“No customization” is one of the most common mantras we hear about ERP systems among our global client base. As ideal as a zero-customization ERP implementation may sound, the unfortunate fact is that most organizations customize their ERP systems – at least to some degree. While most executives want to manage their implementations by simply using basic configuration, setup and personalization of the software, an overwhelming majority end up making fundamental changes to the source code.
Two things are clear: most organizations fear customization yet most fail to implement ERP software without customizing it. Below are just a few thoughts to keep in mind as you find yourself navigating the slippery slope of ERP system customization:
ERP customization can create problems during implementation. Most executives have read the horror stories of ERP failures largely attributed to over-customization of ERP systems, so it’s only natural that they would err on the side of “no customization” to mitigate the associated risks. Customization is hard to manage, can break your implementation budget and can indicate that employees are refusing to change their processes. Perhaps most concerning, customization is also sending your organization down a path of relying less on proven, out-of-the-box functionality, which should be a big concern for any CEO, CIO or implementation project manager.
ERP customization can create problems after implementation. Upgrades become more difficult since the code often needs to be rewritten to support newer versions of the software, which often leads organizations to defer upgrades – sometimes indefinitely. When we look at trends of our newer clients, most are looking to replace their old ERP systems largely because they’ve customized the software so much that they can’t (or aren’t willing) to take advantage of newer versions of the software because of the associated risks.
Vanilla ERP systems can create strategic disadvantages. As much of a no-brainer that “no customization” may seem given the above two points, the main challenge is that no matter how good any ERP software may be, it is not going to address 100% of your organization’s needs. ERP systems, by nature, involve tradeoffs of flexibility versus standardization, tradeoffs of one single system for all functions and departments versus a best of breed approach, and a host of other compromises. Once you add your organization’s areas of competitive advantage to the mix, you suddenly have some pretty compelling reasons to customize at least a handful of areas in your ERP system.
Vanilla ERP systems can create even more organizational change issues. Each and every ERP implementation involves fairly significant organizational change management issues, but these challenges are even further magnified when the organization is making little to no change to the software to accommodate the current realities of the business. While this pure vanilla approach may be the best route to pursue for a minority of organizations, it is a reality that needs to be addressed via more dedicated focus on a comprehensive organizational change management plan. A good rule of thumb is that only areas of competitive advantage should be even considered for customization.
Unfortunately, there is no black-and-white answer to this issue and there are very compelling reasons on both sides of the argument. We find that most mid-size to large organizations need at least a minor amount of customization to protect areas of competitive advantage and mitigate change management risks. This, in and of itself, isn’t a bad thing, provided those organizations are able to contain and isolate the level of customization via effective project management and governance, while effectively addressing change management issues.