Eric Kimberling over at Panorama Consulting had some interesting things to say recently about the necessity and perils of customizing an ERP system.
As Kimberling explains, “no customization” is a common mantra surrounding ERP implementation.
Mantra or not, it is hard to avoid. He writes:
As utopian as a zero-customization ERP implementation may sound, the unfortunate fact is that most organizations customize their ERP systems – at least to some degree. In fact, our 2013 ERP Report on organizational change and business process management shows that 90% of ERP systems have at least minor customization. So while most executives want to manage their implementations by simply using basic configuration, setup and personalization of the software, an overwhelming majority also end up making fundamental changes to the source code.
That put me in mind of something NetSuite CEO Zach Nelson said during his keynote address at SuiteWorld 2013 when reflecting on the early days of the NetSuite system.
“What Evan [Goldberg NetSuite founder and CTO] and the team discovered was, now every customer was going to want to customize the system,” he said. “We built it into the second version of NetSuite -- the ability not for us to customize the product but for customers to customize the product. It didn’t require Evan, the world’s greatest programmer to make changes. In fact, that’s what Evan didn’t want. He knew he would be inundated by 16,000 customers asking for this, that and the other thing. So we built this incredible architecture to allow our customers to change how the system operated in simple ways and in very deep ways.”
As Nelson explained, the NetSuite customization platform evolved into the SuiteCloud development platform. Customizations, and the SuiteApps built by partners, run in the NetSuite data center, upgrade when NetSuite uprades, “as if Evan and the team built them themselves,” Nelson said. And that answers a central problem with ERP customization that Kimberling addresses in his post. He writes:
Upgrades become more difficult since the code often needs to be rewritten to support newer versions of the software, which often leads organizations to defer upgrades – sometimes indefinitely. When we look at trends of our newer clients, most are looking to replace their old ERP systems largely because they’ve customized the software so much that they can’t (or aren’t willing) to take advantage of newer versions of the software because of the risks associated with doing so.
There is another issue with customizing ERP, however. Partner products built atop an ERP platform face many of the same issues that customizations created by customers face when it comes to upgrades. NetSuite now has more than 23,000 SuiteApps installed today and customers, on average, are running two SuiteApps per instance of NetSuite, Nelson said.
Ensuring partner apps work not only with the core ERP system as it evolves, but with one another is a core consideration for both customers and partners. NetSuite’s answer is the Built for NetSuite program.
“It’s an evolution of our SuiteCloud Development Platform,” Nelson said during his keynote address. “Today we’re announcing Built for NetSuite, a new set of standards, verification, a new set of best practices that enable us to ensure that your apps you’re building play well together in your NetSuite environment, a very important next step to enabling the platform as service model to work -- ensuring all these applications being developed around the globe play well together.”
So, given Kimberling’s assertion:
As much of a no-brainer that “no customization” may seem given the above two points, the main challenge is that no matter how good any given ERP software may be, it is not going to address 100% of any organization’s needs.
Then NetSuite’s recent announcement removes some of the problems of customizing ERP for both customers and partners. As Nelson said, “You can’t talk about NetSuite without talking about the customization platform. I believe it’s why we win.”
-Barney Beal, Content Development Writer/Editor at NetSuite