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ERP Customization and Configuration

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Table of Contents

  • The Difference Between ERP Customization and ERP Configuration
  • What Does Configuration Mean in the Context of ERP Software?
  • Ultimate Guide to Understanding ERP Configuration
  • ERP Configuration vs Customization
  • Is Your ERP Customizable?
  • The Fundamentals of ERP Configuration
  • The ERP Configuration Process
  • ERP Configuration Steps
  • The Fundamentals of ERP Customization
  • The ERP Customization Process
  • ERP Customization Steps
  • ERP Customization and Configuration Examples
  • Configuration
  • Customization and Configuration
  • Customization
  • How Do You Set Up an ERP System?
  • Conclusion

The Difference Between ERP Customization and ERP Configuration

Enterprise Resource Planning (ERP) systems are essential for managing all business processes. Integrating this into your company’s operations makes you accustomed to two words. The terms, customization and configuration. So, what do these terms mean, and what’s the difference? 

ERP systems are built to be flexible and offer many functionalities to meet the needs of your business. Many companies need to customize the system and configure its functions to meet their requirements. 

What Does Configuration Mean in the Context of ERP Software?

Configuration is a feature, setting, or personalization added to the software. It ensures that the ERP software performs according to an organization’s parameters and data set. An important goal during software selection is to find one that can be configured to meet the organization’s needs. After installing the software, configuration is the next major step in ERP implementation. The program is set up and personalized to meet organizational changesThe process involves custom coding which adds new functionality to the software and makes it better for the business. 

Ultimate Guide to Understanding ERP Configuration

Enterprise resource planning configuration is an integral part of the implementation process. It makes ERP systems effective in enhancing efficiency and ensuring proper organizational change managementBefore implementing ERP software, you need to find an ERP platform that fits your processes and meets the needs of your business

Configuration is a setting, parameter, or personalization added to the new ERP. The setting could be simple or complex as enhancing interfaces to reorder how a form appears. No coding is needed to implement these settings. 

ERP Configuration vs. Customization

ERP configuration and customization work together to provide efficient ERP application solutions. Yet, they are still two entirely different concepts. It deals with the components of the system but not the business needs. This process enhances business process management and improves the needs of the business. 

Customization modifies the software’s settings and functions according to the business’ digital strategy. It helps in process improvements and requires customized coding. Changes are made to the source code of the ERP application. This increases implementation costs and makes the process time-consuming and potentially risky. Suppose you can achieve your business goals by configuring the application alone. In that case, it is best to avoid customizing. This is because optimization by configuring is more straightforward, quicker, and usually free. Configuration is almost always update-safe.

Is Your ERP Customizable?

For every ERP project, you need to meet with your ERP vendor and detail your business requirements. You may need to make some alterations to enable the new system to meet the needs of your business. Implementing these changes requires customization

The Fundamentals of ERP Configuration

Configuration is one of the most critical steps in ERP implementation. It means altering the parameters of the system to meet your specific requirements. It involves optimizing the functions and components of the system. This will enable it to merge with an existing system environment. It allows your system to work within set restrictions such as; languages, time zones, currencies, etc. Although it is a tedious task, you can learn how to execute this by yourself. Most configurations are not affected by software updates.

The ERP Configuration Process

To configure a system during ERP implementation, you are setting the ERP’s options; there are options for each module. In-depth knowledge of your system’s inner workings is helpful during configuration. 

The first step is to install the specific modules required and configure them. ERP partners have the right experience to configure your ERP according to your requirements, ensuring project success and preventing ERP implementation failures

The process is complex, especially for vendors like SAP, Netsuite and Oracle (which supports cloud ERP). ERP vendors reduce this complexity by creating configured modules for a particular industry. These independent ERP consultants also develop automated tools containing industry templates. These can be modified for an individual company.

  • Deep product knowledge is essential.
  • It modifies current features to meet requirements.
  • Configurations can be done identically across the ERP and used in multiple companies. 

ERP Configuration Steps

Configuration ensures your software supports your workflow effectively, and the multi-step process below helps to configure your ERP. 

  1. Create Companies: This means creating databases for different purposes. Examples are transactions or testing and training databases designed for e-commerce.
  2. Set Up Currency: The currencies used for transactions of the software are configured. These include the base currency of the country where the business operates. Other currencies used by customers and vendors across different countries are also recorded.
  3. Create Calendar and Periods: The calendars are used to document the availability of resources. The time intervals are utilized for financial, statistical and planning purposes. These are important for effective supply chain management.
  4. Integrate Processes: Various processes are integrated—the methods of updating finance tables, either in batches or in real-time. The best way to perform inventory valuation, treatment of transactions on ledger, etc. are some of the processes.
  5. DescribeNumber Group’, ‘Type’ and ‘Length’: These are the unique ID for transactions such as purchase orders, sales orders and production orders.
  6. Define Countries and Assign Tax Codes: The country codes for countries where ERP customers and vendors operate are stated. This is essential for taxes and reporting purposes.

The Fundamentals of ERP Customization

It refers to reports, screens, programs, or other functions not in the program. Customizing a system means you are developing a functionality that is yet to exist anywhere on the software to optimize processes. Enterprise Resource Planning customization allows for the personalization of the system. Usually, this requires solid technical software development knowledge and coding skills. Data migration in ERP customization involves carefully transferring data from one storage system to another to prevent the loss of vital information.

The ERP Customization Process

To successfully customize your ERP, you need to define your company’s needs and processes clearly. Without this, you risk altering your software to add unnecessary features, a primary reason for ERP failures

  • New features and task management processes are added to meet your specifications
  • It requires extensive technical and product knowledge
  • Custom code is required
  • Unique for business solutions.
  • Improves the functions of the existing ERP system

ERP Customization Steps

Before ERP implementation, the first step is to brainstorm with key users and check out legacy systems. This helps to identify opportunities for improvements in the existing process. Then, you will contact your ERP vendor to explain your organization’s needs and determine how the ERP solution can optimize the new system. The vendor then works with you to select the ERP feature to customize the system and calculate the implementation costs. These are steps to follow before the ERP implementations

  1. Document Best Practices and Use Project Controls: It is vital to note the current best practices in the industry and work with ERP providers to develop the best solutions; practices and updates can be gotten from places like LinkedIn. During the ERP integration, you need to put strong project controls in place to ensure your team does not over customize. Prioritize the needs of the ERP customers at all times. CRM technology guarantees to manage all connections with existing and potential customers. Check through the system for features that must be altered to give the company a competitive advantage and meet those needs. Use effective supply chain management to oversee the production sequence of the product.
  2. Remove Unnecessary Customizations: A business’s needs increase as it grows, and some processes may no longer be relevant at this stage. If an ERP customization stops providing value, then there’s no need to keep it. You can retire it in one of the following ways:
    • Deleting it if its removal will have no adverse effect on the system.
      Deactivating and hiding its functionality. Do this if its removal will have an impact on the system.
      Deciding against upgrading the system or rebuilding the customization in the new version. This should be a last resort. 

ERP Customization and Configuration Examples

Below are some examples of ERP implementation processes that incorporate configuration and customization. 

Configuration

  • Altering field labels using internal nomenclature
  • Creation of organization-specific roles
  • Modifying reports to show business requirements
  • Adding new business-specific fields to forms to collect important information.

Customization and Configuration

  • Developing a workflow
  • Altering the solution process to include or remove add steps based on the company requirements. 

Customization

  • Formulating new functions and options within current modules.
  • Connecting the existing system with a third-party system.
  • Including task management processes.

How Do You Set Up an ERP System?

There are two types of ERP systems, “Out-of-the-Box”, and “Custom”. Out-of-the-Box is built for mass-market offering and often leaves no room for customization. Custom ERP is modified by organizations to match their processes better. Many companies develop ERP systems to link their processes and increase efficiency.

The step-by-step process of setting up an ERP system include:

  1. Define your company’s goals and highlight why you need custom software.
  2. Brainstorm with your project team to develop a list of required features and functionality
  3. Decide where your custom ERP solution would be hosted. 

     Get a team of software experts to develop the system. Begin the development phase.

  1. Review the final product to see how well the system integrates with your processes. Your employees can serve as beta testers.
  2. Deploy the product. 

Conclusion

When performing ERP integration, you want to personalize it to make your business ERP more effective. You will need to identify your desired features and discuss them with independent ERP consultants to develop the best solutions that align with your goals.