The true cost of customisation

Buying software is not something many of us do every day and buying warehouse management systems particularly so.  Rarely is the process straightforward and even more rarely does it go as smoothly as expected.

One would think that with all of the systems that have been installed, particularly by the big international suppliers, functionality would have been completely standardised by now with little requirement for customisation and yet, although there is a trend in this direction, it is still common for new users to want changes.

The diagram below demonstrates part of the reason for this.  Warehouse management systems (WMS) work at the operational level within a business - a level at which businesses do vary significantly one from another. It can be a level at which companies manage customer specific, value added services and these are often an important point of differentiation from competitors.  It is therefore understandable that organisations expect a WMS to adapt to their way of working rather than the other way round.

As part of the WMS selection process there are usually two elements of customisation proposed by the supplier - dedicated interface changes and enhancements to meet specific operational requirements.  The interface customisation is usually not negotiable, however any other customisation is only required if either the functionality is poor within the package being purchased, or there is a special requirement not deemed mainstream enough to be included in the base package.

There is a debate to be had with regard to exactly how important any functionality enhancements really are, it is always better to look for a suitable work around first, either by constructive use of the software or through amendment of the operating practice.  If a particular process is not part of a WMS base package it is worth investigating why.  Is it because the process is not well thought through?  If so, the implementation advisor / WMS supplier should say and help to identify a more efficient and logical solution.  As mentioned earlier there are, however, situations where some degree of customisation is unavoidable perhaps because it is a point of competitive advantage.

There are a number of very good reasons for avoiding major customisation, which, during the negotiation stage of purchasing a system, should be discussed openly with the provider.

Will adding the enhancements allow the system to remain on the software upgrade path?

The answer to this question should always be yes.  Care must be taken to understand whether the ‘yes’ answer actually means ‘yes in all cases’ or ‘yes, but only under certain conditions’.  Conditions to be aware of can include:

• only for certain upgrades (i.e. - major upgrades but not software patches)
• at a cost, WMS suppliers often charge an additional upgrade fee to make enhancements compatible with the latest version.  This does not necessarily mean that changes to the software are required, but pays for the developer to investigate whether the software is compatible with the new release.

If the supplier has made it clear that enhancements will not or cannot be included in the upgrade path then in most cases choose another supplier.  Staying on an upgrade path is almost essential.

Have the modifications already been built (and paid), for another customer?

Suppliers aren’t always forthcoming with an answer to this, as saying “yes” will not earn them as much development time and provides a strong argument for the functionality being included in the base release.  If similar functionality is seen on a site visit (and this is one of the most important reasons for visiting existing users) during the selection phase, this will be worth pursuing.  The result may be that the development cost is split with another customer or even that the modification will be included in the base licence fee.

What are the supplier’s intentions for specifying, testing and implementing the enhancements?

Once a supplier has agreed to develop customer specific software, care must be taken to ensure that all aspects of the development and implementation are included in the price.  It is important that the supplier specifies the change, but equally important that the customer’s requirements are fully met.  At this stage suppliers have a tendency to roll out a number of technical reasons for the enhancement can’t be exactly what the purchaser requires.  This needs to be clearly understood before committing to pay for the enhancement and in some cases before committing to a particular supplier.  There may be a very good reason why the functionality cannot meet a customer specification, but this should be transparent throughout all negotiations, not come to light during the early stages of development.

Another pitfall is where the software supplier presents the customer with a very detailed technical specification and expects them to sign off the design.  A compromise needs to be found where the customer has input, but ensures that the supplier’s development team fully understand the requirement.  The design should only be signed off when it is fully understood.  However once signed off do not expect to influence or amend the design during development or test phases without incurring additional costs.

It is not un-typical for a supplier to expect the purchaser to carry out the larger portion of the testing and modification that they have commissioned.  This does not seem fair, but is common practice.  When agreeing the cost of changes, ensure that testing responsibilities are fully understood by both parties.  When it comes to project planning, confirm the exact plans and time-scales for the development to be implemented.   Many live dates are compromised by essential enhancements causing issues during the build phase.  Ensure that the supplier has built in enough time in the project plan for all aspect of the project; otherwise the most critical testing (the enhancements) are likely either to be missed or not received sufficient attention.  When considering the cost of customisation, the customer should also budget for a large element of internal resource for designing, testing and implementation.

Finally it is worth pointing out that the anecdotal evidence from suppliers is that a significant proportion of customisation is never used or ceases to be used after a short period of time.  Many customers only accept that the core functionality is acceptable, even preferable, once they have had experience of operating the system.  Keep this in mind when specifying changes.

The true cost of customisation is usually more more than the price initially quoted by the supplier.  However, by taking account of the points raised above those costs should be kept to a minimum and future problems avoided.

If all of this seems daunting, why not give one of our Senior Consultants a call on 01527 889 060 or email your questions / project requirements to info@logistics.co.uk

THE LOGISTICS BUSINESS, a leading specialist supply chain and logistics consultancy, has experience in planning and developing supply chain, distribution and warehousing operations throughout the world. From supply chain and distribution strategy, to development of distribution operations, warehouse design and layout, as well as manufacturing logistics and IT systems design, its clients include many blue chip companies.

We have also worked on government initiatives on sustainable transport and waste minimisation.For further information please call:Helen Morris, THE LOGISTICS BUSINESS on +44(0)1527 889 060, email helen.morris@logistics.co.uk