Any industry expert will tell you that ERP implementations are not just about technology. People and business processes matter more to the success of an ERP project than abundant IT staffing and strategic customization ever will.

Nonetheless, most organizations – no matter their convictions – will end up customizing their ERP software to some extent. According to Panorama’s 2012 ERP Report, only eleven-percent of respondents implemented ERP software with no customization.

Customization isn’t the only success factor organizations should consider, however. Organizational change management can also contribute to the success of an ERP implementation and significantly reduce the time and money spent on customization. Organizational change management is not necessarily easier than customization but it’s worth comparing the benefits and drawbacks of each in terms of time, money and effort.

Although costly and time-consuming, customization can bring a great deal of benefit to a company. To achieve benefits, however, organizations must have their priorities in order. For instance, if an organization customizes software in order to cater to the comfort of employees, the organization may end up ignoring inefficient business processes that need reengineering. The key to customization is enabling processes that are already optimized and supporting processes that offer competitive advantage. One of the benefits of customization is that it encourages organizations to evaluate business processes and carefully decide which processes should be standardized to fit the software and which processes necessitate customization.

Organizational change management also has “pros and cons.” Changing employees’ perceptions of new ERP software and communicating about new roles and responsibilities takes plenty of time and resources in its own right. Change management requires a significant monetary investment in assessments, training, communication materials, performance measurement and post-implementation audits. Although it can be an arduous process, the benefits of having a staff that are engaged and excited by the potential of an ERP system are perhaps without parallel.

Although neither customization nor change management initiatives are cheap – if the motives and deployment is right – the payoff is almost always worth it. A solid organizational change management initiative can markedly accelerate employee adoption and increase benefits realization. And appropriate customization can ensure that a vendor’s idea of “best practices” does not eradicate an organization’s key differentiators.

If your organization were to assess its current business processes and organizational culture, what would it find? Is your organization prepared to make the critical decisions imposed by new ERP software? If not, Panorama’s experienced ERP consultants can help your organization make the right decisions about customization and organizational change management. Be sure to download our 2010 Organizational Change Management Report for more information.

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