Developing a Business Case for ERP CustomizationsJanuary 29, 2012 To customize or not to customize that is the question which continues to be a source of contention and confusion. On one hand, customization(s can resu!t in an e"#ensi$e %&' so!ution. (owe$er, %&' software enhancements can #ro$ide a com#etiti$e ad$anta)e or cost reduction that is customer*s#ecific. The cha!!en)e is not in the question itse!f but ratherhow the answer is +ustified. ,nfortunate!y, many business cases for %&' customizations areeither too short*si)hted or do not fu!!y com#rehend the im#acts to the %&' in$estment. -n the ne"t section we wi!! discuss the .ey com#onents required for an %&' business case for customization(s.Business Case Overview/o!!owin) is a business case tem#!ate -0$e used as a consu!tant to +ustify %&' customizations. 1usiness 2ase /ormat3et0s brief!y discuss each section in )reater detai!. The Problem (or Opportunity) section shou!d c!ear!y define the issue(s as we!! as the tar)et audience who wi!! benefit from addressin) the #rob!em. The #rob!em section shou!d a!so e"#!ain the com#e!!in) reason (s why the #rob!em shou!d be addressed. The Solution section shou!d s#ea. direct!y to so!$in) the #rob!em or addressin) the o##ortunity. The so!ution section must inc!ude the method(s used to $a!idate that the #ro#osed so!ution so!$ed the defined #rob!em.The Approa! section detai!s the $iab!e methods a$ai!ab!e to im#!ement the so!ution. The a##roach section shou!d not be a theoretica!!y e"#!oration of a!! #ossib!e o#tions. Too often - ha$e obser$ed where unrea!istic a##roaches were defined, which did more to confuse decision ma.ers rather than create a focused, com#e!!in) ar)ument. -n )enera!, - ty#ica!!y #ro$ide three a##roaches when #itchin) an %&' customization4 /u!! 2ustomization (%"treme 'artia! 2ustomization (5idd!e of the &oad Out Of The 1o" (OOT1 (%"treme/o!!owin) is a )eneric e"am#!e of com#arin) the abo$e o#tions4'ossib!e 6##roaches for %&' 7a#s5o$in) bac. to the business case, the Ris" Assessment section out!ines the ris.(s associated with each a##roach o#tion defined in the #re$ious section as we!! as identifyin) the ris.(s of doin) nothin) to address the #rob!em8o##ortunity. The fina! section is the #alue Analysis section. The .ey cha!!en)e - ha$e noted is that short*term $a!ue methods (e"am#!es4 benefit8cost ana!ysis, #aybac. #eriod are used to su##ort a decision with a !on)*term im#act. -n the ne"t section we wi!! discuss the unique considerations one must address in de$e!o#in) a $a!id %&' software customization $a!ue ana!ysis.#alue Assessment Consi$erations for ERP-n addition to the short*term costs associated with %&' customizations one must consider the fo!!owin) areas to ca!cu!ate the !on)*term costs41. %mpat to &pgra$e an$ 'aintenane( 9hat is the im#act that the customization wi!! ha$e to the %&' maintenance and u#)rade #rocess. -s the software customization intrusi$e: 5eanin) is it an add*on enhancement or a fundamenta! chan)e to how the %&' software wor.s: The more intrusi$e the customization is the)reater the costs required for %&' su##ort and u#)rades. /requent %&' u#)rades area .ey strate)y for dri$in) additiona! business $a!ue.2. %mpat to %) Resoure Souring( The more you customize the %&' software the more customer*s#ecific %&' .now!ed)e an -T resource requires to #ro$ide an effecti$e !e$e! of ser$ice. 6dditiona! customizations wi!! ha$e a shrin.in) effect on the -T resource #oo! and may ha$e the #otentia! of dri$in) u# re!ated -T su##ort costs. ;. Cumulative %mpat to t!e %) *ootprint( Too often we consider customizations indi$idua!!y and not #art of the tota! %&' software chan)es made. 6 fie!d chan)e here or a new a##!ication #a)e may not seem !i.e a bi) dea! but you must rememberthat you must su##ort e$erythin) you customize.The abo$e areas wi!! ensure that you )enerate a ho!istic set of information for an informed decision. Too often, short*si)hted decisions are made to customize %&' without com#!ete!yunderstandin) the #otentia! im#acts. The ne"t section wi!! shed more !i)ht on some of the !ess ob$ious ris.s associated with not ha$in) a ho!istic business case.Ris"s of not $eveloping an effetive ERP ustomization business ase-ncom#!ete information resu!ts in incom#!ete decisions and more im#ortant!y missed e"#ectations and business resu!ts. /o!!owin) are a few of the .ey ris.s )enerated from o$er*customizin) your %&' software41. +reater operational osts( There is an additiona! cost associated with customizations ty#ica!!y required from the -T or)anization to su##ort and mana)e the software chan)es. 2. Slower $eployments of te!nology( 9ith additiona! techno!o)y de#endencies )enerated by %&' customizations come the additiona! #!annin) and testin) acti$itiesrequired to de#!oy new %&' functiona!ity.;. ,ost opportunity osts( This is an area that is ty#ica!!y o$er!oo.ed in customization $a!ue ana!ysis. -t is more than +ust com#arin) one %&' customizationto another but a!so identifyin) the #otentia! reduction in f!e"ibi!ity %&' software can #ro$ide to the business. Summary%&' is a !on)*term #ro#osition and requires a !on)*term business case and $a!ue ana!ysis for any chan)e in the %&'0s $a!ue #ro#osition. Too often decisions on %&' customizations are based u#on #artia! information and are made in iso!ation. %&' is on!y one com#onent ofa business so!ution. 1usiness #rocesses and 'eo#!e ha$e a )reater im#act on business resu!ts.