Software implementation project teams have long advocated ‘vanilla’ as the preferred flavor for packaged software implementations. But what often happens is that the organization wants hot fudge and sprinkles – or worse yet, requires multiple flavors like Neapolitan or Rocky Road to satisfy their unique business requirements. For core transactional systems, there are very few pure vanilla implementations because business requirements, unlike ice cream, are rarely simple choices. Most business requirements are a blend (or the color of your hot fudge sundae after you have mixed the fudge and the ice cream together) which requires analysis and trade-offs. The more complex the business requirement, the longer the list of potential customizations. It’s like walking into a Ben and Jerry’s superstore.
Customizing packaged software is an expectation of implementation – and anything but vanilla. After all, it is called ‘packaged’ software because it has been designed to meet most requirements across businesses functions or industries. According to the 2011 Panorama Consulting Group ERP Report, only 15%of companies did not customize their ERP software while the remaining 85%chose some level of customization: 37% chose minor customization (1-10% of code modified); 33% had ‘some’ customization (11-25% of code modified); and 15% reported significant or extremely customized solutions (> 25% of code modified).
However, when it comes to analyzing customizations, most project teams do not conduct a traditional ROI analysis. Most rely on a more subjective cost / benefit analysis that focuses on the impact to the project instead of return on investment. Typically, this approach has been sufficient because there is a portion of the implementation budget allocated towards customizations and the ratio of customization costs to overall costs is small.
Although this approach has historically been sufficient for the project team, it may not be in the best long term interest of the organization. At the end of the day, as many as 58% of organizations fail to realize more than 50% of the anticipated benefits from their enterprise software applications.2 In addition, as organizations move to the next generation of business software delivered as a service or through a business process outsourcer, the cost of customizations will become more apparent as customization has a more direct impact on implementation and support costs.
To assist in the software customization decision making process, this White Paper examines:
• The traditional processes for evaluating software customizations
• How to calculate true costs and ROI for customization
• A framework to assist in software customization analysis