25th January, 2023
If you’re considering an expensive development project to customise your ERP system, make sure you read this before investing a cent.
Today, enterprise resource planning (ERP) software is on the rise.
Increasingly, more organisations implement and deploy ERP systems to automate and streamline workflows, thereby improving competitiveness and service quality.
While many businesses will find value in choosing out-of-the-box solutions, others may seek more bespoke options. In that case, tailoring an ERP to their unique needs means customising user experience (UX) or user interfaces (UI), adding new features or developing custom integrations. According to the 2022 Panorama Consulting report, over 63 percent of enterprises make at least moderate customisations when implementing an ERP.
Although customisation of ERP may help an enterprise achieve a desired competitive advantage, it also tends to be a challenging, risky and expensive task, so make sure you’re confident you’ve selected the right ERP for your business before considering customisation in the first place.
In this article we outline the main difficulties of ERP customisation and provide some tips on avoiding them.
The challenges listed below are almost inevitable for any enterprise starting a customisation process. Of course, this isn’t a comprehensive list since there may be additional difficulties related to the specifics of a particular business case. To identify them, organisations may consider engaging ERP consultants to deliver more specific solutions.
Like any software development project, ERP customisation must bring a clear and measurable business result, whether it’s increasing productivity, workflow improvement or a specific advantage in a particular market niche.
Business leaders can’t deem their customisation project successful if it fails to bring value or solve pain points.
The above Panorama Consulting report also reveals more than 40 percent of enterprises exceed the budgets of their ERP projects.
Organisational issues, the need for additional technology, increased development scope and other factors may result in tens or even hundreds of thousands of dollars spent over budget.
ERP software vendors are usually responsible for supporting the provided software: they implement updates and patches, conduct monitoring and post-deployment testing. But when a business implements customisation — be it new functionality or custom integrations — it needs to invest further effort in maintenance and modernisation.
Also, the resulting diffusion of responsibility creates threats regarding cybersecurity. For instance, if an IT department doesn’t have the competencies or resources to guarantee safety of the customised ERP, corporate and customer data may be at risk.
Employees become accustomed to a specific UI, functionality and workflow. Therefore, ERP customisations may face user adoption issues due to a general resistance to change. The inability to identify and prevent this challenge may result in reduced employee productivity over months or even years.
The best way to encourage adoption starts with communicating a clear value proposition for the employees using the software, whether it saves them time, makes their work simpler or offers some other tangible benefit.
Having identified the main ERP customisation difficulties, it’s worth discussing what enterprises can do to avoid them. Here are some suggestions.
An ERP customisation should bring practical business value. But it’s impossible if an organisation doesn’t define precise business requirements and goals.
First, decision makers should communicate with their IT departments and managers of the teams whose work would be affected by the customisation.
Together, they can address the following questions:
The answers to these and other questions may help enterprises that settle on ERP customisation to draft the project’s initial vision, or select a solution that doesn’t require customisation in the first place. This information will also come in handy for documenting software requirements and developing a project plan.
Among other things, organisations should pay specific attention to the precise definition of the work scope, and there are multiple reasons for it.
First, an enterprise may not have the resources to build and maintain all possible customisations that may benefit its business.
Secondly, too many customisations can cause over-customisation, making further upgrades too complicated to pursue.
To avoid these issues, business leaders should think long and hard about whether customisation is required in the first place as well as what kind of customisation is required.
For example, some companies will talk to no-code, low-code or full-code development options, while ERP solutions like MYOB Advanced Business offers industry-specific editions and scalability without the need for additional development.
For those convinced they need customisation, decision-makers should determine which changes will bring the best business advantage and prioritise them.
Workflow mapping, which highlights the correlations between different ERP work processes, may help. Using it, enterprises can identify workflows that need urgent transformation and thus define the most critical customisations. Later, an organisation can use this information when initiating further development to support a more complex digital ecosystem.
Clearly understanding its business requirements and project scope, an organisation may calculate an approximate customisation budget.
Since each project is unique, and the costs may significantly vary in a particular business case, it’s not easy to give one-size-fits-all advice.
Initially, keep in mind the people responsible for project costing estimates should consider direct expenses (hiring developers and purchasing tools and technologies) and associated costs related to employee training, software maintenance and security monitoring.
Among other things, decision makers should remember that their organisation doesn’t necessarily have to conduct customisation work itself.
If your business lacks the talent or resources to conduct business analysis, build a project plan or perform coding, it may delegate these and other software development aspects to third-party ERP experts.
Needless to say, consultants should have proven experience and industry knowledge if they’re to be brought in on the project.
Although ERP customisation is one of the most effective ways to gain a unique competitive advantage, the risks associated with it may counteract any benefits gained. If not approached correctly, your enterprise may spend money and still not achieve its business goals.
Therefore, corporate decision makers should clearly define their goals and requirements, prioritise customisation options and calculate the hidden project costs in advance.
Even better, some of the benefits offered by customisation are today being overcome by good, cloud-based ERP alternatives like MYOB Advanced Business, including out-of-the-box UI options, additional workflows and easy integration with third-party integrated service vendors to further extend your functionality without adding unnecessary development costs.
So if you’re considering customising a legacy ERP system, you should first ask yourself whether migrating to a more fit-for-purpose solution might be the better option.
Get the benefits of customisation without the added risks by choosing a cloud ERP solution that’s fit for you and scales with your ambition. MYOB Advanced Business is tailored for your business and industry, allowing you to manage financials, customers, projects and reporting from one integrated system. Find out more today.