To Customize Or Not?

Computerworld - Call it a cautionary tale.

Earlier this year, Beaverton, Ore.-based footwear maker Nike Inc. faced serious inventory reduction and misplacement as it rolled out a highly customized retail supply chain system that included applications from Dallas-based i2 Technologies Inc.

At the time, i2 said the difficulties stemmed from tying the customized applications to other enterprise resource planning (ERP) and back-end systems.

And this case isn't unique, say those who advise against tinkering with ERP applications. While customizing may give you industry-specific capabilities, it can be expensive and difficult, and the custom software may require special maintenance, say critics. It may also make the core application unstable and prone to glitches.

But there's another side to the debate. Some IT professionals view at least some customization as not just desirable, but also inevitable. They point out that when firms install pure, out-of-the box applications, they may have to part with code and functions that have been developed over years to suit particular business processes.

"Every ERP installation is customized," says Steve Abrams, senior vice president of corporate payment solutions at Purchase, N.Y.-based MasterCard International Inc., which is running Oracle Corp. business applications. "No one installs out of the box."

	Weighing ERP Customization Benefits 1. It can give software industry-specific capabilities. 2. It can help companies preserve homegrown tools. 3. It can enable users to react to unique problems and give them competitive advantages. Risks 1. It can be costly. 2. It may make upgrading more difficult. 3. It may make the core application unstable. 4. It may make the system more prone to glitches.

Peterson says companies are leaning more toward vanilla ERP upgrades. Writing custom code is costly and can make it difficult to upgrade to newer versions of the application, among other problems, she adds.

But sometimes customization is the only answer to a specific business problem. For instance, according to an SAP AG spokesman, a bank in a South American country with a high crime rate had an unusual request for an ERP customization.

While implementing SAP's supply chain application, the bank, which asked not to be named, decided it needed to be able to forecast the demand for cash on peak withdrawal days, such as Fridays before Christmas or other public holidays, while factoring in, among other variables, the chance that a branch might be robbed. The spokesman says SAP fine-tuned the software to optimize the bank's money transportation operations, factoring in the possibility of theft. The transportation system became more efficient, and resulted in a 20% reduction of costs and a full return on investment in four months.