Custom ERP vs SAP, Oracle and NetSuite for small and mid-size businesses

There comes a moment in the life of a company when spreadsheets stop being enough. Orders get lost between emails, the inventory the system shows is not the inventory in the warehouse, and nobody knows for sure how much was made last month until accounting closes the books, three weeks later. That is the moment someone says the word ERP.

And that is where the trouble starts, because the options that show up first are the usual ones: SAP, Oracle, NetSuite, Microsoft Dynamics. Names that inspire confidence because the largest companies in the world use them. What is said less loudly is that they were designed precisely for that: the largest companies in the world. And that today there is another option that used to be unrealistic.

What an ERP is and what it should do for you

An ERP, enterprise resource planning, is the software where the company's operation lives: sales, purchasing, inventory, production, invoicing, collections, and the reports that come out of all that. Its value is not in any single feature but in the fact that they all share the same information: when something sells, inventory goes down, the invoice goes out and the receivable gets recorded, without anyone typing anything three times.

That is the goal. Any path that gets you there is valid. The question is which one gets you there faster, with less friction and at a cost that makes sense for the size of your company.

The license model: what it really costs

A licensed ERP gets paid for several times over, and the license is the small part:

• The license or subscription, per user, per year, forever. It grows as your team grows.
• Implementation, which is almost never done by the vendor but by a consultant or "partner", and often costs more than the first year's license.
• Customization, because the system comes designed for a generic company and yours is not one. Every adjustment is a new quote.
• Training, because these systems are large and complex, and your team has to learn to operate the system rather than the system adapting to your team.
• Maintenance and upgrades, which in many cases break the customizations you paid for.

None of this is a criticism of the software. It is the natural consequence of a product that tries to serve every industry and every size. For an enterprise with thousands of users and its own IT department, it makes sense. For a company of twenty, fifty or two hundred people, it is almost always a size too big.

A generic ERP forces you to operate the way the system operates. A custom one operates the way your company does.

The custom model: what changed

Ten years ago, building your own system was madness for a mid-size business: large teams, months of development, costs only an enterprise could afford. That changed, and it changed fast.

Today a small, experienced team builds a custom system in weeks or a few months, with the quality of what used to take a year. Modern development tools, the cloud and a far more efficient way of working made possible what used to be a privilege of the big players. We wrote about that shift in why you no longer need a 15-person team to build software.

A custom system is designed around how your company works, not the other way around. It has exactly the modules you use, with the names your team already uses, in the order your operation happens. There is no menu of two hundred options of which you use eight.

Side by side

When a licensed ERP does make sense

To be fair, there are cases where a generic product is the right answer:

• Your company operates exactly like the standard of its industry and has no distinctive process of its own.
• You have an IT department with the capacity to administer a large product.
• You need very specific certifications or compliance features that come already solved in the product.

If you recognize yourself in all three, a generic product may be your path. If not, and in our experience most mid-size companies do not, a system of your own will cost less, arrive sooner and be yours.

How a custom system gets built without stopping the company

The most common fear is "I can't stop the operation to switch systems". You do not have to stop it. A custom system is built in stages:

1. Start with the biggest pain. If inventory is what hurts, the inventory module gets built, goes live and gets measured.
2. Each new module connects to the previous one. Sales connects to inventory, invoicing to sales, and so on until the information flows end to end.
3. What already works stays until the new module replaces it. Spreadsheets and the old system coexist with the new one for as long as needed.
4. The team learns along the way, because each stage is small and speaks their language.

To find out whether your company is already at that point, we wrote the signs your company needs custom software.

Frequently asked questions

Is a custom system more expensive than a license?

In the first year it can be similar. From the second year on, the license keeps charging and the custom system is already yours. Over three years the difference in favor of the custom system is usually large, and that is before counting the customization and training the license does not include.

What happens if the vendor that built it disappears?

The code and the data are yours, in your own cloud account. Any competent team can continue it. With a license, if the vendor changes its pricing or discontinues the product, you have no options.

Can a custom system handle invoicing, inventory and collections?

Yes. It connects to the invoicing or accounting provider you already use, to your bank if needed and to whatever your operation requires. Integrations are designed for your case, not for the average.

How long until it is up and running?

The first module, the one that solves the biggest pain, is usually live in weeks. The full system, in stages, in a few months. Without stopping anything.

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At tēo studio we design and build custom systems and ERPs for companies that have outgrown their spreadsheets and do not want to pay a yearly license for a system that was not made for them. Tell us how your company operates and we will tell you where we would start.