TxM 023 Section 2.6 The case for Strategic Customization Created by James on 7/1/2013 1:40:12 PM
In the context of ERP, customization tends to be a swear word, however, in my experience there ARE situations where customization IS justified.
I define this customization as "Strategic Customization" it is limited scope, highly focussed precision customization of small components that exploit the Strategic Engineered Precision Taxonomies (SEPT) to create highly valuable functionality at a fraction of the cost of alternative courses of action and which generate very significant business gain relating to the essence of the business and how it thrives.
I want to refer specifically to the following image that I have used regularly on my courses and in Pulse Measurement presentations to Executive Committees in recent years.
The vertical scale represents strategic value, support for high level, high value decision making, return on investment, executive satisfaction and excitement – any measure which reflects a real satisfaction with the investment.
1. The left-hand scale -- common practice
The left hand scale of 0 to 10 represents the standards that I typically see applied to ERP implementations.
It is characterized by high levels of executive frustration, inability to get answers when they are needed or at all, high system operating costs – senior consultants who make a living hacking things to keep the system going, high levels of customization, high levels of things done outside the system, no standards, etc.
This scale of mediocrity results from the lack of a high level strategic view in the original implementation – support for the essence of the business and how it thrives, the lack of rigour in the implementation (lack of an "engineering approach"), all the things I talk about at my briefings and courses.
The most fundamental weakness of these implementations is the lack of what I term strategic engineered precision configuration built around strategic engineered precision taxonomies which is the essence of the middle scale.
2. The middle scale – taxonomy excellence
The middle, green, scale represents what is made possible with outstanding taxonomies – this includes things like “we have so much high quality management information it is fantastic”, “the audit fees have been slashed by 75%”, "we are operating with less staff" / "getting much more done with the same staff", "staff at all levels are strategically aligned", "the entire enterprise is running leaner and much more efficiently AND effectively", "this is one of the best investments we have ever made", "we should have done this years ago", etc.
This outcome results from strategic engineered precision configuration built on strategic engineered precision taxonomies.
Even a mediocre implementation on this scale is likely to produce a better business outcome than an excellent implementation on the left-hand scale.
3. The right-hand scale – strategic customization built on taxonomy excellence
The right hand, blue, scale represents what is possible if we add “strategic customization” to the mix building on opportunities created by the taxonomies and precision configuration.
It is vital to stress that "strategic customization" relates to customization that supports "the essence of the business and how it thrives" – customization that will not do this is NOT strategic and should be avoided.
Strategic customization relates to small pieces of very clever software or very clever system modification that ONLY works if there are precision taxonomies in place and well maintained.
Strategic customization allows the system to be effortlessly tailored to the operation of the business for limited expenditure in ways that most implementers think are impossible.
An example of strategic customization was a case where an investment of R250,000 in custom software allowed standard functionality in the ERP to be used to budget and project manage marketing across thousands of products and thirty cost bins for a distribution and brand management company that allowed that company to secure the business of one of the top brands in the world resulting in a nearly 15% increase in value of brands managed – in other words it supported strategic growth. It also delivered high levels of satisfaction to owners of existing brands that were being managed.
The sort of customization that characterises most ERP and Data Warehouse implementations is so far removed from this that it is vital that you do not let that bad experience colour thinking to resist strategic customization.
Strategic customization involves the investment of a small amount of time and money to fine tune an ERP system that has cost hundreds of millions of dollars to develop to fit the target business far more closely and more effectively through primarily use of standard functionality.
The return on investment on really valid strategic customization is huge and it is only possible with precision taxonomies underpinning it.
This is where the opportunity lies for any ERP investment to produce massive return on investment measured in terms of strategic competitiveness in the market place, the ability to run a leaner and more effective and efficient business, undertake strategic acquisitions quickly and efficiently and deliver a return on investment for the ERP implementation that is visible and understood by all in your organization without any calculation.
If this is all done with an outstanding implementation that conforms to the standards set out elsewhere in this document then the value to your organization will be far beyond anything that current paradigms indicate is possible.
Conclusion
I have total certainty that strategic customization is the cherry on the top of any ERP implementation and will deliver the highest return and you should all do what you need to do to ensure that the project executive and then the business are on-board with the value of doing this.
In general, the investment in strategic customization is likely to be small relative to the total cost of any significant ERP related project cost.
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