Why You Should Avoid Customized Software
Why should you avoid customized software (bespoke software or tailor-made software) instead of adopting an off-the-shelf ERP solution?
In the last 20 years, I often came across companies looking for an off-the-shelf ERP solution to replace their customized software. All those companies often faced with the following issues:
- The software was buggy even after a long time of usage.
- The vendor or the programmer no longer supports the software.
- They could not upgrade, or it’s too expensive to upgrade the old software.
- They finally realized that the customized software could not perform to their expectation.
Those companies ultimately paid a high price for customized software with much fewer functionalities than off-the-shelf ERP solutions.
Why Companies Engaged in Customized Software
So, why these companies engage in customized software in the first place?
- Users want software that performs precisely to their requirements.
- Management believes that their business process is unique.
- They initially believe that customized software is cheaper.
The Root Cause of the Problem
The root cause of the problem is human.
Users who think that their requirement is unique believe that they can have customized software that they can proudly own.
And you have programmers who believe that they can customize anything without fully understand the consequences of accounting and business practices.
Issues Faced with Customized Software
Customized software programmers often claim that they can deliver projects faster and cheaper. But what are the realities?
How can it cost lesser to reinvent a wheel than purchasing an off-the-shelf wheel?
For customized software, one customer pays the total R&D cost. In comparison, hundreds of thousands of customers share the R&D cost of an off-the-shelf ERP solution, such as Dynamics 365 Business Central.
So, off-the-shelf ERP solutions are much cheaper for the functionalities that it provides. It can only be cheaper when its functionalities are much fewer than off-the-shelf ERP solutions.
One of the challenges of software implementation is the management of user expectations.
I often jokingly told my customers that everything is possible in IT. If you have unlimited time and money, you can even make your computer flies to Mars. Unfortunately, we don’t have unlimited money and time.
It takes months to implement an off-the-shelf ERP solution. And that is base on consulting work to configure from a tested base of the ERP software. Customized software with the same functionalities will need programming and testing processes that will take a much longer time.
The risks of embarking on a customized software will be much higher than an off-the-shelf ERP solution. These risks included low stability of the system, the lack of continuity, and the likelihood that you will be held ransom by the vendor.
The standard functionalities of an off-the-shelf ERP solution often tested in pilot sites before released to other customers. And it would already be used by a few customers and completed some bug fixes, if any, before the customers in Singapore purchase it.
Customized software has to rush through a tight project schedule, and it will not be able to have the same vigorous testing compared to an off-the-shelf ERP solution. That’s why customized software will have more bugs. And if the bugs are discovered after live data has been captured in the software, reversing the error will be very challenging.
Off-the-shelf ERPs enhance their functionalities through properly designed software architecture. The software architecture has been tested and improved over a long period. And it provides an upgrade path to add on features in the future.
Programmers usually do not design Customized software with upgrading in mind. Programming of upgradable architecture to allow future upgrade is time-consuming and require a lot more know-how. Customized software does not have the time and resources to do that.
Held Ransom by Vendor
Customized software is often the work of very few programmers. There is a risk of knowledge lost when they left the company. So, if you need their support, there is no alternative to find cheaper options.
Off-the-shelf ERP solutions are standard products with a proper user manual. There will be many consultants who can support it. So, you will have a large pool of support resources and more likely able to change your implementation and support vendor if needed.
Quality of Solution
Some people believe that their business is so unique that there is no off-the-shelf solution that can meet their requirements. Their beliefs may be right 30 to 40 years ago. Now, they can choose from many sophisticated and proven off-the-shelf ERP solutions.
Even a customized e-Commerce site usually starts from a template and not from ground zero. The programmer will utilize the already built-in content management system and payment gateway without the need to rebuild them.
One problem that I often see in customized software is that the programmer replicates the existing manual process without understanding the consequences in potential business scenarios. They often lack accounting knowledge and did not consider costing into their design.
Off-the-shelf ERP solutions incorporate proven best practices in their process. It is perhaps important not to assume that your existing business process is the best. ERP solutions allow some flexibility for the consultant to configure the process base on users’ needs. It is advisable to try to use these processes instead of reinventing your own. At least not until you had used the ERP for some time and acquired a better understanding of the software.
When Should You Engage Customized Software
There is no ERP that can cater to every unique requirement. So, there may be rare cases that your best option is to customize a software from the ground up.
Regardless of the business terms used. Every company performs selling, purchasing of inventory, or services. Companies will need to make payment and receive payment with proper accounting. Some will have more complex conversion process such as manufacturing or project.
So, the company’s business processes are usually not that unique, after all.
The majority of the companies will be able to adopt these core business processes in the off-the-shelf ERP solution with some modifications.
Therefore, companies should at least consider adopting an ERP closest to their needs and do the customization from there. It is easier to build from a reliable business process foundation of the ERP than trying to reinvent the wheel.
The benefits of off-the-shelf ERP solutions
over customized software are clear. The reason that you should avoid customized software now is more evident than before. Companies are just spoilt for choice of ERP solutions as compared to many years ago.
The chances that your company is so unique and only customized software can meet your requirement is low.
Why do you want to pay more for less functionality?
Why do you need to reinvent the wheel when there are many reasonable ERP solutions available for purchase?
If you like to discuss further and understand more about ERP implementation, please do not hesitate to contact us.
About the Author
Raymond Yap is a veteran in ERP who implemented the world first Cloud Enterprise Resource Planning (ERP) for his manufacturing company in 1996. It was a Singapore government-sponsored ERP program called “MRP Online” to help Singapore SME towards digitization.
Since then, he has spent his career in the ERP industry as a consultant, sales, and ERP company management.
Raymond also taught at Nanyang Polytechnics, Temasek Polytechnics, and other Universities on topics related to manufacturing, ERP, and IT. He also conducted public ERP seminars in Singapore and Mauritius about the evaluation and implementation of ERP Solutions.
Raymond accumulated rich knowledge and experience on ERP and its application to business operations both as an end-user and vendor. He has dealt with hundreds of companies in Singapore and the region on ERP projects. His experience allows him to share the practical approach to ERP selection, implementation, and maximizing the ROI of ERP Projects.