Systems development
ERP system on licence or your own software?
By Optifirm's consultants3 min read
The business system is the backbone of many companies and holds orders, inventory, finance and customers together. That is why the choice between licensing a standard system and owning your own software is one of the most important technical decisions a company makes. There is no answer that suits everyone, but there are the right questions to ask.
Two roads to the same goal
A licensed ERP system is a finished product that you rent, often as a cloud service with a monthly or per-user fee. The supplier develops and maintains the system, and you adapt it within the limits available. Your own software is instead built for your business. You own the code, set the pace of development and can shape the system around your processes rather than the other way round.
When a licence is the right choice
- Your processes resemble the industry standard and do not create a competitive advantage in themselves.
- You want to get started quickly and have limited resources for your own development.
- You need proven functionality for things like accounting, VAT and reporting.
- Predictable running costs matter more than full control.
When your own software is the right choice
- The way you work is part of your offering and would be lost in a standard system.
- Licence costs grow with the number of users and start taking a significant share of the margin.
- You need to integrate many systems, or build AI and automation deep into your flows.
- You want to own data, code and roadmap without depending on a supplier's priorities.
Compare total cost, not just the start-up cost
A licence often looks cheaper at first, and your own development requires a larger investment before the system is live. But the comparison needs to span several years. Include licence fees per user, the cost of customisations and integrations, consulting hours for upgrades and what it costs when processes have to adapt to the system. For your own software, include development, operations, security updates and further development. Only then does the real difference show.
Risks to weigh up
- Lock-in. How easy is it to get your data out and switch supplier if the terms change?
- Customisation debt. Many customisations of a standard system make every upgrade more expensive.
- Expertise. Your own software requires a partner or team that can maintain it long term.
- Security. Both roads require clear responsibility for updates, permissions and backups.
The answer is often a combination
Many companies end up with a hybrid, with a standard system for what is generic, such as accounting and payroll, and custom-built parts for what sets them apart, such as a customer portal, quoting flow or production planning. With well-built integrations you get the best of both worlds, with proven stability where it is needed and full freedom where it makes a difference.
License what is standard. Own what makes you unique.
How to make the decision
- Map your most important processes and mark the ones that are unique to you.
- Calculate the total cost over at least five years for both options.
- Assess how much you will need to integrate, automate and build in AI going forward.
- Choose a solution you can grow with, and make sure you always own your data.
Optifirm helps you make the comparison and carry out the road you choose, from requirements analysis and architecture to development, integrations and maintenance. Book a meeting and we will go through your situation.
