With more businesses taking the plunge into ERP systems, ERP customization has become an expected norm. It is inevitable that some unscrupulous ERP solutions providers try deepening their margins by overpromising their clients on solutions capabilities and burying a ton of customizations into the fine print. But is it really worth it?
The truth is, it depends.
I always make it a point to caution my clients that ERP Customization can be complex and costly. Future upgrading process can be difficult and tedious where customizations are concerned, coding needs to be reviewed and possibly rewritten with every update. Not forgetting the additional testing before deployment and each redeployment.
In this year-end 2-Part Special Series, I’m holding your hand through what might be one of the biggest business decisions you’ll need to make. And we’re going to dig deep and dive into this, together.
Before we jump into whether ERP customizations are worth the money, risk, effort, and sanity, we need to get back to basics. We need to first understand the motivations and goals behind the decision to embark on the ERP journey.
Enterprise Resource Planning (ERP) systems were developed to automate, standardize, streamline and integrate business processes across various functions and departments in an organization.
ERP systems provide businesses with a centralized database where all users work from and pump data into the same source of information through a single system. It also provides an easier and faster way for businesses to generate various reports for analysis through a central database.
Using the database within an ERP software eliminates redundant tasks and reduces human error such as double or wrong entries. ERPs essentially helps organizations increase productivity, efficiency and profitability.
In reality, there is no ERP Software in the market that fits the entire needs of an organization. Every organization has their own way of working and running operations, this is where the differences start to arise between actual business processes and standard ERP system workflow.
Most ERP Systems are designed with industry best practices in mind, but it is still not robust enough to cater to all individual work flow or processes across industries, let alone each individual organization. Software companies are competing on features, functions, usability, and interfaces. Which is why we see constant upgrades or version releases of ERP systems happening frequently.
Today, ERP systems still lack certain structures such as fields, forms, procedures or workflow out-the-box to create a glove-fit between the system and the people using the system. This is the leading reason why organizations start exploring ERP customization.
While that seems to be the only logical route, as Justin Bieber and Adele both say, “hold on…”
Case in point – “Company R”, a manufacturing company I previously worked with. Due to its rapid growth, the management decided to get an ERP system to handle its operations. It had been years since the company started using Microsoft Office to record transactions and a lot of updating was done manually into Excel, with departments maintaining multiple versions and copies of their own spreadsheets and documents. It was virtually impossible for the management to have an overview of the full operation due to discrepancies in data capture platforms with no analytical bridge. In short, all the data lost in translation caused a truly huge headache and there were too many unconnected dots.
The company had many long serving employees, with little to no understanding of what an ERP System could do. Fortunately, a newly hired Production Manager who came onboard right at the beginning of the implementation project happened to have just the knowledge they lacked. Needless to say, he was immediately catapulted to the role of ERP Project Lead.
While they now had a project leader who knew how to steer the ship, the greatest challenge it now faced was the workers’ resistance to change. This resulted in a stark increase for customization requests, just to cater to their individual needs.
With a long-serving team and employees who were so set in their way of working for decades, the realization that their way may not be the best way, was a really tough pill to swallow. The fear of unknown and exposed individual competence left them feeling vulnerable. Eventually, this led to them pulling the project in different directions to fit their own ideas.
And trust me when I say, this is a very common scenario. Especially so in older organizations that have been around through generations.
As per our normal process, we went through a thorough Business Requirement Session. We gathered users from various departments, going through requirements and expectations. Thereafter, we conducted an internal mapping exercise against the system work flow. We tried to suggest every feasible workaround within the systems. Finally, we arrived at a gap-fit analysis report which consisted of a 25 item-long list of ERP customization.
25, a number that on hindsight, we must have been crazy to turn away.
Even though the company was willing to pay the hefty price, we made the responsible decision to pause. Why? Simply because we knew at this rate, their system will not be sustainable. Not if they plan to use it beyond 2 decades.
So we sacrificed our bottomline and steered them clear of impending doom. How?
Stay tuned to Part 2 of this piece to find out. 😉
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