ERP configuration or customization? What’s right for you?

An enterprise resource planning (ERP) system is made up of a set of modules. That helps to automate business processes and serve as a single source of information. Businesses use ERP systems to streamline operations and enhance reporting capabilities by centralizing critical data in one place. 

An organization’s enterprise resource planning (ERP) system does a lot of different things to keep operations moving smoothly and efficiently. From streamlining inventory and supply chain to managing payroll to helping plan future projects. For an ERP to function effectively for your specific business needs means either working within the available configuration or through more intricate customizations. But how do you know which approach will work best for your business?

Differences between ERP configuration and ERP customization

The first step is understanding the differences between ERP configuration and ERP customization. When you think of configuring business software, it’s easy to imagine a lot of small changes made within the constraints of whatever system is in use. Customization, on the other hand, often refers to larger changes aimed at improving business processes. 

When companies first start looking at a new ERP, many think they need a fully customizable solution over one with standard modules installed, that may require only setup and configuration to get started. Businesses usually go this route with the idea that they’ll be able to custom-tailor their new system to meet every specific requirement they have. The overlooked downsides of ERP customization include significantly increased time and cost, increased risk of development defects, lack of maintenance guarantees, and vendor lock-in. Worse, any major system updates can result in broken customizations and even more time spent creating fixes, many of which can become a bigger problem later on down the road.

In our experience, businesses get more mileage out of configuration than customization. Because with customization comes the need for more extensive changes overall in order to support unique company processes. 

Understand your business needs

For most organizations then, the way to go is implementing an off-the-shelf solution without any major customizations. The biggest benefit of an out-of-the-box solution is the reduced IT project management costs. Because of shorter implementation times, lower ongoing development costs, and the ability to introduce native standardization across multiple systems within a single organization or across different clients using integrated software suites. 

ERP configured solution instead of ERP customization

When opting for an ERP configured solution instead of ERP customization, it’s important to understand what components can be changed post-implementation to meet evolving requirements; it might make sense to invest additional resources in creating configuration flexibility after assessing which areas need modification down the line. It’s also essential to consider not only your current needs but future ones as well. Companies are constantly changing over time. New departments may be created or others eliminated entirely, new technology introduced into the fold, etc. – so it’s important to consider where you’ll stand five years down the road when picking between configuring versus customizing your system at deployment time. 

You probably already know that the right business application can save a lot of time and money, streamline processes. And helps build a much more efficient version of your company. But it can only do all those things if it’s configured properly to match your company’s unique workflows. When configuring an ERP system, your IT team will need to understand what kind of data you work with and how they can configure inputs at each stage of your workflow. 

If your business processes aren’t very unique, and there aren’t many things that need to be adjusted. Because of those differences, then configuring a standard solution might be enough. Otherwise, you’ll probably have to take a look at options for customization. A thorough evaluation can help ensure that you’re not missing anything before making any major changes. And even if it takes more time than originally anticipated. 

Final Thoughts

At first glance, ERP customization may sound like a simple project that can produce the best results. However, there are always going to be exceptions where certain customizations grow beyond their configurations to require constant attention. For example, a field could require specialized formatting depending on which department inputs it. Or its logic could hinge on a set of outside factors such as location or vendor type. If either of these cases applies to you, this is where additional customization could become necessary.

Understanding all the factors involved allows CIOs and other decision-makers to select a solution. That makes sense long-term while still being able to achieve short-term goals efficiently. This helps mitigate risks associated with selecting one method over another while ensuring ultimate return on investment (ROI). 

Consider seeking advice from a partner with experience in your industry. They can offer unbiased advice about potential issues related to both types of deployments. And provide trusted counsel about which option is best for each company’s unique situation. These professionals are able to help evaluate available options and can recommend that a business would be best suited to customizing an ERP or better off configuring a ready-made solution.