ERP system customization: is it necessary or not?
What is the customization of an ERP system? It is a change in the built-in functions and capabilities of the software or the creation of new features. In this sense, there are two fairly common theories about ERP systems.
One says that it’s better not to customize – it means additional costs, it may repeat the imperfect requirements of certain users, and in the future, these additional newly created functions need to be supported, and transferred from one version of the ERP system to another. In short, it’s better to adapt your requirements to the standard capabilities of the system – it will be cheaper and more correct because the system was created by professionals and contains the best practices.
Another theory says that the best ERP system should be a designer with powerful capabilities to create any new functionality. They say that no one knows better than the company itself how its business processes should be built, so it is necessary to provide it with maximum customization options.
The different approaches
Of course, each theory has its logic. But let’s see what this topic looks like in real life and touch on the practical component.
Real life proves that even companies with relatively simple requirements and uncomplicated processes have individual features that may require customization of the ERP system. This could be a specific print form or report, or integration with other systems or services used by the company.
It is also true that companies that want to create a competitive advantage have their vision of how to build a particular business process in their company, and this also requires the ability to customize standard ERP system settings.
On the other hand, too simple systems with a small list of possible customizations require building a certain list of business process elements from scratch, which looks like an investment in developing something that would probably be more fashionable to get just for a license fee.
So we can agree with some aspects of each of the above requirements.
– It is great if an ERP system has many basic scenarios for implementing business processes that only require customization.
– At the same time, it’s great if the system has a customization tool that allows you to easily create new functions and elements. And these new developments can be easily transferred to new versions of the base platform.
A good example of a balanced ERP system is Microsoft Dynamics 365 Business Central. The basic platform has a set of all necessary modules to build the key processes of the company – financial accounting and reporting, financial consolidation for a group of companies, supply chain (procurement, warehouse, sales), production, project accounting and invoicing, treasury, and budgeting functions.
There are many customizations, for example
– You can use complex pricing and discounts or set prices manually;
– You can set up inventory planning and order creation automatically based on certain parameters, or you can buy manually;
– You can maintain a regular warehouse or add settings for storing addresses in cells;
– You can approve expenses in the chain of certain managers or not, and so on.
At the same time, the system architecture allows you to create applications within the system (extensions), which can contain code that customizes the system. All you need to do is connect the environment to Microsoft Visual Studio Code, which contains the Business Central programming language libraries.
In addition, you can view extensions created by certified Microsoft partners and published by Microsoft itself on the AppSource portal, an online store of sorts. For a subscription fee, you can easily install these applications in your environment and get new functionality. This can be easier and faster than building your own. For example, complex functionality for logistics companies and 3PL operators, specific furniture manufacturing, or applications that help recognize incoming documents from suppliers, etc. To date, there are more than 4000 applications on AppSource.
Microsoft Power Platform
Another way of “soft” customization is to use the low-code/no-code Microsoft Power Platform and the entire Microsoft 365 application stack. A great example from a real project is below.
One of our customers needed not only to customize Business Central for their industry and accounting needs but also to automate certain business processes to free up staff and optimize the use of ERP system licenses. For example, a task was implemented for the company’s HR department. The idea was to allow all employees to approve leave and provide feedback with a single click. All HR records are stored in Business Central. The employee does not need to have access to it. All they have to do is fill out a vacation form in Microsoft Forms. The approver in Microsoft Outlook receives an automatically generated email with the employee’s vacation request. After approval by the HR department, a leave order is automatically created in Business Central. The employee receives a letter notifying him or her of the approval or rejection of the leave. The main settings for this process were made using low code in the Microsoft Power Automate application.
How to choose the right way?
Finally, we would like to point out that customization should always be approached responsibly. Sometimes creating additional functionality is obvious, but it is always worth getting professional advice from experienced ERP system architects.
There are cases where inexperienced analysts may recommend creating a “new wheel” if they are not well versed in the variety of standard functionality. A similar problem can occur when a team implementing a new ERP system agrees to make customizations, where it is necessary to show and explain how to build a process within the standard functionality to avoid development costs.