can you upgrade 2017 iMac 21.5 inch SSD?

Yes, an AASP should be able to do that.

I would caution against DIY. SSD replacements are very difficult and somewhat risky since you have to very carefully cut the display off just to start the upgrade. Also note that Apple uses a non-standard SSD connector so for DIY you would either need an adapter or an aftermarket SSD made specifically for Macs.

As a cheaper easier alternative have you considered just using an external USB-C SSD?

Do not perform a DIY upgrade. Rather, use an external SSD: How to Setup and Use an External SSD as y… - Apple Community.

Jack

No to Apple/AASP. DIY only. All the best!

I am a +1 on doing an external SSD. Much less expensive than doing an internal and just as quick and it is something you can do. I would recommend the following SSD if you want the fastest available. There are less expensive options however they will be substantially slower.

OWC Envoy Pro EX Thunderbolt 3 (macsales.com)