By Roman Davydov, Ecommerce Technology Observer at Itransition: Software Development Company
Today, we can see that increasing numbers of enterprises are resorting to ERP customization services. The reason is that organizations want to tailor the existing software to their workflows, thereby ensuring even greater ERP efficiency and value. The 2022 ERP Report by Panorama Consulting shows that only 3.6% of enterprises implement ERP software without any modifications, while the majority of ERP adopters conduct moderate to heavy customization.
Nevertheless, ERP customization is not an easy task. It typically involves rewriting software code and introducing system architecture changes. Needless to say, such disruptions may cause serious difficulties and risks, jeopardizing the success of ERP customization projects.
This article covers the main challenges of ERP customization and provides several tips on how enterprises can overcome them.
What are the main challenges of ERP customization?
Increased ERP development costs
Even though ERP software allows enterprises to gain multiple business benefits and thereby become more prosperous, ERP development typically requires huge upfront investments. According to the 2022 ERP Software Report by Software Path, the average budget per user for an ERP project is $9,000, while the total cost of development may equal hundreds of thousands of dollars. So naturally, if your ERP project includes customization, the total cost of ERP development may be overwhelming.
As mentioned above, ERP customization often involves modifying the software code, and this can cause troubles at multiple levels if not done properly. For example, after developers made changes to the existing solution, new, sometimes critical bugs may appear. In the worst-case scenario, an ERP system may not function properly, which can paralyze the work of several enterprise departments at once.
Complicated software management and maintenance
Generally, ERP vendors are responsible for updating their software solutions and delivering new versions. However, if an enterprise decides to implement new features to its ERP system through customization, it has to update and maintain the modified version in-house. This, in turn, may become a severe burden for the enterprise IT department and create cybersecurity risks.
How to perform ERP customization successfully
Now that we have covered the main challenges of ERP customization, let’s discuss how an organization can overcome them and ensure the customization project will succeed. Here are several recommendations that can come in handy.
Set clear project goals and requirements
Depending on your business need, you may need to customize ERP user interface and experience, and functionality, or even develop custom integrations to connect ERP software with other corporate systems. However, none of these customizations will be completed successfully if you do not clearly understand the customization project’s goals and requirements.
Therefore, before the development begins, you should initiate a series of meetings with managers of your departments — finance, human resources, inventory management, and so on — to discuss the purpose and viability of customizations. In particular, you can ask your colleagues these and other questions:
- Why should we initiate ERP customization? What business challenges can we resolve with this project?
- Do we need moderate or more radical customizations? Should we modernize the entire ERP software architecture?
- Can we develop customizations ourselves, or should we hire third-party developers?
- What KPIs should we use to monitor customization progress?
Ideally, at this preparatory stage, you may also need to conduct a thorough business analysis and map your workflows related to enterprise resource planning. This way, you will be able to better understand your internal processes and how they are connected, which will enable you to determine the customization types that may be most relevant for your business case.
Prioritize changes when planning customizations
As we have noted, the more customizations you implement, the higher the risk that something goes wrong, and in the case of over-customization, critical technical issues may arise. Therefore, we recommend starting with customizations that have the most apparent value and only then gradually implementing modernizations that seem less important.
Take into account competitors’ experience
If you have information about similar projects completed by organizations from your business niche, try to draw on their experience when initiating your own ERP customization project. This way, you can avoid the challenges someone has faced before.
Consider consulting ERP development experts
If you realize that your skills and competencies are not enough to carry out successful ERP customization or you feel that you need expert advice, consider hiring third-party ERP consultants. ERP development experts can not only help you make the best choice regarding the customization type and make sure that your idea is viable but also suggest which development approaches are best suited for your specific business case. If necessary, you can also delegate the entire customization process to a third-party consultant.
Given the importance of effective enterprise resource planning, a reliable ERP solution is a must-have for a growing business that wants to remain prosperous and competitive. In addition, if an organization aims to get the most out of its enterprise resource planning, it should invest in ERP customization to tailor the software solution to corporate business processes and workflows.
Nevertheless, conducting ERP customization is not easy. If done improperly, an enterprise may not only spend hundreds of thousands of dollars but also disrupt an existing ERP solution. Fortunately, organizations can mitigate most of the customization risks with a clear understanding of business goals, prioritization of customizations, and taking into account the competitors’ experience.
Roman Davydov is Ecommerce Technology Observer at Itransition: Software Development Company. With over four years of experience in the IT industry, Roman follows and analyzes digital transformation trends to guide retail businesses in making informed software buying choices when it comes to commerce and store management automation.