Can Standardized SAP Configuration Replace Customization?

The introduction of RISE with SAP, the Clean Core initiative, and cloud-first architectures suggest a shift away from the era of deep customization.

Instead, SAP advocates for using pre-configured best practices wherever possible and shifting modifications to side-by-side extensibility rather than altering the core system.?

Whether this transition is viable depends on many factors, including the adaptability of standard SAP workflows to diverse industries, the necessity for company-specific process automation, and the growing role of AI-driven optimization.

This article from IgniteSAP asks, will standardization and emerging innovations in the SAP ecosystem ever replace customization?

Configuration vs. Customization

SAP provides a broad range of configuration options that allow companies to calibrate their ERP systems without altering underlying code.

These adjustments, made within SAP’s existing framework, include setting up organizational structures, adjusting approval hierarchies, defining reporting formats, and enabling optional features within standard modules. Configuration allows businesses to implement SAP efficiently while maintaining compatibility with future upgrades.

While customization offers unmatched flexibility, it creates dependencies on legacy code, complicates version updates, and increases reliance on specialized development teams. The trade-off between adaptability and maintainability defines the ongoing discussion about whether standard configuration can replace custom development in practice.

SAP’s Rationale for Reducing Customization

Companies that modify core SAP components often struggle with upgradability, as new system versions introduce incompatibilities with existing modifications. This has resulted in businesses postponing system updates, accumulating technical debt, and eventually requiring expensive redevelopment efforts.

In SAP S/4HANA Cloud, the ability to modify core functionality is deliberately restricted, preventing the kind of deep customization that was common in on-premise deployments.?

Cloud-based systems operate under a continuous innovation model, where SAP provides frequent updates and enhancements. Maintaining a standardized core ensures that organizations can take advantage of these updates without encountering disruptions caused by custom code conflicts.

The financial impact of customization is another consideration. Development, testing, and maintenance of custom enhancements require dedicated teams, extensive documentation, and ongoing monitoring to ensure compatibility with evolving business requirements. Over time, modifications that once provided competitive advantages can become liabilities, limiting agility and increasing operational costs.

SAP’s recommendation for standard configuration assumes that its built-in processes can accommodate a broad range of business requirements. While this may be true for many organizations, certain industries rely on complex workflows that cannot be efficiently managed within SAP’s default structure alone.

Industry-Specific Challenges to Standardization

Banking, pharmaceuticals, and government agencies often require unique compliance mechanisms that currently standard configurations do not fully address. Regulatory reporting, audit trails, and risk management frameworks frequently require custom logic and additional security layers.

In manufacturing and logistics, companies depend on finely tuned scheduling algorithms, warehouse automation, and real-time tracking systems which standard SAP modules may not fully support. Custom-developed integrations with third-party logistics providers, proprietary hardware, or IoT sensors are common. While SAP’s Industry Cloud solutions aim to address some of these specialized needs, many companies still require modifications.

Retail and e-commerce present another case where hyper-personalization and omnichannel engagement strategies demand more than SAP’s standard capabilities. Custom pricing engines, loyalty program mechanics, and customer engagement platforms frequently necessitate modifications beyond SAP’s out-of-the-box offerings. Standard configurations may not offer the level of differentiation that businesses require to stay competitive.

The Clean Core Approach and Its Practical Implications

SAP’s Clean Core initiative addresses the long-term challenges of customization by advocating for an ERP strategy where core components remain unmodified while additional functionality is built outside of SAP S/4HANA. This aims to balance standardization with the ability to introduce tailored solutions when necessary.

Businesses are encouraged to develop external applications that interact with SAP through APIs and microservices. These side-by-side extensions enable companies to introduce additional capabilities without compromising SAP’s upgradeability.

SAP Business Technology Platform provides the infrastructure for this model, offering development environments for applications that can extend SAP functionality without modifying the ERP itself. This could be described as “standardized customization”.

Businesses that have relied on embedded modifications must rethink how they approach ERP customization. SAP’s custom code migration tools help evaluate which existing modifications can be retired, refactored, or transitioned to external platforms. This assessment process determines whether legacy customizations remain essential or whether SAP’s latest standard features can now support the same business processes.

Companies considering a cleaner SAP core must also reassess their custom ABAP developments. SAP now promotes low-code/no-code alternatives, cloud-native development, and integration via SAP Extension Suite and SAP Integration Suite.

The challenge in this transition is ensuring that critical business functions remain intact while moving away from past customization practices. Businesses that have heavily modified SAP over the years often need to engage in business process reengineering to determine whether long-standing workflows should be adapted to fit standard SAP offerings rather than ported over as custom extensions.

Business Process Optimization as a Precursor to Standardization

One of the most overlooked aspects of SAP’s push for standardization is the importance of business process optimization before system implementation.

Many legacy customizations exist not because SAP lacks necessary functionality but because businesses have shaped their ERP to match historical ways of working.

SAP provides process mining and optimization tools, such as Signavio, which allow businesses to map out existing workflows, identify inefficiencies, and determine whether adjusting internal operations could eliminate the need for customization altogether. By evaluating alternative ways of structuring approval processes, financial controls, or supply chain management, companies can often achieve the same outcomes without modifying SAP itself.

This shifts the discussion from whether standard configuration can replace customization to whether businesses are willing to adjust their internal processes to accommodate SAP’s best practices.

The ability to make these adjustments depends on factors such as organizational flexibility, regulatory requirements, and customer expectations. Companies that can rethink their workflows may find that standard SAP functionality meets their needs, while those with highly specific processes may still require tailored solutions.

The Role of AI in Reducing Customization Needs

As SAP embeds machine learning, process automation, and predictive analytics across its ecosystem, businesses can now replace some custom developments with AI-driven adaptability.

For example, workflow automation, which previously required custom-coded logic, can now be handled through AI-driven decision engines. SAP’s AI Core continuously refines approval processes, invoice verification, and fraud detection based on historical patterns, eliminating the need for rigid, pre-defined business rules. Instead of embedding hardcoded logic into SAP’s ERP, companies can allow AI to dynamically adjust workflows based on real-time data.

Predictive analytics is another area where SAP’s AI capabilities reduce the need for bespoke developments. AI-driven forecasting minimizes the need for custom reports or external analytics tools, making it possible to generate accurate, real-time insights without modifying SAP’s core functionality.

Many businesses previously created custom user interfaces and interactive dashboards to accelerate system navigation for employees. Now, SAP Joule, SAP’s AI-powered digital assistant, allows users to retrieve reports, trigger workflows, and execute transactions using natural language commands. This enables employees to interact with SAP without needing custom-built UI enhancements, reducing reliance on unique front-end modifications.

These advancements do not eliminate the need for business-specific adjustments but significantly reduce the cases where companies must develop their own automation solutions. SAP consultants are still required for evaluating whether past modifications should be carried forward, or whether AI-driven features can replace the need for manual configurations.

When to Standardize, Extend, or Customize

Advising clients on whether to adopt SAP’s standard processes, extend with BTP, or customize entirely requires careful assessment. Each option presents different trade-offs in terms of flexibility, cost, and system maintainability.

A structured decision-making framework can help guide this process by evaluating multiple factors. First, process evaluation determines whether SAP’s standard functionality meets business needs with minimal adjustment, making a Fit-to-Standard approach preferable.?

Next, checking for adaptability versus customization assesses whether essential requirements, not natively supported, can be addressed by adjusting business processes rather than modifying SAP. If standard SAP cannot support the requirement, extensions should be considered by establishing whether an SAP BTP-based extension can provide the necessary functionality without modifying the ERP core.

Finally, if direct customization is the only solution, its long-term viability must be evaluated by determining whether the modification can be maintained through future SAP upgrades and whether the cost of ongoing maintenance justifies the business value it provides.

How Standardization Affects SAP Consulting

The shift toward configuration-first ERP strategies also alters the role of SAP consultants. Rather than focusing on how to modify SAP, consultants will increasingly focus on how to implement SAP in a way that avoids long-term modification risks.

As SAP encourages cloud-based, modular, and AI-driven processes, consultants must adapt their expertise for these new customer requirements.

Future SAP projects will require expertise in business process optimization, ensuring that SAP’s standard workflows can be adapted to meet unique business needs without relying on custom code.

Consultants must also have a deep understanding of SAP BTP and API-based extensibility, shifting focus from embedded ABAP customization to SAP BTP development, API integrations, and event-driven architecture.

As AI continues to shape SAP’s ecosystem, developing AI and automation strategies will be essential for identifying where intelligent automation can replace traditional customization efforts.

Additionally, with RISE with SAP accelerating cloud adoption, consultants must possess cloud-centric implementation knowledge to guide businesses through the transition from on-premise customization to cloud-based extensibility.

Will Customization Disappear Entirely?

The future of SAP is not fully standardized ERP, but a balance between standard processes and modular extensibility.

As AI becomes more sophisticated and cloud-based solutions expand, businesses will have fewer reasons to embed customization directly into their ERP systems.

SAP’s roadmap suggests that AI-driven automation will replace many historical customization requirements related to workflow automation, forecasting, and user interaction. As SAP BTP continues to expand, it will provide more tools for side-by-side customization, further reducing the need for ERP modifications.

Low-code/no-code development is set to become the new standard, enabling business users to build process extensions without requiring deep technical expertise. Meanwhile, cloud-first strategies will encourage increasing standardization, as SAP S/4HANA Cloud operates on a continuous upgrade model, limiting direct customization options.

This means that the most sustainable long-term business IT strategy is to evaluate customization needs carefully, keeping only the modifications that genuinely drive business value and shifting the rest to external extensibility frameworks.

What This Means for SAP Consultants and Organizations

Standard configuration will redefine where and how customization is implemented.

For businesses, this requires a shift in thinking. Instead of expecting SAP to be fully customized to existing workflows, organizations must evaluate whether SAP’s standard functionality can meet business needs with minor adjustments and modular extensions, rather than deep system modifications.

As this change in SAP system architecture develops further, consulting success will depend on guiding organizations through this transition, helping them determine when customization is necessary and when alternative approaches are more sustainable: helping businesses make the right choices for long-term system adaptability.

Custom ERP is not disappearing, but it is evolving. The challenge for SAP professionals is not whether standardization can replace customization, but how to reframe the need for customization as an opportunity to optimize business processes, and ensure future-ready SAP systems.?

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