In an ever-increasing competitive environment, businesses need to keep ahead of the competition. Central to this is a vigorous drive for improved productivity, cost-effectiveness and increased customer satisfaction. A key tool to achieving these goals is transformation through technology. Implementing Enterprise Resource Planning (ERPs) to unify business processes into a single system. Notably, standardising and enforcing processes across multiple divisions and locations will accelerate these goals.
iTrain has been supporting Oracle and SAP ERP implementations since 2001 across multiple sectors and global regions. We work to support our client’s choices and are agnostic both in technology and approach.
Planning and Customization
In planning an ERP implementation or implementing an ERP System, organisations are often faced with the decision of customising or adapting their business processes to the standard best practices. Which are embedded in the ERP system they have opted for. The question of whether an ERP system should be tailored to fit specific business requirements. Or whether businesses should adapt their business processes to align with standard ERP best practices is a critical consideration.
Customization during implementation requires building new functionalities. as well as Modifying existing ERP functionalities, building new reports and workflows, building interfaces to other existing systems, or a combination of one of these. Choosing to move away from the functionality supplied by the vendor.
Adoption
Adoption, on the other hand, fits the existing business processes with the available ERP standard best practices.
These approaches, at the end of the continuum in an ERP Implementation, have their own pros and cons. This article discusses the case for each approach. Exploring the up and down sizes ahead of discussing a balance between the two approaches based on our experience with two market-leading ERP solutions: Oracle Fusion Cloud and SAP S/4 HANA.
Customising to Fit Business Requirements
We first explore customization options to fit the unique needs of a business. Every organisation has distinct processes. Namely its workflows, reporting and other industry-specific requirements that may not be fully addressed by the standard solutions – central to this approach. Customization allows organisations to tailor the ERP system to meet these specific needs. Such as integrating with unique legacy systems and workflows, reporting or accommodating specialised business processes and reporting requirements or fulfilling niche market demands.
Pros
- Better Fit: Customizing the ERP system can provide a closer fit to the business’s existing or specific needs; this can reduce change, in turn leading to improved efficiency and effectiveness.
- Competitive Advantage: By tailoring the system to their unique processes, organizations can gain a competitive edge, as the ERP system becomes a bespoke tool that aligns precisely with their strategic objectives.
- Increased Flexibility: Customized solutions can offer greater flexibility in how the system handles complex or unique business scenarios. These might be crucial for industries with specific regulatory or operational requirements.
Cons
- Cost: Customization can significantly increase the cost of ERP implementation. It often involves extensive development work and specialized expertise.
- Complexity: These extensive developments can lead to increased complexity in system maintenance and upgrades. Both Fusion and S/4 Hana have compulsory security updates (patching). Your organization will be responsible for any customization conflicts. (This may also be de-risked to your implementation partner.)
- Integration Issues: Custom solutions may create integration challenges with other systems or future software upgrades. This can potentially lead to long-term technical debt.
- Resource Intensive: Customization often requires extensive development and testing time and ongoing support and development resources. Which can strain internal IT teams and budgets.
Customizing SAP and Oracle
As mentioned above, patching in ERP systems plays a critical role in the customization. However, this customization process can have significant implications. For instance, high levels of customization can lead to increased maintenance challenges. As future patches or updates from the ERP vendor might conflict with the custom code. Leading to system instability or increased support costs. Additionally, while customization can provide true organizational benefits by better aligning the system with business processes. It also requires careful consideration to avoid long-term negative impacts on system quality and maintainability.
Oracle and SAP both release patches regularly to address security vulnerabilities, improve performance, and update functionalities within their ERP systems.
Oracle releases patches quarterly as part of its Critical Patch Updates (CPUs). These patches typically include security updates, fixes for known issues, and improvements across various Oracle products. This also includes Oracle Database, Oracle Middleware, and applications within the Oracle Cloud suite. Oracle strongly recommends applying these patches promptly to maintain the security and stability of its systems.
SAP also follows a quarterly release schedule for its patches, often termed “Support Packages” or “Support Package Stacks” (SPS). In addition, SAP releases feature updates and innovations on a biannual basis, typically in May and November. These updates are designed to ensure that SAP systems remain compliant with new regulations, secure, and aligned with the latest technological advancements.
Patching and who owns the risk of customization conflict should be major considerations.
Finding the Balance
The choice between customizing the ERP system or aligning business processes with the standard ERP practices is not always clear-cut. Many organizations find that a hybrid approach offers the best solution, balancing customization with standardization. This approach involves implementing core ERP functionalities based on best practices while allowing for selective customizations to address critical or unique business requirements.
Considerations for a Balanced Approach:
- Strategic Objectives: Organizations should align their ERP strategy with their long-term strategic goals. Considering whether the benefits of customization outweigh the costs or if standardization offers a more practical solution.
- Industry Requirements: Industry-specific needs and regulations may dictate the extent of customization required, as some sectors have unique demands that standard ERP systems cannot fully address. You will already know about sector-specific solutions from both Oracle and SAP.
- Areas for Customization: Areas for customization should be identified in advance. These could include industry-specific or organisation-specific business requirements. These might include integrations, workflows and regulatory and operational forms and reports.
- “We’ve always done it this way” needs to be banned!
- Areas for Standardization: Areas that fit the standard best practices need to be identified. These could include the core businesses that remain the same across industries.
- Change Management: Effective change management and end-user enablement practices are essential for ensuring smooth transitions. Whether customizing the ERP system or adapting business processes.
Is it right for you?
Whether to customize an ERP system to fit business requirements or to adapt business processes to align with ERP best practices is a complex decision that depends on multiple factors. Particularly cost, complexity, strategic goals, and industry and organizational demands. A thoughtful approach that considers both the benefits and challenges of each option and potentially adopts a hybrid solution. Which can help organizations achieve an ERP implementation that enhances operational efficiency and supports long-term success.
Whichever route you elect to adopt, iTrain has the experience, expertise and flexibility to support your business needs. We have delivered training and change to over 100 ERP programmes. Each programme drawing on our experience yet approached as a unique project with unique needs.
We are able to support you wherever you are in the project lifecycle and welcome a discussion to expand on this paper further or to discuss your specific needs and objectives.
Contact iTrain today to discuss how we can support your strategy.