No more sprinkles on your vanilla applications.
There was once a well-trodden path for ERP implementations. Buy a licence from Oracle or SAP for some generic finance and HR software and then give Deloitte or Capgemini several million pounds to dismantle that product and re-assemble it to suit your unique business processes over a grisly two-year implementation. Most ERP customers inherited a highly customised solution, prone to cracks, immune to updates, burdened with redundant code and user interfaces that were unappealing, cumbersome and not fit for purpose. It is therefore unsurprising that ERP takes such a panning in the mainstream business media when so few customers report a happy outcome from their ERP implementation – and even fewer from the long term usability and scalability of the system.
The Lidl story has been around for a while so I won’t labour that one again – but it is worth noting that there was one (or maybe two if you include the human decision making process) root cause for that €500m ERP disaster – customisation.
The story has been repeated time and again. A customer is married to a process and rather than adopt vanilla principles, the old process is forced into the new system through customisation. The digital revolution is set to transform that outdated process with cloud-native applications and API integrations which still afford customers the flexibility to maintain competitive advantage whilst following tried, tested and best practice application architecture.
Debbie Green, newly promoted VP of applications at Oraclesaid: “The increasing adoption of cloud ERP solutions should mark the end of customisation as we know it, not least because it is impossible to make the type of fundamental changes to the source code that many organisations or partners were able to make to on-premise solutions. While it’s true that different businesses are subject to different pressures and have different requirements from their finance systems, starting down the road of customisation immediately limits the scalability of the product and forces finance teams into a trade-off between long-term benefits and short-term convenience. To get the most out of any technology implementation – ERP or otherwise – users should take the opportunity to re-evaluate their working practices in the context of what the new solution enables, rather than look at how they can change the solution to fit existing established processes.”
Green’s statement leaves little room for doubt; customisation as we know it is a thing of the past and post-modern ERP vendors are now delivering solutions that do away with the old notion of customisation in favour of ‘personalisation’ through APIs and other bolt-ons.
Mark Hughes, regional vice president for UK and Ireland at Epicor agrees that personalisation is the new advantage for ERP customers and warns against the use of customisation in modern ERP practices. He said: “For many years, ERP providers have traded on the fact that the software they sell is hugely customisable. However, for many businesses using ERP software, the difference between actual customisation and personalisation remains unclear. Personalisation is a non-invasive means of tailoring software; for example, changing the way reports are produced, or altering the tracking of KPIs. Customisation, on the other hand, often requires code, technical expertise, and access to how a system works. In addition, it can have significant knock-on effects further down the line.
“The main problem with customisation is that businesses end up with a solution that is completely different to everybody else’s – and this matters for a number of reasons. In terms of supporting and maintaining ERP systems, if you are using standard, configured, personalised software, any errors found in your system are more than likely to have been found in others. However, as soon as you begin to customise the software, any bugs or problems will be limited solely to that system and will need to be solved on an individual basis. This makes supporting customised software much harder.
“ERP technology has been around a long time, and its capability is much greater than it once was. Due to advancements in ERP systems, businesses can make adequate changes through simple personalisation, which many would have previously considered as a customisation or modification of the software. By putting an agile and modern ERP system in place, businesses will be able to fully utilise their software and avoid the need to customise.”
Claus Jepsen, Deputy CTO at Unit4 also has strong views on how customisation has hindered ERP value and suggests that microservices (APIs and bolt-ons) are the new frontier of value drivers in modern ERP solutions: He said: “In the past, organisations saw the value of ERP in the customisations they could build. They would work hard to make the ERP system fit their business and not the other way around – that was the accepted thinking. As cloud advantages and new technology have emerged, it’s those customisations that have held organisations back from modernising, upgrading and implementing new systems.
“To make it deliver value in the future, companies have to innovate at the edge with microservices and extensible technologies that efficiently facilitate and underpin delivery of new business models. Very specific service applications coming out of the ERP system at the core are the new way to customise, and will deliver great advantages in terms of speed of digital change and user experience.”
Matthew Johnson from Deloitte also believes that the notion of customisation is changing and cites innovations in PaaS and IaaS as key drivers for these new advantages. ERP users can now innovate without having to customise their core system as products released by SAP, such as the Leonardo platform, are allowing customers – even those who run their applications on-premise – to create competitive advantage through intelligent integrations while keeping their core ERP landscape ‘clean’ from customisations.
Johnson said: “ERP was built to address the core transactional needs of the many, not the few. It was never engineered for you and you alone. The more you add and bolt on to the core, the bigger the impact to test and deploy those changes back into productive use. Years of customising and incrementally enhancing your existing ERP landscape, often results in an architecture that is burdened with technical debt. Evidence of technical debt can be found in areas such as reports that are compiled but no longer used, transactions that are optimised for outdated business models, and infrastructure that is always scaled for performance and business exceptions that nobody recalls.
“Over the last 12 months, there have been two key technology introductions into the SAP eco-system – Leonardo and SAP Cloud Platform – that have allowed us to look at making your legacy SAP landscape, relevant for the demands of today and future-proofed for the expectations of tomorrow.
“At Deloitte, I have been working with our global SAP practice to introduce an approach and set of enabling technologies that help our clients to leverage these key innovations. We call this ‘CleanERP and Innovate off any core’, working on the basis that you innovate and develop – using SAP Cloud Platform and SAP Leonardo – outside of your core ERP and leave your solution ‘clean’. This changing notion of customisation allows you to leverage the full value of best in class technology.”
AP has also tackled the problem of customisation directly through their junior product suite called Business ByDesign. Unlike their flagship product, S/4HAHA, Business ByDesign offers customers an out of the box solution that is almost exclusively used without customisation. In Cloud Solutions are the UK’s leading Business ByDesign partner with more than 50 percent of SAP BBD customers on their books. Bob Atkinson, managing director at In Cloud Solutions went on to explain: “Out of the box ERP is attractive to business for its many advantages. It’s quick to implement – in around 14 weeks – and builds on the best practices of thousands of businesses who have gone before. The Business ByDesign customer wants the convenience of a good quality product without the huge expense and time of creating the bespoke version.”
Atkinson continued to note that he had not yet come across a customer who did not want some form of customisation even though they have selected a solution knowing that this is not bespoke. “This is OK up to a point – we have a fantastic team of skilled consultants and developers and we ‘could’ re-write the whole of SAP Business ByDesign for a customer if that is what they want. But this is not the point, although manipulation of the system doesn’t cause us any sleepless nights, it’s just not effective use of a system that was already globally compliant with best business practices to start with.”
Another vendor which has sought to tackle the problem of customisation head-on is Infor. The largest privately held enterprise software company in the world, has taken a very different approach to product development from its main rivals and has developed a suite of applications focussed on micro-verticals. In effect, the customisation happens at the core, rather than locally, and each customer simply switches on or off the discrete modules or functionality that it does or doesn’t require. Infor has invested a huge amount of capital in developing these products and boasts a team of more than 5000 developers who are focussed on building industry specific products which require zero customisation. Read more on Infor in my interview with CEO, Charles Phillips, elsewhere in ERP Today.
Phil Lewis, VP of consulting at Infor explained: “We are committed to this industry specific model that combats customisations. We have invested approximately $2.5 billion in product design and development over the last five years and delivered more than 475 new products, 1,870 integrations, and 20,700 industry features in our CloudSuite product line.
“The big question is of course how do you establish in the minds of customers, be they new or existing, the clear case for cloud and that the mass of customisations they have developed over years is no longer needed, or indeed actually helps their business.
“We have found that it is vital to demonstrate that this is not just a technology decision but a part of a transformation project. Read more on this in our Cloud Readiness feature elsewhere in ERP Today. This means we often have to challenge our customers, asking why they do something in a given way, especially when competitors or best practice is something else entirely. We have to gently show them that the customisations they love, don’t love them back.”
FS is also on a mission to eradicate the need for customisations by continuing to enhance their core offering and by providing unique capability and tooling to configure the solution to a business’ needs. Aaron Sleight, a senior project manager at IFS said: “This is an area we have focused on within IFS Field Service Management mobile application over recent years. IFS released extended configuration capability in workflow definition and scripting that resulted in more than 90 percent of our new mobile deployments being achieved through configuration only. Not a single line of core code modified or customised code written. Because of its success, we are extending this across IFS FSM with new scripting
capability to continue to eradicate customisations and maximise business value. This enhancement means it is truly an exciting time to invest in field service software.”
More on this in our next edition as we take a deeper look into the changing role of the SI and ask how they will survive in the new era of autonomous and automated migration capability and how they will compete with the new breed of integration tools that can accelerate cloud migration in timescales of weeks rather than years.
One thing is clear from all the comments – customisations, at least as we have known them – are a thing of the past and the new breed of SaaS applications should revolutionise the ERP implementation saga once and for all. By utilising best in class business processes, supported by SaaS applications and microservices, business can now face ERP implementations with a fresh perspective and look forward to using a solution that they will never need to upgrade again. Great news for ERP buyers but perhaps not such great news for the many System Integrators who have grown fat on the back of ERP projects which have historically required so much effort and resource.
Back to customisations and to conclude, I asked Martin Burden, director of business applications at Avanade for his top tips for businesses who are trying to find the balance between vanilla applications and the evolving needs of their business, he said: “The dreaded ‘C’ word – Customisation – is often brought up when I speak with clients who are looking to transform from old legacy to the new world. In many cases legacy business applications have been heavily customised over many years to get it to do specifically what the business wants – often significantly over-engineered and tuned to within an inch of its life.
“We suggest considering the following steps to assess whether customisations are necessary and urge management teams to evaluate the true value of the customisations they have developed over the years against the benefit of adopting standard applications.”
• Be pragmatic. Review the actual needs you have as a business and review how sensible it is to actually put into a business application. There could be business functions that are better served with different technology. Your ERP business application does not need to contain everything. A consultancy should be able to support your organisation and architect the optimal solution (which may contain multiple pieces of software).
• Be led by standard ways of working and processes that have already been defined for your organisations industry. Why? If you start from a blank piece of paper to analyse the business requirements you are more likely to re-engineer what you currently have (including customisations). This approach will focus minds on adoption of standard solutions and ways of working.
• Focus on business benefits case for change / customisation. If there is truly little business value that will make your organisation significantly better for it – why customise?
• Have clear and concise stakeholder management. Have clear internal guidelines to encourage the business to adopt off the shelf solutions (with the message coming down from the project sponsors). It’s important to have strong internal change management to communicate the objects and benefits of what is trying to be achieved.
• Look for pre-built solutions to fill gaps. In the Microsoft world, there is access to product extensions (an application store) where you can buy additional functionality to extend the scope of the core solution. Make the most of pre-build applications to fill any gaps raised. These solutions will have Microsoft roadmaps and upgrade cycles in line with Microsoft plug and play solutions.
• Finally, it goes without saying, select an ERP platform which provides standard functionality that meets your business function needs.
Burden concluded: “With every organisation I work with, I focus on how we support a business to adopt off the shelf solutions as much as possible and customisations should only be deployed as a last resort. Management of this has to be attacked in two ways; the first being the appetite and focus within the business to challenge existing ways of working to adopt standard solutions, and the second is defining the correct solution and architecture. This may embrace multiple technologies or solutions, to achieve the best possible outcome.”