Enterprise resource planning (ERP) software features a collection of digital tools and applications to help businesses better manage various aspects of their operations, such as manufacturing, customer relationships, human resources, and accounting. ERP software plays a crucial role in streamlining business processes and improving operational efficiency.
If you’re considering integrating an ERP system into your business, you must decide whether to use a customized ERP system or an out-of-the-box solution. Each option has its pros and cons, so you might have difficulty choosing one over the other. We will try to help you make that choice by exploring ERP customization and its alternatives.
Below is a breakdown of the differences between customized ERP systems and out-of-the-box solutions, including how and when to implement them for optimal business process management.
Out-of-the-Box ERP Systems
Out-of-the-box ERP systems are preconfigured software bundles for general business use across various industries and sectors. Businesses using these solutions are forced to adapt to the software suite’s built-in tools and functions rather than the other way around.
An out-of-the-box ERP should be good enough unless your business has specific managerial needs. It can fulfill all your basic bookkeeping, financial reporting, invoicing, payroll, workflows, scheduling, and emailing tasks. New and small businesses may find it easier to use an out-of-the-box ERP to perform standard functions, making it an ideal ERP for small business operations.
Pros
Out-of-the-box ERP systems are much more affordable and quicker to integrate into a company. Since everything comes preconfigured, you won’t need to spend time and money on extensive software customization. The faster ERP implementation will enable your business to begin its operations sooner rather than later.
The standardized workflows integrated into the out-of-the-box ERP systems fit businesses in many industries. Plus, ERP vendors that create out-of-the-box ERP systems continuously release software updates regarding security and functionality. That means your system may improve over time based on the latest updates.
Your employees don’t need much technical experience to operate the out-of-the-box ERP system because it has a user-friendly interface for easy controllability. This high user adoption rate means you will save yourself the time of extensive ERP user training.
Cons
Perhaps the biggest disadvantage of out-of-the-box ERP systems is their limited adaptability to new or custom workflows. They only offer generic workflow solutions unsuitable for all types of businesses. There is no option to create customized workflows or tailor the functions of the software suite to unique business needs.
Your out-of-the-box ERP system could have features that your business doesn’t need, making it more complex to operate. You must also consider that other companies are using the same preconfigured out-of-the-box ERP system as you are, including your competition. That will make it more challenging to differentiate your business from others as you try to gain a competitive advantage in the marketplace.
When to Use It
Companies with standard workflow requirements and smaller budgets are better suited to use out-of-the-box ERP systems. Their standardized processes are sufficient to run their day-to-day business operations without complications. Any startup company that wants to get off the ground fast should choose an out-of-the-box ERP system for quick ERP implementation and immediate operational efficiency gains.
Customised ERP Systems
Customized ERP systems let you modify the core processes and functionalities of the software suite to better align with your company’s specific needs and requirements. The user interface will have all the functions and options you need to streamline the management of your company’s supply chain, finances, and sales.
Large or expanding companies with more complex operations might need to invest more in building customized ERP systems to improve efficiency and support their long-term strategy. Custom enterprise software allows for tailored ERP solutions that cater to unique business processes and industry-specific requirements.
Pros
Customized ERP systems can be made to better align with the unique core processes, industry requirements, and workflows of your company’s operations. ERP customization could be the only way to improve efficiency and gain a competitive advantage over other businesses in your industry.
You don’t need to worry about future setbacks if your business grows because you can modify your customized ERP system to adapt to the growth and changing workflow requirements. There is no limit to the level of scalability in customized ERP systems. This adaptability will encourage you to grow your business rather than feeling restricted by the limitations of preconfigured software.
The user interfaces are customizable to improve the productivity of each user role in the company. You will be able to continuously fine-tune the ERP modules to maximize productivity and ensure your business objectives are being met. And if you want to gain deep insights into the activities of your operations, generate customized analytical reports from your dashboard for enhanced data visibility and real-time data analysis.
Cons
Customized ERP systems cost more time and money to operate than out-of-the-box solutions. Without preconfigured settings, you must design, develop, test, and maintain the ERP system to ensure it aligns with your company’s core processes. This increased complexity in ERP system maintenance can lead to higher maintenance costs over time.
Startups and new businesses probably won’t like the increased implementation time of customized ERP systems because it will take longer to get the businesses up and running. In addition, you will need to have IT-savvy employees who know how to customize and maintain the ERP systems. Otherwise, your company must expose its core processes to third-party IT professionals who will have to run your ERP system for you, potentially creating vendor dependency.
When to Use It
Businesses with unique core processes and a high volume of complex transactions will find it more efficient to use customized ERP systems. They may also need customized ERP systems to comply with strict regulatory requirements that out-of-the-box solutions do not provide.
Healthcare and manufacturing ERP are two examples of industries with unique core processes. Organizations with older legacy ERP systems cannot adapt to the ever-changing needs and demands of industries like these. Customized ERP systems are the only solution if your organization has industry-specific requirements, such as specialized inventory management or production planning, that are not found in out-of-the-box solutions.
Conclusion
Do you need help deciding between a customized ERP system and an out-of-the-box solution? Bluehub is a consultancy firm specializing in digital systems integration and ERP consulting. We can evaluate your company and recommend the best tailored ERP solutions for improving efficiency. Our experts can guide you through the ERP customization process, from initial system requirements analysis to final implementation and ongoing support, ensuring your ERP software meets your unique business needs and contributes to your long-term success.
