How to Achieve Greater ROI from ERP Customization
When implementing ERP software, many companies choose to make customizations in order to better align the solutions to their business processes. In fact, Panorama’s 2015 ERP Report indicates that 93% of the businesses they surveyed completed some amount of customizations to their ERP systems. The small number of companies willing to go with a generic ERP tends to suggest that from a business perspective, at least, some amount of customization is generally deemed necessary.
We have found that while companies may consider customization inevitable, the mention of making functional changes through code creates worry for most businesses. And it should. First of all, ERP is a complicated animal in it’s most vanilla form. Additionally, the failure rate of ERP projects and the cost of implementations are pain points that drive the hype cycle for better business solutions. However, by clearly defining business needs and selecting a system that targets your industry, the amount of customization required can be significantly reduced. Keep in mind that implementing vanilla code is a powerful way to alleviate some of the risk, time and cost involved in ERP.
In a world of increasingly divergent business processes, a generic ERP solution may not work for your company. Globalization continues to push businesses to become more inventive and individual in order to stay relevant and competitive. Nowhere is this more apparent than in the small- to mid-sized business space. Your differentiators are the factors that make you successful, and some of the processes involved in delivering a differentiated product may not be supported by a generic, one-size-fits-all ERP. Just note some real-life examples of SMB’s with very niche processes:
- A global distributor of technology products requiring detailed, time sensitive shop-floor inspections and approvals (see Case Study)
- A manufacturer and distributor of car care products involving the intricate inventory handling and shipping of chemicals as both raw and finished materials (see Case Study)
- An organization that daily prepares and delivers meals to schools, fulfilling student orders placed via an online store
Considering the options
The case for ERP customization is strong. Some platforms lend themselves handily to creating customizations through code change, particularly open source ERPs. And many ERPs have considerable “customizing” options that can be set via a system administrative panel. Which choice, or combination of choices, is the best for you?
The power of system configuration
Organizations that are unfamiliar with the scope of configuration options available to them in their ERP may feel that they need to pursue code customization out-of-the-gate to get the system design that they want. But often times an organization can get a lot of customized behavior by leveraging the ERP’s built-in flexibility, without having to invest in a lot of development.
On the other hand, choosing the correct configuration options from among the thousands of possible combinations is complex, and to be efficient requires an understanding of the system architecture and the business objectives. Having qualified analysis to understand both your business processes and your software is critical to understanding when and how to optimize configuration customizations.
Changing code for the right business reasons
Customizing ERP by changing the code can give you the one-of-a-kind features and processes you want; but development is also impactful and expensive. It stands to reason that an organization would only want to make code changes where it really makes sense:
- Understand your business processes first. You might find that your current process management could or should be refined first, reducing the need for new feature development in the software.
- Identify your business processes that give you a unique, competitive edge (your ‘secret sauce’), and that aren’t supported by out-of-the box functionality.
By selecting an ERP solution that is designed to work with your business vertical and then building well-designed, customized features and processes selectively, you can create huge efficiencies in your software that will prove to be worth your time and money.
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