Once during the discount season I decided to buy a suit for my son who has just entered college. It was one of those times when I had the opportunity to buy something with a very attractive discount and it coincided that my son would soon need it because he had already told me that he would need a suit for several events that would take place during the next year.
So we went to the store and after he tried on several models, since some of the ones he liked did not fit him well or were not his size. He finally decided on the one he thought was the best and it served him well for a while during that year at his school.
After a while, he needed his suit again for a party we were invited to and I felt the need to buy him a new suit again because my son had certainly changed. But his mother, who always keeps an eye on family spending, had him try it on and seeing that it only needed a few adjustments we decided, save ourselves a new suit and go to a tailor to make the adjustments.
At the party, something unusual happened: A lady was wearing exactly the same dress as my wife. At first I foolishly wanted to make a little joke, but when I saw the look on my wife’s face I knew it was serious, in fact very serious! Certainly the probability of this happening is very low but the situation could have been avoided if a dress had been specially made for the occasion.
Today I am looking forward to my son’s graduation and I am definitely planning to go to a tailor to have a suit made especially for me. I am aware that I have to plan ahead for the time to take the measurements, choose the fabric and then the time required to make a suit designed especially for me. The process is a very different experience than going to a store and shopping in much less time, it involves learning a bit about fabrics, styles and the tailoring process, but also learning more about the purposes for which I will wear the suit.
But what does all this have to do with technology? The above story will serve as an example to better understand the differences between the following solutions:
Commercial Software (store suit) vs. Custom Software (tailor suit).
First: It is not just any article of clothing, it is a suit.
The suit is not just any article of clothing. Likewise, this discussion should not be generalized to just any type of software solution. We are not dealing with word processing software, a spreadsheet, an internet browser or presentation software or image and video editing software.
The suit is formal wear. Similarly, the central topic to be addressed below is about business software. This means software solutions that serve to manage, control and operate a business or company, with its warehouses, production processes, distribution and logistics, point of sale and even customer management.
This type of software has been called ERP (enterprise resource planning) and CRM (customer relationship management).
For example, some enterprise software applications are SAP, NetSuite, Microsoft Dynamics, Workday, Sage ERP, Oracle e-Business Suite, JD Edwards EnterpriseOne, Openbravo, Deltek, Exact Online, Agresso ERP, QAD, FinancialForce, Visma, Macola, Infor CloudSuite Industrial, etc. (1).
Second: Although the business suit is available, it always needs adjustments before it can be used.
Just as a business suit in the store requires adjustments so that it can be worn comfortably by the person purchasing it, a business enterprise system requires adjustments so that it can be implemented in the operation of the enterprise.
However, unlike a suit the adjustments required to the business system can result in two options:
It can be too costly and then, in order not to make the adjustments to the system, the company ends up modifying its processes.
It is simply not possible to adapt the business system to the company’s unique operation.
In the best case scenario, the business system company can adapt the technology tool to the specific business process.
For example, the well-known multinational company, Hershey, wanted to shorten the adaptation period of its ERP from 4 years to only 2.5 years. But doing so resulted in numerous system failures that caused a loss of $100 million dollars due to product order failures (2).
Third: People change, so new adjustments are required or a new suit must be purchased.
Another important aspect to consider is that just as people change, companies also change over time and so the system must be readjusted to the new needs of the company.
However, unlike a commercial suit that can be refitted by a tailor, this is not the case with business systems, for the following reasons:
The company that develops the commercial enterprise system (commercial software) does not offer the service of customization.
The new functions required by the company cannot be implemented in the commercial enterprise system, either because of cost or because it is simply not designed for those functions.
In the best case, the commercial software company can implement the new functionality at a reasonable cost.
For example, the famous cosmetics company, Avon, in 2013 unsuccessfully spent over $125 million trying to adapt an ERP to its processes. After 4 years of work to adapt the technological tool, it was found that the new business system generated much more work than before, so it was decided to reverse the total implementation of the system (3).
Fourth: A tailored suit requires planning ahead.
The tailored suit is not for a compulsive, spur-of-the-moment purchase or for the promotional discount, simply because you will not get the garment at the moment. It requires planning, in the same way a business application specially designed for a company (custom software) requires planning.
It seems unwise to invest time in a customized software for the company. However, before rushing into a hasty decision, the following aspects should be taken into account:
An enterprise software is extremely important because it will be the backbone of the business. It is the nervous system, the source of information and the means of communication for all the people involved in all the company’s activities. Therefore, it is well worth investing the time to analyze what you want to achieve.
During the planning and analysis time, much learning is gained from the actual activities of the company. Failure to do so, overlooking this learning process, can result in substantial economic losses for the company.
The case of Nike in 2000 is a good example of this: it lost more than $100 million dollars in sales and its stock fell more than 20% in a failed enterprise software project because it did not take into account important implementation details (4).
Fifth: A unique outfit means much more than a luxury or a whim.
Certainly any woman would feel extremely uncomfortable if she finds herself at an important party with another person wearing the exact same dress. And it is not a whim because behind a dress there is a very significant value. The Royal Spanish Academy defines someone “distinguished” as “noble”, “illustrious”, which can also be translated as “honorable”, “respectable”. Dress should project and transmit these values that are so important in society.
In the business world this is no different. It is directly related to the value of distinguishing oneself from the competition. Differentiation is vital for survival in this increasingly competitive world. And customized software definitely enables that distinction.
But it is not only about differentiation, also about innovation. Custom software promotes innovation, from the very moment you start analyzing processes and designing the solution, you are actually working on an innovation process.
Although custom software takes time and can be expensive, the opportunity cost can be much higher for missing the opportunity to innovate. From this point of view, adopting a solution compulsively can be the beginning of a company’s decline.
On the other hand, acting with the patience of a farmer who knows that he cannot skip nature’s processes, investing the necessary time to design the right solution for the company can be the big difference that germinates the seed of success and growth of the company for a long time to come.
For example, an ERP that gives traceability to each product and can be connected to the point of sale to guarantee the freshness of the product, so as to automatically prevent the sale of expired product, is a guarantee of quality that definitely distinguishes this company from the competition and customers will certainly value it for a long time (5).
Sixth: A specially tailored suit feels and looks good.
There is no doubt about it. A specially tailored suit fits our body perfectly, it’s not a little baggy, or a little tight, it’s just right. It feels good and we look good in it. This has an effect on our mood, our confidence and ultimately on how we deal with others. On the contrary, if the pants are too tight or too loose, the discomfort translates into mistrust or a bad mood, and we reflect this in our dealings with others.
In the business environment, a complicated system, full of unnecessary options, directions and texts that are not understood, excessive windows and unattractive design, is a nightmare for users trying to keep calm to get the job done.
The issue is: Productivity. A user-friendly business system allows users to be infinitely more productive and to have better communication with the different areas of the organization.
Nowadays, a user-friendly system is also a system that is accessible from any device at any place. Having reports in real time, in the palm of your hand with a smartphone can be of great advantage to any manager traveling or away from the production plant.An example of how unproductive and annoying an ERP can be is the case of the system used by the city of Palo Alto California. The system they have is so heavy and complex that it cannot be worked from a cell phone, which generates complaints from users who need to access the system (6).
1) https://es.wikipedia.org/wiki/Anexo:Software_ERP
2) https://www.pemeco.com/a-case-study-on-hersheys-erp-implementation-failure-the-importance-of-testing-and-scheduling/
3) https://blog.datixinc.com/blog/erp-failure-stories
4) https://www.erpsoftwareblog.com/2017/05/3-biggest-failure-cases-erp-implementation-can-avoid-mistakes/
5) https://linnetware.com/2019/01/17/digitalizacion-cadena-de-valor-caso-1/
6) ERP de la ciudad de Palo Alto, California, es difícil de usar:
https://searcherp.techtarget.com/feature/CIO-feels-the-pain-of-an-outdated-hard-to-use-SAP-ERP-system