Here’s a hard nut to crack: “I would love to adopt the base ERP functionality that my vendor solution is providing. I know this is the most efficient answer, but my business is different, and I can’t change how it works”.
Conflicting objectives can derail your plans for benefits if not dealt with correctly. It is critical to address this up-front in your ERP implementation, and that needs real focus, expertise and leadership.
How to strike the right balance for your ERP transformation objectives
There is no one-size-fits all answer here.
One initial test is to consider how transformational you want to be. Vendors have invested huge amounts of research and development into their products, which should therefore be market leading. If you are truly on a transformational journey, then why would you not leverage that?
However, there will be cases where a functional area is unique or highly differentiated, and it is business critical to keep it so. A good example we found of this was in the projects and assets area of a leading utilities company, with significant scale and regulatory requirements.
The answer is to do an initial scoping and assessment phase and from that determine and agree the right principles and strategy for how decisions will be managed regarding customization, tying back to the business case and the true drivers of business value.
Five key principles to get your ERP Transformation strategy right
- Hold to the base functionality if you can.
If the assessment shows limited gaps between the desired process and the standard, then go with a firm no customization strategy. If there are material gaps, and the business is happy to change the processes to fit then also go with no customization.
Also consider that customization is the long-standing enemy of cloud-based solutions. Customization will lead to serious constraints, for example as the core updates with regular releases, regression testing and fixes to previous customizations increase in effort every time and start to erode your business case.
- Consider your architecture design.
If the gaps are too large, then revisit the architectural scope. In one of our customers, we reduced the ERP package scope right down to the core, where the fit was good, and then integrated it to best-of-breed applications which had a better fit to the surrounding business requirements.
Another solution we used at a leading UK defence company was to bolster the middleware layer to provide a relief valve on the design, with the middleware doing all of the translation and file changes to preserve the integrity of the core ERP solution.
- Customize only where essential.
If some customization really is needed, then the answer is to establish clear criteria for what makes a customization an acceptable divergence from standard, for example contractual, regulatory or fiscal reporting needs. Embed this into the project lifecycle with really strict change control.
Another example of where we have seen the need for customization was at a leading UK retailer with significant integration to other systems and associated data mastering and management that could not be changed.
- Implement strong business design governance.
Governance is key. Once the strategy is chosen, the project governance needs to kick in via a business-side design authority. The worst situation is when a no-customization strategy is set, but weak governance means it doesn’t get enforced and through neglect you end up with a highly customized solution that no-one wants.
A really honest evaluation of business criticality needs to be undertaken. Every department often thinks it is different or special, but tying back to the clear criteria is mandatory.
At a leading UK defence Company, we set a no-customization strategy and then a very rigorous change process with a very high bar to review any requests for customization. This meant most teams self-elected not to request a change and to manage it as a business change; this was due to knowing the challenge would be so strong the customization would be rejected.
- Ensure strong leadership and effective business change activity.
This is where your business sponsor earns their money. Inspirational leadership is required to continually emphasize the importance of the programme, with a clearly defined vision, reiterated through a regular drumbeat of communication.
Managing expectations is critical when it comes to the principle of minimizing customization. Existing ways of working need to be challenged hard. Nominate Change Champions to build team excitement for the new solution. Seek input to the key messages that need to be cascaded to build enthusiasm, always focusing on the why and the benefits, for example reduction in manual workarounds, faster processing time, enabling a data driven organization with real-time insights and enhanced reporting.
Creating a culture of tracking business adoption and driving continuous improvement is critical to ensuring the change sticks.
Real change only happens if you engage with your organization in the right way. Yes, ERP transformation is tough, and there are real dilemmas to overcome, but provide the right guidance, leadership and passion, and you will make a real difference to your organization and your people.