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The Downsides of Using Templated Business Processes During an ERP Implementation
Posted on: October 23, 2024 | By: Guy Logan | ERP Selection, Professional Services
Enterprise Resource Planning (ERP) systems are designed to streamline and optimize business operations, integrating various functions such as finance, supply chain, human resources, and production into a cohesive system. One common approach to ERP implementation is using templated business processes (sometimes referred to as “Fit to Business”). These involve pre-built, industry-standard workflows that promise to fast-track implementation by relying on established best practices.
While this approach can seem appealing due to its speed and efficiency, templated business processes often come with significant downsides that can hinder long-term success. In this blog, we’ll explore why the 80/20 rule often applies to templated ERP implementations—where templates cover 80% of your needs but struggle with the remaining 20%—and why a more strategic approach may be necessary for your business.
1. Inflexibility in Adapting to Unique Business Needs
The primary drawback of templated ERP implementations is their rigidity. These templates are designed around generic industry standards, which means they may not fully align with your unique business requirements. This inflexibility can force your company to conform to a “one-size-fits-all” model, which often doesn’t account for specific operational nuances.
The 80/20 rule often applies here: the templates may work perfectly for 80% of your processes, covering standard tasks such as invoicing, payroll, or procurement. However, for the 20% of operations that are unique to your business—such as custom workflows, specialized reporting, or niche production schedules—the templated approach can fall short.
For instance, a manufacturing company with a highly specialized production process may find that the templated workflows do not account for its unique scheduling or inventory requirements. The company would then need to either extensively customize the ERP system or adapt its processes to fit the template, which may sacrifice efficiency and accuracy in the long run.
2. Higher Costs from Future Customization
While a templated ERP implementation can reduce the initial implementation timeline and costs, the savings are often short-lived. As businesses evolve, they may find that the 20% of processes not covered by the template require extensive customization to keep up with changing needs. These customizations not only increase the cost of the project but also make future upgrades more complex and expensive.
For example, when your ERP system receives software updates or requires an upgrade, any customizations you’ve made to fit your specific needs will have to be reviewed, re-implemented, and tested. This rework adds additional costs and risks each time the software is updated. What initially seems like a cost-saving templated implementation often leads to more expensive, time-consuming updates down the line, eroding the long-term value of the templated approach.
3. Over-Simplification of Complex Business Operations
While templated processes aim to be comprehensive, they often oversimplify business operations. For larger or more complex organizations, this oversimplification can lead to inefficiencies, operational bottlenecks, or compliance issues.
Consider a multinational organization with operations in multiple countries. A templated ERP system may struggle to accommodate the varying regulatory, financial, and legal requirements across different regions. The 80% of processes that templates cover might work well for the company’s U.S. operations, but the remaining 20%—such as tax compliance in international subsidiaries—could be left under-supported.
The result is that critical details are either missed or require additional manual intervention, reducing the overall efficiency of the system and potentially putting the business at risk for non-compliance.
4. Lack of Competitive Advantage
In today’s fast-evolving business landscape, maintaining a competitive advantage often depends on your ability to innovate and customize your processes to serve your unique market needs. Templated ERP systems, which are built on generic best practices, can limit your flexibility to innovate or respond to market changes.
That 20% of your business that falls outside the template’s scope is often the most critical part of your operations—the part that differentiates you from competitors. If your ERP system forces you to conform to industry standards that don’t align with your competitive strengths, you risk losing your edge in the marketplace.
Conclusion
While templated business processes may offer a quick and seemingly cost-effective solution for ERP implementation, the 80/20 rule illustrates their limitations. Templates may cover 80% of your business needs, but the remaining 20%—often the most crucial and unique aspects of your operations—can require costly customizations, lead to inefficiencies, or result in employee resistance.
Ultimately, businesses should carefully evaluate whether a templated ERP approach can truly meet their needs. A more tailored solution that combines standard practices with targeted customizations often provides the best balance between efficiency, flexibility, and long-term success.
Templated processes may offer a strong foundation, but a strategic ERP implementation goes beyond templates to address the specific needs of your business and position you for future growth.
