Thinking Customization? Keep in Mind the Top Challenges of Customizing an ERP System

The challenges of customizing an ERP system can be significant.  This is an issue we see regularly when we partner with manufacturing and distribution project teams.  We addressed this topic in a previous blog post entitled “Should We Customize Our ERP system?”

I made the case that even as ERP selection gets underway, it’s overwhelming to consider customizing a solution.

Customizing a system may be justified after a company has fully understood the capabilities of the system – tested its fit through each process. Even then a customization should be carefully considered during the evaluation of the current process for changes.

A Path to Success

In my experience, most customizations could be avoided if the company has done a full business process review.  This would include inventory of their current state processes and identification  of the “must have” capabilities versus the “nice to have.”

The rule in evaluating ERP is to “measure twice and cut once” – be sure to fully document current processes – clearly define a future state, and then educate users to that vision of how it should be going forward.

A proven methodology of business process analysis will make all the difference.  Most modern ERP systems if properly selected, implemented, and with the right level of training will support the business with very little or no customizations.

Top Challenges of Customizing an ERP System

Customizations can often cause wasteful or error-prone habits to be adopted from a prior broken process.  That’s not a best practice.  Instead, the system should support the strategic vision for the company with process improvement being the goal and not just a faster way of doing an inefficient process; which is often the root of a user request for customization.

In general, the challenges of customizing an ERP system fall into the following areas:

• Issues with Upgrades: Customizations can affect the ability to accept system or application upgrades that are frequently high value additions to the system. Most modern ERP systems offer an “extended application” strategy that does enable customizations that extend an application to be upgraded. Be wary of changing the source code in an existing application as a short cut to a customized process. This will create unneeded complexity and expense when applying upgrades or system “fixes.”
• Issues with Support: Customizations can complicate support capabilities from the original publisher or solution provider. In some cases, they can void the warranty or support terms of the contract. If you’re planning a customization – consult the vendor or provider before making the changes.
• Limits of “Custom Code:” Custom code can often lock down a process that may be required in a future state model of the business. Functionality that is “written out” or changed within a module can also break the integration paths that connect it with other applications or functions within the system. Having a clear understanding of an end to end process flow and the upstream and downstream touch points is vital before considering changing the code itself.
• Burden of Maintenance: Adopting a business practice of re-writing code or changing a process within existing software can have the potential of moving your IT group into the software support business. This can put a heavy burden on the IT staff and management. A lot of well-designed engineering has gone into the development of an ERP package. To make drastic changes to it can jeopardize the architecture of the system for future enhancement or on-going development. If you do make changes – make them according to the guidelines of the original publisher if possible, and develop good documentation to support the users and maintain good on-going support.

A Look at Customization and Total Cost of Ownership

It is often thought that customization increases the value of the solution – this may be true in cases where your business is extremely unique, and that uniqueness is a marketplace differentiator, i.e. it increases the value of customer relationships or improves touchpoints with suppliers.

However, in my experience, most customizations over time can create added support expense and/or labor-intensive workarounds.

Most mid-size organizations do not have the internal resources with broad enough expertise to provide adequate support needed for today’s modern ERP technology. This is one of the reasons why many organizations are considering cloud-based solutions as a cost-effective and efficient way to handle the rapid changes in the business world.

Some Good News

The ERP systems of today are much more nimble and adaptive because the cloud delivery model enables more rapid upgrade capability and often provides more frequent updates to functionality than previously experienced from on-premise models.

The good news though, for those who still wish to operate in an on-premise configuration, is that the tools being deployed in nimble cloud solutions are becoming integrated into the on-premise deployments.  These tools offer more configuration capability which may significantly reduce the perceived need for expensive and risky customization.

Learn More

Ultra’s ERP consulting firm helps teams on their journey to process transformation, and helps organizations avoid the challenges of customizing an ERP system.

Please contact Ultra to address your specific requirements.