Customizations and ERP — Don’t recreate the past
As long as there have been ERP suites there have been customizations to ERP. Most people who hear “customized ERP” think of the massive on-premises suites sold in the past 10 to 20 years. Modern SaaS ERP doesn’t permit the same type of customization, but there’s a benefit to applying lessons learned from the past.
Customizing on-premises ERP
ERP suites emerged to solve the problems of nonintegrated business processes and data inconsistency prevalent in the 1980s and early 1990s. They were designed to enforce process disciplines and maintain referential data integrity and they did that well. However, ERP suites were not very easy to use and they definitely were not flexible.
ERP suites in the 1990s through 2010s were packaged applications that ran on a database in the organization’s data center – referred to as “on-premises ERP.” Vendors provided source code for the applications, which gave customers the ability to customize ERP as they desired. Depending on the organization and its approach to customizations and governance, this capability ranged from quite beneficial to really horrific.
The nature of on-premises ERP meant that upgrades were difficult and expensive. Due to the expense and disruption, many organizations only performed an upgrade every 3 to 5 years. This meant features not included in the initial deployment would not be enhanced by vendor-delivered code for years. Any functional gaps or enhancements were resolved by customizing the vendor’s code – called “tightly-coupled” customizations. Customizing vendor-delivered code in this manner was a prevalent and often efficient way to deploy new capabilities – and it became the standard.
The problem? The more customizations deployed, the more difficult and expensive upgrades became. This led to a vicious cycle of no upgrades and more customizations. Over years, customers without the right level of discipline and governance regarding customizations often found themselves in the role of a software development house with piles of “zombie code” that never died or went away.
The expense and difficulty of maintaining and upgrading a highly customized ERP led many organizations to adopt a no-customization approach when replacing or acquiring a new ERP suite. That’s a nice concept but not really practical. I have implemented ERP in one form or another for decades, and no one implements ERP without some customizations.
While ERP customizations generally have a bad rap, there are some valid reasons for them:
- Usability/efficiency. ERP suites are notoriously unfriendly. Inefficient user interfaces can have a serious negative impact on productivity.
- Filling functional gaps. Almost all organizations will need to add functionality to an ERP suite — usually a feature particular to the organization or industry. The requirements of some vertical industries are sometimes not delivered with standard ERP suites. Make-to-order, pharmaceuticals, and food & beverage are good examples.
- Intellectual innovation. Many organizations use customizations to create processes and capabilities that give them a competitive advantage — essentially their own intellectual property in their ERP landscape.
Customizing MT SaaS ERP
Multi-tenant (MT) software-as-a-service (SaaS) ERP has a different dynamic. Vendors tout the advantage of much more frequent releases with much simpler upgrades. Customers get new features and functions much more rapidly because vendors no longer allow them to customize the core system. This eliminates the tightly-coupled customizations that are used to interfere with upgrades and enable faster adoption of vendor-delivered capabilities.
Although newer systems have much nicer interfaces and are designed for faster new feature delivery, some usability and gap resolution enhancements are often still required. The good news is that SaaS vendors provide very good capabilities for low-code / no-code development and integration through enterprise application platforms (EAPs), making adding new capabilities – modern customizations – much easier. This enables what is now called Composable ERP.
The bad news is that without proper governance and planning, this can lead to a new technology version of the highly customized messes of the past — code attached everywhere to the periphery of the ERP suite. Like dropping a ball of Velcro into a pile of lint. Good luck untangling it.
With the proper controls, SaaS ERP can be customized and tailored to the needs of an individual organization. Doing so correctly provides the best of both worlds. You can still provide the customizations you need and desire. And still leverage the massive investments vendors are putting into making these systems more easily updatable, smarter, and easier to use.
You just need a different approach and understanding of the technology.
Newer MT SaaS ERP suites have characteristics that can minimize the need for customizations:
- Nicer UIs. User interfaces are much nicer and easier to configure without writing code.
- Systems are updated more frequently. Most SaaS ERP vendors deliver new features and functions several times per year. The cycle ranges from quarterly to semi-annually.
- Enterprise application platform capabilities. SaaS ERP runs on EAPs that provide low-code / no-code development and integration capabilities. This provides an easier plug-and-play type environment to fill functional gaps or add intellectual property-enhanced capabilities.
- Marketplaces. Leading SaaS ERP vendors provide a structured environment for any end user, partner or external developer to create and deploy capabilities in a supportable framework.
Guidelines for managing and customizing a modern ERP suite
- Adopt new vendor releases consistently. Standardize on consuming new vendor releases wherever possible. Don’t fall behind in adopting new capabilities. Technology advances such as process analysis and intelligence in applications will be evolutionary and built on prior releases.
- Democratize governance – but keep it rigorous. Just because you can do something doesn’t mean you should. Adopt a disciplined and democratized approach to customizations. Permit decision-making further down the org structure.
- Focus on user experiences rather than features. Value comes mostly from enhanced user experiences, so establish flexible end-user and experience-focused governance.
- Embrace change and a composable mindset. Encourage and embrace frequent changes. Keep in mind that many customizations should have a much shorter lifespan than in the past. Vendor features will arrive faster than in the past. Enforce the discipline to remove custom code when new vendor-delivered features are close enough.
- Reorganize and retool IT. Support democratized development and integration. Change the role of IT from controlling to advising, to enable business functions to be more self-sufficient.
- Leverage the capabilities of the EAP. Enterprise application platforms delivered by vendors enable a flexible, composable, enterprise application suite. Be sure IT and your internal support staff are trained on configuration and integration tools.
- Leverage marketplaces. Make use of marketplaces to buy vs. build when it makes sense.
Emerging new technologies and capabilities delivered by ERP vendors offer tremendous opportunities for enhanced productivity. Customizations still have a role to play and can add significant value, but remember not to live in the past. Don’t recreate a modern technology version of the highly customized suites.
About Mike Guay: Guay started working with business systems decades ago – before they were called ERP. His career has spanned over 35 years as a user, vendor, and system integrator. His expertise and experience with ERP systems across HR, Finance, Supply Management, and technology. He has worked with customers in many verticals including Public Sector, K-12, Higher Ed, and others. Prior to joining Infor in 2020, Guay spent over 7 years as a senior ERP Analyst at Gartner. He was the lead author of the first Cloud ERP Magic Quadrant in 2018. He has expertise in best practices for adopting MT SaaS ERP and how customers can maximize value from the investments Infor is making in products and technology.