10 Challenges of ERP Customization and How to Conquer Them
Of all the operations management tools available in the digital solutions market, ERP software has been one of the most widely adopted. And there is a reason for that - enterprises tend to opt for complete asset management solutions rather than piecemeal applications to manage their day-to-day operations.
Readily-available ERP solutions are popular for their availability and relative ease of implementation. However, there is no guarantee that a ready-made ERP will be able to cater to 100% of the business requirements. Thus, businesses often end up customizing existing ERP software in one way or another or opt for a completely custom ERP software solution.
In this blog, we will explore the advantages and challenges of customized ERP and ready-made solutions. We will also offer strategies that can help organizations overcome the challenges of customizing ERP software.
Understanding ERP Customization
ERP customization is a process of altering the existing software features to meet the specific needs of a business. It is important to distinguish between customized ERP solutions, ready-made ERP and custom ERP software. A customized ERP system involves modifying an already-existing solution, whereas custom ERP software is fully built from scratch.
Common ERP modifications include altering the interface of the software, adding new features, or integrating it with other systems. The goal of ERP customization is to make the software align with the business’ requirements as much as possible.
As we mentioned above, no ERP software can fully address the needs of a given business, primarily because ERP systems are built to address the mass needs businesses have. Moreover, every business has its own unique needs and requirements that are almost impossible to address with a generic ERP system.
With this in mind, customizing an existing ERP system has become a common practice among organizations looking to get a system that is more or less tailored to their requirements.
Common ERP Customization Challenges
While ERP customization may seem like a perfect solution for companies in need of a more or less customized system, customizing existing ERP software comes with a number of challenges. Many companies that seek to implement their first-ever ERP solution do not often understand the challenges they are bound to face when they decide to alter their existing ERP system to their liking. Below is an overview of the common ERP customization challenges that organizations should consider before deciding to customize their ERP software.
1. High Costs
Customizing an existing ERP solution can turn out to be a significant financial burden, and here is why. ERP customization often involves re-building the code of the existing ERP software to accommodate the new features that the business needs and that the existing ERP software lacks. This, most of the time, involves hiring an external team of developers, doing extensive research on the existing system, building the new features and, overall, making sure the customized software works as intended. All of this can be a costly endeavor. Moreover, there is the ongoing maintenance and support costs that add to the ERP customization expenses.
Note that ERP customization is different from a fully custom ERP software designed from scratch, where a team of software developers works on building a completely tailored ERP system from the ground up.
2. Complexity and Scope Creep
Customization of an existing ERP software is in and of itself an intricate process. It involves altering an existing system to accommodate additional features. Thus, the expansion of the original project scope is almost inevitable, leading to a so-called scope creep - the modification of the original project to include additional features. Deviating from the original plan will not only increase the complexity of the software but will also add to the total expenses of the project.
3. Integration Issues
Integration of new software (be it ERP or any other type of software) is a challenge on its own, but with customized software, integration becomes even more complex. Customization presents compatibility issues between the new and existing software, requiring thorough testing and sometimes even the creation of middleware to accommodate the transition between the two systems. All of this can affect the initial budget and timeline of the project.
4. Data Migration
Data is the core of every business operation, and its migration from legacy to new software must be treated with utmost care. There are various risks involved in migrating the data from one system to another. Data can be lost or damaged, affecting the integrity of historical information and the business processes that depend on it.
5. User Adoption and Training
It may seem that with customized ERP software, user adoption will be a breeze. Learning how to use the software that’s already built to mirror the usual workflow should be the least challenging part of ERP integration. However, it is not always as easy as it seems. Regardless of the degree of customization, it is still a new software, and users will have to be trained to be able to use the software effectively while also feeling comfortable using it.
6. Maintenance and Upgrades
Maintenance is a crucial aspect of any ERP software. With customized ERP systems, maintenance and support often pose significant challenges for software users and developers because standard upgrades and maintenance procedures may not be compatible. Development teams are required to make custom modifications to the software to make it compatible with new versions, often leading to increased downtime and additional costs.
7. Vendor Dependence
ERP customization is rarely handled by the original software vendor, and companies are often forced to rely on customized software development services providers (or third-party vendors) to handle customizations and upgrades. This dependence involves additional costs and, in some cases, locks the business to a specific vendor for ongoing maintenance, support and future customizations.
8. Customization Limitations
As much as customization allows companies to build a system of their needs, certain features are simply impossible to integrate due to the limitations of the existing ERP software. In other cases, the cost of customization is so high that it outweighs the benefits it would bring. Moreover, there is always the risk of over-customization - a situation when the software has been customized to the point where it becomes too complex to manage.
9. Project Management Challenges
ERP customization is a complex project, involving managing multiple aspects and requiring a dedicated project manager. Common tasks to oversee include coordinating between various stakeholders, managing timelines, and ensuring that the project stays within budget. Project managers must set clear objectives, define roles and responsibilities within the team, as well as encourage open communication between team members and project stakeholders. Without a dedicated project manager, ERP customization is bound to fail.
10. Regulatory and Compliance Issues
Both, ready-made and custom ERP software, are designed to comply with industry regulations and standards. Therefore, customized ERP software must also adhere to these requirements. Ensuring customized ERP software is compliant involves understanding relevant regulations and incorporating necessary features and controls into the ERP system. Relying on non-compliant software can result in legal penalties, financial losses, and damaged reputation.
Strategies to Overcome ERP Customization Challenges
With all the challenges ERP customization presents, it may seem like a futile endeavor to pursue a customized ERP solution. However, it is not as worthless as it may seem. With the right strategy and project management tactics, customizing an existing ERP system can bring desired benefits.
1. Clear Scope and Requirements Definition
One of the most effective ways to tackle ERP customization challenges is to clearly define the scope of work and requirements. Gathering project requirements will help understand the client's needs at the onset of the project while avoiding setting unrealistic expectations. Documenting the project objectives, including functional and non-functional requirements, will provide a clear vision of the project scope. Prioritization of the tasks that are of the highest importance for the business will help avoid unnecessary customizations and stay within project timelines.
2. Effective Project Management
Employing effective project management strategies and tools is another way to overcome ERP customization challenges. Effective project management involves developing a detailed plan that includes timelines, milestones, resource allocation and budget estimates. It also involves creating a detailed data migration plan to help mitigate the risks of data loss during the data transfer. Using specialized project management tools will help track the progress of the project. Maintaining clear communication among team members, clients and project stakeholders is also critical for the success of the ERP customization. Managing resources effectively (for example, ensuring that the right people with the right skills are assigned to the project) is another aspect of project management that helps to ensure the success of the ERP customization. The project management team should ideally comprise members from the client’s organization and the customized software development services provider's team.
3. Stakeholder Involvement
Getting stakeholders involved in the customization of ERP software is as essential as planning and managing the project. Interviewing the stakeholders to document their needs and requirements, keeping them informed of all the updates and changes in the project, eliciting feedback and involving them in key decision-making processes - all of these are important to ensure the success of the ERP customization.
4. Comprehensive Training Programs
The successful adoption of customized ERP software is another aspect companies need to consider. As mentioned above, the fact that the software has been customized to meet specific business needs does not necessarily mean it will be automatically and easily adopted by the company’s users. Team members may resist the change and fail to see the value in the addition of the new software.
Proper change management strategies and comprehensive user training facilitated by the customized software development services company must be put in place to help team members smoothly transition to the new ERP system. Customized training programs may be of help for those who are reluctant to change.
5. Robust Testing and Quality Assurance
Testing and quality assurance are important aspects of any ERP project. As ERP software is a complex system with many modules and functionalities, it is essential to not only test the features individually but also test how the system functions as a whole, requiring a holistic approach to the testing process. This includes developing a detailed test plan that outlines the testing strategy and test cases. Implementing automated testing can help quickly identify and resolve issues. Establishing a bug-tracking process will help record bugs and resolve issues promptly. Involving end-users in the test process is another crucial aspect of software testing, as it helps validate that the customized software meets their expectations.
Final Thoughts
Customizing ERP software is a task full of challenges. From high costs to integration issues, all these obstacles can make the idea of redesigning an existing ERP system worthless. However, developing a comprehensive ERP customization plan with clear goals and objectives can help make the process much easier and more successful. Customizing an existing ERP system is a great option for companies not willing to switch to a completely new ERP solution, or those not in favour of building a new custom ERP software from scratch. It’s a great way to keep the existing system but alter some of its functionalities to enhance the company’s workflow and productivity. By taking a strategic approach to ER customization, businesses can leverage the full potential of a customized ERP solution, tailored to their unique needs, driving efficiency and fostering growth.
