All the way back in 2006, Gartner published that “25% of IT spending was on unnecessary and redundant customization . . . and that when enterprises seek highly customized implementation. This situation is unsustainable.”
So fast forward 11 years and it’s maybe not so surprising that a SaaS company like Salesforce, which offers configurable cloud solutions — as opposed to customizable solutions — are enjoying 25% year over year growth.
A simple but significant difference between “customizable and configurable” software solutions is that configuration requires no changes to the source code; this one distinction has powerful business ramifications that have driven many companies to move far away from customizable tool kits. Here’s a short list of reasons why:
- Customized solutions often fit a single business need for a moment in time, thus eliminating the agility to move or scale to address a future strategic need.
- Customizations require long-implementation times with subsequent delays spent on modifications.
- The component costs often outweigh the original licensing costs.
- When upgrading the customizations will need to be completely re-implemented as no migration path from one version to the next exists.
- Ultimately the business simply does not upgrade because of the associated costs – causing technology lag.
In fact, the more complex the customization is, the higher the operational cost will be. Software customization is also one of the most widely-cited causes of failed software operation. System failure prevents value gain from the solution, thus becomes a cost rather than an asset.
Time is money, so cost-per-call metrics will often rise, rather than fall, as a result of customization. The pursuit of the perfect solution can, in fact, destroy value rather than create it.
Therefore, the two questions that organizations should be asking are ‘how much do we need this feature?’ and ‘is there a risk that this functionality will cost more than it’s worth?’ If it does cost more than it is worth, what was intended as a strategic asset will instead become a drain on resources, effectively wasting valuable resources that could be better invested elsewhere.
Customers that crave customization forget to consider the total cost of ownership (TCO) of their on-premise investment, including: hardware, network, backup and development systems. The TCO includes the cost of human capital, such as project management, database, server, firewall, security, backup and help desk resources — not to mention the overtime pay for weekend work to install emergency hot fixes, hardware repairs, or security issues.
On-premise solutions sell the concept that you can customize — and, hey, that’s great for certain companies; however, Arena Solutions, the market leader in cloud-based Product Lifecycle Management (PLM) solution, found — from talking to 20 former on-premise solution customers who switched to a cloud solution — that only two had even attempted to customize and the ones that did were very unhappy. Once they had customized the system, they were now locked into that version and were not able to benefit from software upgrades. If they wanted the new upgrade, they would have to rip out the old software and rebuild it from scratch with the new software — a very expensive proposition.
On-premise concerns continue to bedevil customers who fear upgrades, updates and security breaches. Many companies that believe they want the ability to customize soon realize the very real additional time, energy and expense to make that happen for very little payoff.