide
Should a mid-size company buy an ERP or build a custom one?
Buy a mid-market ERP such as Oracle NetSuite when your operations are close to standard and you want a vendor-run system that works in a known way. Build a custom ERP when you would spend the license and consulting budget forcing a product to match how you work, because over five years the product keeps charging for users and modules and a system you own has no license fee.
| What you are comparing | A product | A custom build |
|---|---|---|
| Cost over five years | A subscription every year, built from users, modules or resources depending on the vendor, plus implementation, data migration, training and support. The total grows as the company does. | A one-time build scoped in writing, then running costs such as hosting, database and email. No licenses, so the total does not grow with headcount. |
| Per-seat fees | Per-seat fees are common. SAP, Microsoft and Odoo publish per-user rates, and NetSuite counts users in its license. Acumatica is the exception on our lists and prices by applications and resources. | None. Adding a buyer, a warehouse lead or a read-only executive adds no fee. |
| Fit to your process | You adopt the processes the product comes with and configure the rest, inside the limits of your plan and modules. What it cannot model ends up in spreadsheets beside it. | Built from your process, including the pricing rules, approvals and handoffs between departments that are specific to you. |
| Time to launch | A contract can be signed quickly, but an ERP rollout is a project of its own, with configuration, data migration and training before anyone can work in it. | Starts with discovery and a written scope. Working screens are shown during the build, areas go live in stages, and the schedule is set in that scope. |
| Who runs it day to day | An internal admin, a partner or a reseller. Several vendors on our lists sell only through partners or resellers. | A named owner on your side, with Black Badger or any competent developer maintaining code that is written to be read and extended. |
| Adding an entity or location | Often a plan change, an added module or a new quote. Odoo, for example, places multi-company use on its Custom plan. | A change to a system you own, scoped and built when you need it. There is no plan to upgrade and there are no licenses to add. |
| Vendor risk | Pricing, packaging and roadmap are decisions the vendor makes, and renewal terms can change. | No vendor to renew with. The risk moves to keeping a maintainer available, which owning the code and every account is meant to cover. |
When buying a mid-market ERP is the right answer
Buy when your operations look like those of most companies. Standard purchasing, standard inventory and standard accounting are what ERP vendors have spent decades modeling, and a product gives you those from the start.
Buy when you are choosing your first ERP and are not yet sure what you need. A product comes with a point of view about how a business should run, and for many mid-size companies adopting that view is an improvement.
When building a custom mid-market ERP is the right answer
Build when keeping the product working has become a project of its own. The signs are spreadsheets running beside the ERP, one person re-keying data between two systems, and a consultant and a quote for every change.
Build when the bill rises and the system does no more for you. Users, modules and entities each add to a subscription, so a growing company pays more each year for the same system. A custom ERP costs what it costs to build and then what it costs to run.
How to compare the cost of a mid-market ERP with a custom build
Do not compare a first-year license quote with a build. Compare five years. Add the subscription at the plan and modules you will need, the implementation, the migration, the training, and the partner fees you already pay for changes. That is the product number.
The custom number is a one-time build plus running costs. Black Badger does not publish a price, because the figure depends on what the system has to do and how many other systems it has to agree with. A written scope gives you the number to put beside the product total.
What a custom ERP usually keeps
A custom ERP does not have to replace everything. Where a ledger or payroll service works and your accountants trust it, it can stay, and the custom system connects to it. The build goes where the product does not fit, which is usually operations.
What a custom build involves, and how to ask about one
Questions buyers ask
Is a custom ERP cheaper than NetSuite for a mid-size company?
A custom ERP is not always cheaper than NetSuite in the first year. NetSuite publishes no price, so the only fair comparison is your own quote over five years against a written scope for a build. A build costs once and a subscription repeats, so the custom total usually compares better as users, modules and years add up.
Is a custom ERP too risky for a mid-size company?
The main risk of a custom ERP for a mid-size company used to be depending on one developer. Black Badger answers that in two ways. Every account the system runs on is created in your name, and the code is written so another developer can read it and carry on. The risk that remains is scoping, which is why nothing is built before the scope is written.
Can a company keep its accounting system and build a custom ERP for operations only?
Yes, a company can keep its accounting system and build only the operations side, and that is often the sensible design. The ledger stays where your accountants want it, and the custom system handles orders, inventory, production or jobs and posts to it. Replacing a tool that works adds cost without a benefit.