One of the most prevalent mantras we hear regarding ERP systems from our global client base is “no customization.” However, as appealing as a zero-customization ERP deployment may appear, the reality is that most businesses must customise their ERP systems to some extent. While the majority of executives desire to manage their implementations by using simple software configuration, setup, and customising, the vast majority wind up making significant changes to the source code.
There are two things that are obvious: 1) Most businesses are afraid of customisation, and 2) most ERP software implementations fail due to this concern. While any ERP system may be customised to some level, it isn’t always necessary—or the most efficient method to achieve what you need. Before you go out and buy an ERP solution or explore customising one you already have, consider the following points about ERP customization:
Disadvantages of ERP Customization
ERP customization can create problems during implementation
Most executives have heard horror stories about ERP failures that were mostly caused by over-customization of the software, so it’s only reasonable that they would err on the side of “no customization” to avoid the dangers. Customization is difficult to manage, can blow your implementation budget, and shows a reluctance to modify inefficient procedures rather than reviewing processes to see how functionality given out of the box by today’s ERP systems can be enhanced or even eliminated. Most problematic, however, is that customization is leading your company down a path of depending less on tried-and-true out-of-the-box capabilities, which should be a major issue for any CEO, CIO, or project manager in charge of deployment.
ERP customization can create problems after implementation
Upgrades are more complex since the code often needs to be rebuilt to support newer versions of the programme. As a result, corporations frequently postpone upgrades – sometimes indefinitely. When we look at the patterns among our younger clients, we find that the majority are wanting to replace their old ERP systems, primarily because they’ve modified the software so extensively that they can’t (or won’t) take advantage of newer versions due to the risks involved. As a result, the more you tweak, the further you deviate from the software’s natural progression, which means you’ll miss out on all of the exciting new features.
Advantages of ERP Customization
As much of a no-brainer that “no customization” might seem given the above two points, there are advantages to customizing your ERP.
“Vanilla” ERP systems can create strategic disadvantages
The fundamental issue with ERP is that, no matter how good it is, it will never be able to meet all of your company’s requirements. ERP systems can’t do everything, therefore they have to make compromises: flexibility vs. uniformity, a single system for all functions/departments vs. a best-of-breed strategy, and so on. When you factor in your company’s areas of competitive advantage, you’ve got some pretty strong reasons to personalise at least a few elements of your ERP system.
“Vanilla” ERP systems can create even more organizational change issues
Every ERP adoption entails some level of organisational change management challenges, but these concerns are amplified when the organisation makes little to no changes to the software to match the current business reality. While this “plain vanilla” approach may be the best option for some firms, it is a reality that requires a greater focus on a comprehensive organisational change management strategy. Only areas of competitive advantage should be evaluated for customization, according to a good rule of thumb.
It’s Not Black and White, but Here’s a Game Changer
Unfortunately, there is no black-and-white answer to this question, and both sides have good reasons. Most mid-size to big firms, according to Addend Analytics, require at least a moderate amount of customization to retain competitive advantage and avoid change management risks. This isn’t always a bad thing, as long as those businesses can properly manage and isolate the level of customization through good project management and governance, as well as deal with change management challenges.
If you’re considering a new ERP system, make sure you know how much modification it will require—and that the customization process is as simple and cost-effective as feasible. For example, Microsoft has substantially simplified the process of customising Dynamics 365 Business Central. Customizing Business Central to match your individual needs is much easier and faster with Events and Extensions, making the option of “to customise or not to modify” much easier. Learn more about Events and Extensions, and contact Addend Analytic’s ERP professionals to discuss your ERP requirements.