How Hard Is It to Change ERP Vendors After Years of Customization?

Executives often ask the same question when discussing heavily-customized legacy ERP systems: “Is changing vendors harder than upgrading?” 

While changing ERP vendors can be difficult, it’s often easier than the alternatives. 

This post explores why organizations choose to switch ERP vendors and how leadership teams can navigate the transition.

The Customization Trap: How Flexibility Becomes Fragility​

Many ERP platforms implemented more than a decade ago were sold on the promise of customization. 

For manufacturers and distributors, this meant software that could bend to industry-specific processes, from lot tracking and shop floor sequencing to pricing models and supplier scorecards. 

For public sector agencies and complex multi-entity organizations, this meant embedding statutory requirements, funding structures, and entity-specific rules directly into the ERP to reflect how the organization was governed.

Over time, these customizations accumulated. They became interdependent. And eventually, they became brittle.

When organizations reach the stage of “too much ERP customization”, ERP selections and upgrades are often deferred because:

• Upgrading may break custom code or integrations.
• Training new users would be a knowledge transfer exercise based on tribal memory.

Reasons to Change ERP Vendors​

Changing ERP vendors after years of rewriting code is never a simple undertaking. However, it becomes necessary when several conditions converge:

• The platform cannot support modern capabilities such as predictive analytics, mobility in the field, or ERP-AI integration.

• Customizations have become the business logic to the point where no one can separate processes from software. This creates high operating risk if institutional knowledge walks out the door.

• The vendor relationship has broken down to the point where critical issues—security vulnerabilities, service outages, etc.,—make continued reliance untenable.

• Strategic priorities have changed and you want to expand to new markets, acquire other companies, or adopt new business models. A platform built around yesterday’s constraints can rarely keep pace with tomorrow’s complexity.

In these cases, the decision to change ERP vendors is about realigning your technology foundation with your business strategy.

Client Example

Our independent software consultants recently worked with a large public-sector entity that relied on a heavily customized ERP to manage grants, budgeting, procurement, and compliance requirements. Over time, statutory rules and funding structures had been embedded directly into the ERP through custom logic, making upgrades expensive and risky.

When the ERP approached end-of-life, leadership initially explored enhancing the existing system. Panorama’s assessment compared that path against a full vendor replacement. The findings showed that continued customization would perpetuate data silos, manual journal entries, and distrust in reporting.

Rather than attempting a direct “like-for-like” replacement, the agency redesigned its operating model first. This included redefining master data ownership, standardizing approval workflows, and separating policy enforcement from transactional processing where possible. Only then did the organization pursue a new ERP vendor, supported by a multi-year transition roadmap.

How to Change ERP Vendors​

Changing ERP vendors is a transformation that affects your operating model, data architecture, vendor relationships, and internal capabilities. To reduce risk, some organizations are replacing only selected modules or functional domains rather than the entire ERP footprint.

Regardless of your decision, you should treat the process like any other capital investment—with rigor, governance, and structured planning.

1. Conduct a System and Business Process Assessment

Start by mapping your core processes, configurations, and customizations. Identify which are true differentiators versus workarounds created to fit software limitations. 

Cross-functional requirements gathering can help define which capabilities should drive the future-state system.

Client Example

Our ERP consultants recently worked with a multi-entity manufacturing and distribution company convinced that years of customization had made change nearly impossible. Their legacy ERP had been extended with custom code, point-to-point integrations, and homegrown tools to support pricing logic, inventory planning, and intercompany transactions.

Panorama conducted a detailed system and business process assessment and found that many of the customizations existed to compensate for inconsistent processes across business units and the absence of a shared data model. 

By isolating true differentiators from workaround-driven customization, the company was able to retire large portions of custom logic, simplify integration requirements, and redefine vendor selection criteria around scalability and data governance. 

2. Reassess Organizational Objectives

ERP replacement is most successful when tied to strategic business outcomes. Are you aiming to consolidate entities? Improve margin visibility? Enable direct-to-consumer sales? 

Clear business objectives should shape vendor selection criteria and roadmap priorities.

3. Pressure-Test Potential Vendors Early

Use real data and complex scenarios in vendor demos. Simulate actual use cases—imperfect data, exception workflows, intercompany transactions—not sanitized future-state flows. 

This approach helps you uncover how much configuration versus customization is required for each vendor.

4. Prioritize Change Management and Internal Capability Building

Too many organizations underestimate the behavioral and process shifts that come with vendor transitions. 

Leaders should ensure that user adoption strategies, training programs, and cross-functional decision-making roles are embedded in the project plan from day one.

5. Protect the Core While Enabling Business Differentiation

Define which capabilities must remain standard within the ERP and which can be delivered through governed extensions, integrations, or side-by-side applications. 

This ensures that differentiation is preserved without compromising upgradeability, security, or long-term support.

6. Build a Transition Roadmap with Two-Tier ERP

Rather than attempting a single, high-risk cutover, many organizations adopt a two-tier ERP strategy that balances control with speed. In this model, the corporate ERP establishes standardized financials, data governance, and reporting, while subsidiary, plant, or regional operations deploy more flexible systems aligned to local requirements. 

This approach allows organizations to modernize incrementally, reduce disruption, and avoid reintroducing excessive customization at the enterprise core.

Thinking About a Vendor Switch?

Changing ERP vendors after years of customization is never easy. However, it is often the most strategic move an organization can make to reclaim agility, reduce risk, and future-proof operations.

If you’re considering whether to stay, re-platform, or change ERP vendors entirely, Panorama’s independent ERP consultants can guide you through that decision.

Independent ERP consultants—free from referral fees or reseller incentives—can provide the outside perspective necessary to separate vendor marketing from operational reality. That perspective is particularly valuable when internal momentum favors sticking with the incumbent, even when the facts point elsewhere.