ERP Customization – What You Should Know

Hi Everyone,

The purpose of this article is to discuss ERP customization and its impact on your project. I read over and over how people warn about ERP customization, but the reality is that ERP is the one application that everyone customizes because of (a) the unique needs of any given organization and (b) the wide-spread use of ERP within an organization. ERP supports almost the entire company, and you need to be efficient in what you do.

The question is: “What is an ERP project manager to do in face of the inevitable need to customize when so many people are saying – don’t do it!!”

What to Do

A better question is “when do ERP customizations make sense?” The simple answer is:

• When you automate manual steps. Here is an example using the iDempiere’s Physical Inventory to automate common manufacturing solutions.
• When you specialize views unique to how you see business.
• When you want to inform a user about consequences. This also known as validation.

An equally important question is “When do you NOT customize?” The simple answer is:

• When you are modifying a core or critical process that will break with each upgrade. Keep in mind that bolting on new processes is an easier and cheaper task than modifying existing ones.
• When you by-pass existing safe guards. One way to ensure you do not bypass safe guards is to ensure you can always perform a process manually. You should be able to unwind any given process manually as well. If your customization ‘paints you into a corner’ you should re-consider your solution.

Take your time when customizing your ERP. Do not rush into the process. As a project manager, get comfortable with telling the group that “we plan to automate that, but not right now!” You need to understand how the ERP ‘thinks’ before you change it.

Another way to view this concept is with the following thoughts:

• Your ERP selection criteria should seriously consider an ERP’s ability to be gracefully customized. After all, you want your ERP to adapt to changes in business as quickly as you can.
• Your ERP go-live should minimally depend on your planned customizations. It is hard enough to go-live with learning the new system, training your users on the new system, and ensuring the system and the users behave exactly as you plan every time in every scenario. Once you go-live, you will have plenty of time to make incremental enhancements.

The Flood of Ideas

In my experience, there are many good ideas discussed by highly intelligent and effective people during an ERP go-live process. There exists a strong catalyst to discuss ideal processes. You are no longer bound by legacy systems. You have the majority of the decision makers in a room proposing decisions. As a project manager, “How do you keep tabs on your customizations and ensure you are only working on the changes that matter?”

The answer is that you constantly document ideas and focus on the low hanging fruit (high impact and low effort changes). Any given change request or idea should have two attributes attached to it:

1. Business Impact – is the value to the organization. High impact changes enable you to do something that you cannot do otherwise. High impact changes also create a discontinuous increase in productivity. An example of a high impact change includes removing 22 hours (or 22 percent) from the monthly period close process.
2. Effort Requirement – is the amount of time required to understand, implement, train and deploy a change.

The Gary Wycoff 4X4 Matrix – Simple Change Management Tracking

I am a big fan of the Gary Wycoff 4×4 matrix to help you identify and prioritize high impact and low effort customizations. With the GW4x4, you assign a business impact ranging from 4 to 1 where 4 is the greatest or most positive impact. You assign an effort requirement of 4 to 1 where 4 represents the least effort. Remember this: 4 is the easiest. Here is the breakdown:

• Business Impact
  • 4: cannot do my job otherwise
  • 3: marks a significant increase in productivity
  • 2: helps but I can do my job otherwise
  • 1: would be nice
• Effort Requirement
  • 4: 4 hours of less
  • 3: 8 hours or less
  • 2: 16 hours or less
  • 1: 32 hours or less

A change request with a 4 business impact and a 4 effort requirement (4×4) deserves near immediate action. As a project manager, you hope that no one ever touches a change request with a 1 business impact and a 1 effort requirement (1×1).

ACTION: As a group, decide the threshold for what gets implemented before go-live. A common rule of thumb is to put everything better than a 3×3 on the pre-go-live list. You get to decide the exact order. Here is a common point of reference:

4×4
4×3
4×2
3×4
3×3
—– go-live-stopping point
4×1
3×2
3×1
2×4
2×3
…

The GW4x4 helps create better project visibility. It helps you see the state of the union by measuring the velocity and wave of your customizations. You can answer the famous questions: “Are we there yet? When are we going to be there?”

Up until now, we have created a list of tasks. This list does not answer the questions “Are we there yet? When are we going to be there?” by themselves. To help you derive meaningful answer, we need to introduce two more concepts:

• Velocity: is the rate at which you are completing requests. If you completed three change requests each with a effort value of 3 (or 8 hours each), you should have taken less than 24 hours to complete all three. If you took less than 24 hours, you have apositive velocity. If you took more than 24 hours, you have a negative velocity.
• Wave: is the volume or queue of open requests for any given business impact. If you have 2 open change requests each with a business impact of 4, your wave is the sum of each request’s effort. If both requests have a effort of 3 (or 8 hours each), your total wave is 16 hours.

Your velocity helps predict the accuracy of your wave. A positive velocity says you will finish faster than you had previously estimated. A negative velocity says your estimations were to aggressive. Here is an example to illustrate:

• Let’s assume you have a positive velocity (you are completing tasks in less time than predicted).
• Your team establishes that only change requests with a business impact of 4 are eligible for pre-go-live release.
• You calculate that your team has a wave of 270 hours (sum of efforts required) where the business impact = 4.
• Your team’s velocity states you can consistently complete 18 hours per day.
• The Result: you should be able to safely assume that your customizations will be complete in 15 days (270 hours / 18 hours per day).

The GW4x4 is easy to implement. The GW4x4 can easily be tracked using a simple XLS or google docs spreadsheet. You make the XLS as simple or complex as needed by your team. If you outgrow XLS, you move into products like the ones provided by Atlassian. Here is an example google docs spreadsheet.

Example XLS….

The Benefit

The biggest benefit of the GW4x4 is its simplicity. You minimize the path to a successful go-live while still proving that your new ERP can change at an acceptable pace. Your team creates a simple vocabulary to help them manage the myriad of details that emerge from go-live discussions. If you apply these concepts early in your ERP project, you will gain visibility from the very first week.

I hope this helps!! Please be quick to ask questions or make comments. Thanks for reading.

Why consider Open Source ERP

Open source ERP gives you every opportunity to prove or disprove its ability to support your company’s ERP needs on a timeline that satisfies your organizational needs. With open source ERP, you do not face the same financial constraints nor do you face the same conflicts of interest as with commercial ERP. Instead, you invest in the appropriate skills and knowledge for your people and processes. Best of all – if open source ERP cannot solve your company’s needs, you can safely justify spending the additional $2K to $5K per person per year for life of your commercial ERP to help drive your organization’s success.

ADempiere vs iDempiere vs Openbravo vs Compiere

Please note that ADempiere, iDempiere and Openbravo are forks or copies from Compiere. Therefore, they have similar abilities mentioned above. The biggest difference is that ADempiere and iDempiere are pure open source. There are no features held behind a commercial or paid license.