ERP Customization: Pros and Cons

Many business owners hit a roadblock when setting up their new ERP system: should they use it as-is, or change it to fit how they work? This choice affects everything: costs, timelines, and team performance.

About 20% of businesses make major changes to their ERP software. Knowing when to customize (and when not to) can save you serious headaches down the road.

I've guided dozens of small to midsized businesses through this exact decision. It's not as complicated as it seems. By the time you finish this article, you’ll know what ERP customization really means, who needs it, and whether it's a good investment for your business.

• What is ERP Customization?
• ERP Customization vs. Configuration or Personalization
• The Hidden Dangers of ERP Customization
• Two ERP Customizations that Won’t Bring You ROI
• Cons of ERP Customization
• Pros of ERP Customization
• Which Businesses Benefit from ERP Customization?
• Should You Customize Your ERP or Adapt Your Processes?
• ERP Customization: Proceed With Care

What is ERP Customization?

ERP customization means changing your Enterprise Resource Planning software to match your specific business needs. It's not just tweaking settings — it’s actually modifying code to create new functionality or change how the original ERP processes work.

The catch? These changes can make updates trickier and often cost more both now and later. Most importantly, ERP customization will increase your total cost of ownership.

ERP Customization vs. Configuration or Personalization

If you’re new to ERP software, it can be easy to mix up these three terms, but they represent completely different approaches:

Configuration

Configuration uses built-in options and settings that already exist in your ERP system. You're just choosing which options you want to use and how you want them to work.

With configuration, you:

• Select system settings
• Set up user permissions
• Create workflow rules
• Define data fields
• Build custom reports

The big plus: configuration doesn't change the system's core code, which keeps future updates simple.

Personalization

Beyond configuration, there's also personalization — another safe way to tailor your ERP without the risks of customization.

Personalization includes adding your logos and colors, moving elements around on screens using the publisher's UI tools, and building low-code/no-code workflows that sit on top of the system. These personalizations are usually future-proof because they're built within the software framework and won’t be disrupted by upgrades.

Customization

Customization goes deeper by actually changing how the software works at its core. You're not just selecting options — you’re creating new ones.

With customization, you:

• Write new code
• Create capabilities not in the standard system
• Change how core processes work
• Develop entirely new modules

Customization changes the system's DNA, which can make future updates more complex.

The Hidden Dangers of ERP Customization

Here's what many businesses don't realize: the most tempting areas to customize are often the most dangerous ones. When you customize standard common screens or core business processes like order-to-cash, procure-to-pay, or inventory management, you're setting yourself up for major problems down the road.

Software publishers are constantly upgrading and enhancing these core capabilities. Your likelihood of collisions and problems is much higher if you make changes to these fundamental functions than if you're building brand new customizations within the product.

Here’s a helpful tip I have learned through many ERP partnerships: 90% of what most businesses do has no reason to be customized. Functions like accounts payable, accounts receivable, and inventory transactions are tried-and-true standards. There aren't that many ways to run those processes, and the best practices are already built into most ERP software platforms.

Which System Components Are Common Targets for ERP Customization?

Some parts of ERP systems get customized more than others. Here's where businesses typically tend to want customizations:

• Business logic (changing standard software calculations)
• Dashboards
• Workflows
• Data Fields and Forms

Two ERP Customizations that Won’t Bring You ROI

Business owners tend to be drawn to unnecessary customization in two specific areas: pricing and commissions.

Many business owners think their complex pricing algorithms or commission structures will be differentiators in the marketplace. But the reality is that most customers don't care what goes on behind the scenes to produce their pricing. When they order something, they only pay attention to the total number on the screen. Complex pricing structure isn't adding value to their customer experience.

The same goes for commissions. Salespeople usually just want to know, "if I sell this, I get this." The more complicated commissions become in promoting one product line over another, the less effective they become. These areas will not usually be differentiators, and they're not where you will see ROI from your customization dollars.

Customization Decision Guide

Here's a quick reference to help you decide between customization and configuration:

Cons of ERP Customization

Before jumping into customization, know what you're getting into. When in doubt, do not customize. To help you remember the risks, I’m putting the cons before the pros.

Higher costs

Custom development costs money. Beyond the initial programming, you'll pay more for testing, training, and ongoing fixes. Expect to spend 10-30% of your total ERP budget just on customizations.

Slower go-live

Custom features take time to build and test. Each change can push back your launch date by weeks or even months, depending on how complex it is.

Update-related malfunctions and technical debt

When your ERP vendor releases updates, your custom code might not work with the new version. This creates ongoing technical debt that chews up a bigger and bigger percentage of your IT capacity over time. You'll have less capability to do new things because you're constantly maintaining old customizations.

If you have customized core business functions, you'll always need to do extensive testing with each upgrade to make sure nothing breaks.

For example, you may have fields that overlap and glitch because the publisher added new fields where you had custom fields. Screen customizations are also painful to maintain.

Missing out on innovation

When you customize, you lose the flexibility that software provides to help you pivot and change business processes. This is becoming especially important as AI capabilities are being rolled out across ERP platforms. If you've done extensive customization, you may not be able to take advantage of new AI functionality that could grow your business.

More bugs

Custom code means more chances for things to break. Custom code typically has more bugs than out-of-the-box code that thousands of other users have already tested.

Pros of ERP Customization

Despite the challenges, customization can pay off for certain businesses:

Tailored for your business

Customization lets you create a system that works exactly how your business operates, instead of making changes to your processes. If you truly have unusual processes that are differentiators, there may be reasons to customize.

Designed for large or complex business structures

Multi-entity or global businesses may find that customization helps them navigate their many moving parts.

Can bring ROI under special circumstances

If your processes have unique regulatory requirements or performance-based quirks, it’s possible that customization might bring enough benefits to justify its risks.

Which Businesses Benefit from ERP Customization?

Not every company needs a customized ERP system. These three business types typically get the most value out of customization:

Companies in specialized industries

Businesses in niche markets may have processes that standard ERP systems don't handle well. (Then again, there may be a niche module that adapts an out-of-the-box ERP system very well to your niche business, so check out all the options first.)

Businesses with unique billing models

Companies that charge based on performance or have unusual billing setups often need custom functionalities.

Highly regulated industries

Businesses in healthcare, finance, or government sectors may need customizations to meet specific compliance requirements.

Should You Customize Your ERP or Adapt Your Processes?

Now we get to the most important question: should you change your software, or tweak your processes to be more standard?

When to Adapt Your Processes

• When your current processes aren't particularly efficient or don’t differ significantly from typical business processes.
• When you are dealing with “commodity” functionality like Accounts Payable, Accounts Receivable, Inventory Management.
• When industry best practices are built into the standard ERP
• When customization costs would outweigh the benefits
• When you want simpler updates and maintenance

Small to midsized businesses can be much more agile and adaptive in the marketplace when they're not so focused on what they think is their current "correct" business process. Often, the processes businesses want to customize aren't truly unique—they’re just the current way of doing something that evolved from outdated customer or supplier requirements.

Adopting standard ways of doing things will uncomplicate your business, streamline operations, and reduce reliance on a single key person in a role that creates bottlenecks

When to Customize Your Technology

• When your processes are genuinely complex and regulated
• When regulations demand specific workflows
• When your business model is truly unique (not just different)
• When standard features would significantly hurt productivity

Most successful ERP projects involve some tweaks to existing processes and data streams. But if you go beyond tweaking to full customization, it's crucial to evaluate your likely ongoing costs from those changes. Usually, you will do better to adopt systems that guarantee a reliable cost.

How To Decide if Customization is Worth It

Follow these steps to make the right decision about ERP customization for your business needs:

1. Document your critical processes - Identify which processes truly make your business tick, and question whether they're actually unique and necessary.
2. Evaluate standard ERP features - See how well the off-the-shelf system meets your needs before assuming you need changes.
3. Calculate the true cost - Factor in not just initial development, but ongoing maintenance, update complications, technical debt, and potential delays.
4. Consider alternatives - Look for third-party add-ons, configuration, or personalization options before building custom code.
5. Start small - If you must customize, begin with the most critical features and add others later if needed. Focus on building new capabilities rather than modifying core functions.
6. Test thoroughly - Make sure any customizations work properly with the rest of your system before fully committing.
7. Plan for the future - Think about how customizations will affect system updates, your ability to adopt new technologies like AI, and your capacity to adapt as your business changes.

ERP Customization: Proceed with Care

ERP customization can be powerful when used wisely but expensive when overused. Remember that customization will increase your total cost of ownership and can lock you out of future innovations.

The smartest approach? Customize only when absolutely necessary, focus on building new capabilities rather than modifying core functions, and adapt your processes where it makes sense. Challenge your assumptions about what makes your business "unique" — you might find that many of your custom requirements aren't actually differentiators.

Small and midsized businesses usually do best with less customization. By carefully weighing the pros and cons of each potential change, you can choose the best options for an ERP system that supports your goals.

Just learning about your ERP software options? Check out two of the most popular options in our comparison of Acumatica vs NetSuite. We are an Acumatica Gold Certified Partner, which means our Stellar One team members are qualified at the highest level of training and expertise.

If you’re ready to see how an ERP platform can streamline your operations and grow your business, sign up for our Risk-Free Trial today.