In a recent speech to some ERP customers, I was making the point that when implementing business software – the urge to customize is an opportunity. Not an opportunity to turn your company into a software development house, but an opportunity to improve your business.
Two points. 1) On the assumption that your software vendor has some credibility in the industry your in, say, manufacturing iPad cases – and the vendor has hundreds of iPad case manufacturers in it’s client portfolio – then there’s a pretty good chance that however the software works out of the box is because it was designed to meet the requirements of these previous hundreds of clients. And if your requirements are different – a light should go off. A bell should ring. Alarms should sound. A robot voice should cry out “Danger Will Robinson”. (dated reference – extra credit if you can source it.)
The point is, you’re swimming upstream and you need to understand why. Which brings us to point #2.
There are only two reasons to operate differently, conventional wisdom and competitive advantage.
Conventional wisdom is the most dangerous.
You may have heard of the story of the woman cutting the end off a ham to put it in the oven for holiday dinner. The niece asks “Why?” and the answer is, “Because that’s the way my mother taught me.” And in this little holiday scenario the mother is in the next room, so they go ask the mother why she taught the ends of hams should be cut off – and again, the mother says “That’s how your grandmother always did it.” This being a big holiday, Granny is also in attendance so they ask her – and her answer is – “Back in the 30’s we had such a small oven a whole ham wouldn’t fit, so I had to cut it down.”
So uncovering the root cause of “that’s how we’ve always done it around here” is key – and the germ of truth of the ham story affects many businesses today. The way they do business is sometimes because of limitations in previous software forced a workaround – and they’ve been doing the workaround for so long, it seems like just the best way to operate.
Competitive Advantage, however, is different. Innovative, creative, value adding ways of doing business often justify customization – but realizing the difference is key:
- Why do we do it this way?
- Do our customers value this change?
- What’s it worth?
- Do our customers value it’s worth?
- How much do our customers value it?
So if it’s a key differentiator, one that’s bringing you business, cutting your customer churn rate, improving bottom line profits – then full speed ahead, customize like a teen geek programmer up all night on Red Bull – and if you know it’s bringing in a couple of million – go for it – spend half a million to develop the system you’ll use for the next 5-7 years at least.
But make sure before you customize software it’s not because “that’s the way we do things around here.’
Ran into a couple of articles that said the same thing differently – one – a Deloitte article titled The End of the Death of ERP stated:
Selectively innovate. Determine which areas of the business provide important competitive differentiation, as these are the spaces in which to innovate. Accept strategic standardization for the remaining operational disciplines, taking advantage of multi-tenant solutions or out-of-the-box, standard options wherever possible.
And after all this, you’re not sure if that customization of the new ERP system is a good idea, we can help you analyze the ROI – everything from customer marketing surveys through internal system analysis
Gene Hammons, MBA can be reached at email@example.com