Blog post

“How Midsize Enterprise CIOs Can Reduce Their ERP Customization” by Alexander Buschek

By Deborah Wilson | May 18, 2020 | 1 Comment

When I was a CIO in midsize enterprises before I joined
Gartner a little more than a year ago, I had to deal with a highly customized
ERP system. Users insisted on customizations that basically only prevented them
from doing one more click. The vendor (I don’t tell you who it was, because the
pattern is / was the same over the entire industry) was more than happy to provide
any customization our users thought of. And don’t get me wrong: this was hard
coded. DLLs (if you remember those) were altered (re-compiled) and after almost
a decade we accumulated close to 150 big and small customizations.

But why would that hurt us? Well, we basically weren’t able
to update our ERP system to the latest version without immense investment. It
was a Catch-22. The new version could eliminate the customization but due to
the customization we could not upgrade to the latest version.

In my conversations as a Gartner analyst with CIOs in
midsize organizations, often with IT teams of less than 20 people, all
versatilists, I learned that this is still the case in many organizations.
However, with the need for business model changes, implementing and integrating
latest technology can fail if the ERP system has been customized to an extent
where it cannot move anymore.

Quite an obstacle to overcome. Moki Dugway, UT Rt 261, Picture: Alexander Buschek

So, what did I do to move away from this massive
customization? As you may guess, talking to users and super users and convince
them of the benefits of reducing customization resulted in two reactions: when
they were not affected they were fine with that. But if they were affected they
would heavily oppose the plan. “I cannot work without this customization and IT
will be responsible if we lose orders [don’t get our work done | upset the
customer you get the picture] as a result!” It was even difficult to explain
the overall result for the entire organization. Silo-thinking is distinct in
family owned businesses in manufacturing.

I was lucky, though. Finance desperately needed a patch in
the software. There were more than 30 customizations involved. That meant that
before we were able to deploy the patch more than 30 customizations needed to
be scrutinized, adapted and tested. Since we also needed specialists from the
vendor it took two weeks until we were able to install the patch with the CFO
knocking on my door every second day.

I prepared a presentation for our monthly ERP super-user
meeting and made the case. Almost everyone was affected on one way or another,
at least for testing. So the mood changed. Now I had a clear case and almost
everyone was eager to support the new initiative: “Clean Up ERP Customization”.

Made it! Picture: Alexander Buschek

We then identified all customizations, clustered them in
“easy to remove”, “medium effort” and “high effort”. We then made a plan to
eliminate 90% of all customizations within the next 12 months. Quire a few
customizations were redone as “extensions” that would not affect the updating

After that was achieved we updated to the latest version of
the system. On this update we spent only 20% of what we had to spend on the
last update with all the customizations in place. As a result we became more
agile and flexible using latest functionalities of the ERP system.

What is your approach? Is your organization faced with
similar challenges? Love to hear your opinion on that.

Comments are closed

1 Comment

  • Mark Smith says:

    This is well articulated and presents the challenge of balancing the weight of customisations versus upgrade-for-functionality in an effective way. Although not an end-user, we would look to add to the debate that we are seeing an increase in market demand for Independent ERP maintenance, because of the ability to support customised ERP estates that see the disruption of an upgrade as problematic, in many cases because the added functional value rarely exists against the cost-to-upgrade. That is what our clients tell us. Can we assume that this increase in demand for Independent ERP maintenance is a push-back on an upgrade option? Or is it giving breathing space for a Company that needs time to consider options ahead of any expansion to the Cloud? We know that part of the Cloud proposition is about less customisations and more standardised processes. It sounds great on paper but, in reality, there is much effort and resource required to make that jump.

    Mark Smith