The Problem with Generic ERP Software

A manufacturing company came to me last month with a specific problem. Their sales process is unique. They have multiple revenue models. They sell standard products. They also do custom manufacturing. They also provide services. Their pricing rules are different for each channel.

The software they use? A big-name ERP system that cost millions to implement. Their IT team spent three months building workarounds to handle multiple revenue models. Still doesn't work perfectly. Still requires manual intervention.

I asked them: did you buy this system because it does what you need, or did you modify your business to fit what the system does?

They got quiet.

That's the question nobody asks before buying enterprise software.

The Generic ERP Trap

Enterprise software is built around assumptions. Those assumptions made sense to someone. Usually they're based on "best practices" from the packaged software industry. "This is how most companies do it. This is efficient. This is scalable."

For companies that do business exactly like the model in the software, great. For everyone else, it's a prison.

SAP assumes this procurement process. Oracle assumes this accounting structure. Microsoft Dynamics assumes this manufacturing workflow. If your business matches that assumption, implementation is fast. If your business doesn't, implementation is a nightmare of customization and workarounds.

The cost compounds. The customization costs money upfront. But then, every time there's a system upgrade, your customizations might break. You need to retest. You need to rebuild. A company I know spent $2 million implementing an ERP five years ago. They've spent another $2 million maintaining customizations through three major releases.

That's not unusual. That's the normal cost of buying generic software for a unique business.

What Generic Gets You

Don't misunderstand. Generic ERP software has advantages. There's a massive library of functionality. Pre-built integrations. A whole ecosystem of consultants who know how to implement it. For large companies with large budgets, those advantages matter.

But here's what generic software optimizes for: a specific user persona. A specific business model. Whoever the vendor decided was the target market.

If you're an enterprise with:

• Centralized procurement
• Standard manufacturing processes
• Predictable revenue streams
• Vanilla financials
• Standard supply chain

Then generic ERP is fine. Especially if your business changes slowly.

If you're an enterprise with:

• Multiple revenue models
• Unique pricing logic
• Complex supply chain
• Rapid business model changes
• Custom manufacturing

Then generic ERP is a straitjacket. And you're paying millions to wear it.

The Real Question

I tell my clients: the choice is not between buying software and building it. The choice is between buying generic software and customizing it, versus building something specific.

One client—a distributor—spent $4 million on a major ERP implementation. After three years, they're still adding features. The system doesn't handle their specific pricing structures. It doesn't handle their specific customer contracts. Every quarter, IT is adding new custom code.

I suggested we build them a custom ERP. A much smaller team. Focused on their specific needs. No "best practices" bloat. Just the functionality they actually use.

The cost to build it? Maybe $800,000. The maintenance cost? Maybe $200,000 per year.

Compare that to their current trajectory: millions spent, still not complete, still hiring teams to maintain the software.

This math is wild because enterprise software vendors have trained companies to believe that buying is cheaper than building. "We're not in the software business," executives say. "We should buy, not build."

But that's only true if the software you buy actually matches what you need. If you're spending millions customizing it, you are in the software business. You're just paying a middle man.

Size Matters

I'm not saying every company should build custom ERP. For a small business starting out, generic ERP might be perfect. You're learning your business model. You don't know your own requirements yet. Generic software helps you figure that out.

But for a company that's been operating for five years, that's profitable, that has a clear business model, that knows exactly how it operates—generic software optimized for someone else's business is becoming a liability.

The winners in this space, I think, are companies that build modular, flexible systems. Platforms that allow customization without requiring deep programming knowledge. Systems that adapt to your business rather than forcing you to adapt to the system.

Until that happens, the smartest advice I can give: if you're evaluating ERP and your business doesn't fit the standard model, be honest about that upfront. Calculate the total cost of ownership including customization and ongoing maintenance. Then decide whether you're actually buying software, or whether you're hiring consultants to build software under the guise of buying it.

The generic software vendor isn't going away. But the companies that win will be the ones that ask hard questions about whether generic is actually good enough.