Are Workarounds the Lurking Hidden Costs in Your ERP?

by | June 7, 2018 | Dynamics 365 for Finance and Operations, Project Management

Hidden Costs in ERP

“We’re going to use the system out of the box to the greatest extent possible.” Awesome. Do this.

“We’re going to minimize coding and customization.” Also great. Do this.

“We’re going to take customization [x] out of scope and use a workaround to conserve budget.” Take caution. Yellow light at the crossing.

Are Workarounds the lurking hidden costs in your ERP? Now I’m certainly not saying you shouldn’t ever take some customizations out of scope. It’s often prudent to do so. But all too often I’ve had clients fall into the trap of not understanding the workaround and finding that it ended up costing more than the original customization itself. Want a nice little example? One cautionary tale I’ve seen play out time and time again is commissions – it’s a classic. If your business doesn’t use commissions, keep reading. You’ll still get the allegory, I promise.

Early on in a project, perhaps even during the sales process, we talk with clients about their options for commissions. You can either use Dynamics 365 for Finance and Operations out of the box for commissions, you can purchase an ISV solution to add on to the functionality or you can customize the functionality to make it work exactly how you want. Let’s say we’re talking about a manufacturer who has relatively simple commissions requirements. They pay a flat percentage of invoiced dollars when an invoice is fully paid. And that’s where the requirement gap is. D365 for Finance and Operations can’t do “pay when paid” commissions out of the box.

ISVs & Customization

So then we talk about ISVs and we talk about customization. For fun, let’s just say the ISV is $20K and the customization is $10K. And the client says “I don’t want to spend the money for this when I can just do it in a spreadsheet”. The client has done the easy math that says if it takes the assistant controller an hour a month to do the spreadsheet, that’s only 12 hours a year which would take about 3 years to surpass the cost of the customization and even more for the ISV. But there’s one key missing piece.

The Workaround

The workaround. The slippery slope. Call it what you will, it’s where the costs hide. The workaround in our commissions example is getting the data out of the system. D365 has some really great ways to get data out of the system. But you still need to understand how to configure the system and perform the extractions. What’s key about this example is that you need data from multiple sources in D365. You need sales order invoices to tell you what was invoiced. You need customer payments to understand what was paid, settlement information to understand how much of each invoice has been paid and when, product category so you can apply the right commission percentages, etc, etc.

The workaround has now turned into at least four data extractions that need to be configured and a spreadsheet that ties all the data together. Then it gets slipperier when we start asking questions like “what if someone invoices something in a past period because the controller reopened the fiscal period?” or “what if I need to make a retroactive change to someone’s commissions?” Not only do the client’s internal labor costs start to rise to handle commissions outside the system but the truly hidden cost emerges – the cost of consulting hours to help the client deal with all these questions and reconfigure the system to address them. The ROI of the customization has just shifted.

Is it a good idea?

Surely the moral of the story has emerged here. Does it seem like a good idea to take known customizations out of scope if they don’t measure up to the “secret sauce of the business” rule? Sure. Is it always a cost-effective move? Not necessarily. Is this something specific to Dynamics 365 or other specific software solutions? Nope – chalk it up to life in ERP. Happy scoping!

Related Posts

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *

Upcoming Events

october

06oct10:00 am10:30 amPreview of D365 Business Central Fall Release Features and Functionality

06oct12:00 pm12:30 pmInsider's Guide to New Features Available in the Fall Release of D365 Finance and Supply Chain

07oct11:00 am12:00 pmConfab LIVE with Stoneridge - Dataverse and Dynamics in Review – Let’s Get Technical

13oct12:00 pm12:30 pmWave 2 Release – What’s Coming for Dynamics 365 Sales and Customer Service

21oct11:00 am12:00 pmConfab LIVE with Stoneridge - Dataverse and Dynamics in Review – Let’s Get Functional

26oct(oct 26)9:00 am28(oct 28)5:00 pmStoneridge Connect Leadership and Community Conference

november

04nov11:00 am12:00 pmConfab LIVE with Stoneridge - Challenging the Development Paradigm

About Stoneridge
Stoneridge Software is a unique Microsoft Gold Partner, with emphasis on partner. With specialties in Microsoft Dynamics 365, Microsoft Dynamics AX, Microsoft Dynamics NAV, Microsoft Dynamics GP and Microsoft Dynamics CRM, we focus on attracting the most knowledgeable experts in the field to our team, and prioritize delivering stellar solutions with maximum impact for your business. At Stoneridge, we are deeply committed to your results. Each engagement is met with a dedicated team, ready to provide thorough, tailored, and expert service. Based in Minnesota, we intentionally “step into your shoes,” wherever you are. We focus on what you care about, and develop trusting, long-term relationships with our clients.

Subscribe To Our Blog

Sign up to get periodic updates on the latest posts.

Thank you for subscribing!

X