erp customization cost

Cost Heavy ERP Customization is a thing of the past

Cost Heavy ERP Customization is a thing of the past

ERP Then and Now

Providing for cost heavy ERP customization is no longer required and is a thing of the past.

Some of the biggest drawbacks of a traditional legacy ERP have been its inherent inflexibility. Often difficult user interfaces are not so user friendly with high license fees, upgrade burden, infrastructure and changeover costs etc.

ERP applications now run virtually every business function, all kinds of businesses and in any business vertical.

ERP Customization

To get the most out of their investments in ERP, most companies resort to some degree of customization. ROI concerns and new tools are helping users manage ERP customization and changing the ERP development equation. Inspite of all the technology advances; customization is still an expensive exercise in the older systems. The new cloud solutions offer a good deal of flexibility and customization inbuilt in the subscription fees.

Types of customization:

Changes in User Interface (UI): Adapting the design of screens and dialogues to personalize the UI based on the preferences of a user or a group of users.

Reports, documents and forms: Order confirmations, invoices, delivery notes etc that are generated by the ERP can be modified in terms of basic layout changes to incorporation of complex logic in reporting.

Workflows: These allow users to select the steps in business processes and define the correct sequence.

Integration to other applications: This may not be required in a one stop solution but in other cases, the same vendor or a third party may offer solutions for data exchange or end to end business processes.

Functionality extensions: Even in a comprehensive ERP solution, some functionality extension may be required for certain business needs.

Modifications of existing functionality: Sometimes, some functionality has to be modified by modifying or replacing inappropriate code

ERP Customization now

There was a time when companies were aggressive about customizing their ERP systems but soon ROI concerns began emerging.

Customization may still be required even in the best ERP fit. This was a tedious and expensive proposition in a standalone legacy ERP system that required extensive coding. It can be done seamlessly in a cloud ERP solution.


Upgrades have exposed the problems with ERP customization from a cost and management perspective. When companies are forced to upgrade their systems they may have issues with the custom code used for customization. The burden of maintaining custom code leads to what is called “technical debt” and the TCO keeps growing over time.

It may get more and more difficult later on when you upgrade, and some code may cause issues with the solution and create an uptime and a coding nightmare.


Executive teams or project teams, when they’re first considering new ERP software have the expectation that they’re not going to do any customization. This figure is supposed to be as high as 90% when they start but most of them end up customizing anyway. When they start to implement it, new issues emerge as ground reality sets in, and customization become inevitable.

The trick, experts say, is to customize only when necessary, and only in areas where it can give a company a business advantage or provides differentiation from competitors. Customize where your secret sauce or Unique Selling Proposition (USP) or Unique Value Proposition (UVP) lies so that you do not lose your strategic advantage.

Why the Cloud

Technology advances like the cloud are making it easier for companies to minimize the customization they have to do. ERP systems are far more flexible and configurable than they’ve been in the past. You can change the software without having to deal with the source code and this is user friendly and provides a great deal of flexibility in UI’s.

Niche functionality is also present in specialized cloud applications which allow organizations to add new capabilities without having to customize their ERP code. With more niche players in the market, one can take more of a best-of-breed approach and there will be a lesser need to customize your ERP system.

How to tackle ERP customization challenges

The need for unnecessary ERP customization can be avoided by paying close attention to vendor road maps for their ERP solutions. Software solution providers also offer a range of tools and services to help companies manage ERP customizations,

Companies need to build “buffers” into their ERP implementation plans that has adequate tolerance levels for customization. Companies may overlook this aspect and find that the project goes off course.

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