Advantages and Disadvantages of a Custom ERP
Tailor-made management for your business
As we have seen in previous articles, ERP systems are at the heart of the software used to manage millions of companies, software that allows companies to manage many areas of their daily operations, from accounting and finance to human resources, purchasing, production and logistics. When implementing a customized ERP, all these possibilities are multiplied by adjusting each parameter according to the specific needs of the organization.
In this article we will delve into what are the main advantages, as well as some disadvantages of having a customized ERP versus a standard ERP.
Main benefits of a customized ERP
The main purpose of an ERP system is to help corporate administration and management, thus contributing to business growth. By grouping all the records and data of the sectors in one place, the ERP system streamlines through automation all the processes, until then manual, which used to take much more time.
Custom ERP Screenshot
Thus, it ensures greater flexibility of the team and provides a plus in information security, giving a much more comprehensive control of everything that happens in the company. If, in addition, the ERP is implemented in a customized way according to the specific needs of our business, we can also add many more advantages.
- Optimization of management processes
The effectiveness and efficiency of an organization improve exponentially with the use of a customized ERP system, because in addition to being a single tool that is responsible for homogenizing and maintaining consistency with the data, it focuses more precisely where it is most relevant. This helps the interaction between the different areas of the company. - Improves the decision-making process
By customizing the ERP, the centralization of information, as well as the increase in its quality and above all its availability in real time, speed up and improve the response times of an organization extraordinarily. - Information security
Apart from the quality and availability of information, we must take into account that in a customized ERP system, protected and restricted access by user facilitates any maintenance and backup task. - Modularity and scalability
A good ERP solution should meet the current needs of the organization and never be a brake on its growth, so being customized we will be sure that we have additional modules to be incorporated at any time they are needed. - Adaptation to the needs
Prior to the ERP configuration, each organization should carry out a previous consultancy in which their requirements are defined. By customizing it we ensure that it responds and adjusts in detail to each of our needs. - Greater control and traceability
Knowing exactly what information is relevant makes it easier to perform an exhaustive follow-up of data, processes or documents. In addition, for greater security, any interaction in an ERP system is always traced and recorded. - Task automation
Reports, communications, follow-ups, claims, etc. (periodic or repetitive tasks) can be automated in order to minimize the use of resources and focus on more productive tasks.
The increase in efficiency that an organization achieves thanks to a customized ERP, the reduction of errors and the reduction of tasks, allow the organization to reduce its business costs while gaining in competitiveness.
As we can see, having a customized ERP system has many advantages, but it is also true that it does not guarantee the total success of the company. Organizational culture, knowing where and how to involve personnel and foreseeing the changes that the organization will undoubtedly undergo when using this new management system, are essential elements for the completion of the implementation.
Disadvantages of Investing in ERP Customization
Below we will list some of the disadvantages that may deter an organization from implementing a customized ERP system.
ERP General
- Overall system costs
The most common drawback that may deter some organizations from using a customized ERP system is usually the cost of the ERP software. This is due to the level of customization that an ERP system requires, although it is true that the higher the level of customization, the higher the price. While it is true that SMEs can avoid these upfront costs with a cloud solution, which is typically billed on a monthly basis, the initial cost of the software alone can be prohibitively expensive, especially for small and medium-sized businesses. This becomes much more apparent as costs increase with customization. - Cost of implementation and maintenance
While customized software is already a significant initial investment, the process of implementing it can be even more expensive (almost four times as much). Additional IT profiles are usually required, as well as ERP consultants or even software training specialists, and it may also be necessary to invest in new hardware that adequately supports the ERP system, such as compatible servers and mobile devices. - Customization process
As we have seen above, customization is one of the most advantageous aspects of ERP software, but keep in mind that you can easily lose control. Customizing an ERP system requires time, effort, expertise and money, but often organizations underestimate the amount of resources required and either do not finish the customization process or it ends up exceeding the budget. - Complexity
Custom ERP systems provide numerous capabilities and concrete enhancements, but that also means that the software can become complex and difficult to use. Some organizations can find themselves with systems that are too large and complex for their processes, which often results in a poor return on investment. - Resistance to information traffic
ERP systems can be compromised in their effectiveness if there is resistance to sharing information between business units or departments. Due to the strong changes in the work culture involved in the implementation of a powerful ERP system, it is possible that there may be staff that is untrained or uninterested in using the system. - Late benefits
The benefits for an organization of having an ERP system are not immediately visible after implementing the software; they will become evident as time goes by and the system has been running for some time. As costs increase due to customization, the benefits, although they may be higher in the long term, will take longer to arrive. - Workforce Capability
The completion of the implementation ultimately depends on the capability, skill and desire of the workforce. This certainly involves education and training to make the system work properly.
In conclusion, a well-implemented custom ERP system can be of great use in optimizing an organization’s work processes and decision making while saving time and resources.
Although its high initial cost compared to a standard ERP can be a brake (especially in small and medium-sized companies), in those organizations with more complex flows and processes, the commitment to the implementation of a customized ERP brings a series of improvements that make its adoption highly recommended in the long term.