If any of you have read our founder, Mike Haile’s book, then you will have read about the conversation he had with his boss about the need for ERP change management. Mike’s boss thought change management was discretionary, so he decided to take its cost out of the budget. It is hard to say how expensive the decision was, but there was resistance to change, which resulted in delays, and the project was run to about 30% over budget. This was a multimillion-dollar project.
In this article, we will explain ERP Change Management, why it is important, and the steps required to manage change effectively.
Understanding ERP Change Management
ERP change management is vital for successful implementation. Without it, you risk project failure, wasted resources, and frustrated employees. Let’s explore why this is so important and how to do it right.
What is an ERP and what is change management?
In case you are new to our blog and or business systems, an ERP (Enterprise Resource Planning) system integrates various functions into one complete system to streamline processes and information across the organization. Think of it as the software that will act as the backbone of your professional services business.
ERP Change Management is like any other change management but focused on managing the changes associated with implementing a new ERP. It is a niche unto itself because changing ERPs is hugely disruptive to the business and means significant changes to the way your employees will work.
Why is it important?
ERP systems are multifaceted. They integrate various functions like finance, HR, sales, and inventory into a single system. This complexity means changes affect multiple areas of the business simultaneously. Effective change management is essential because it ensures that all departments can adapt smoothly, minimizing disruptions and maximizing the benefits of the new system.
Similarly, neglecting change management can lead to serious issues such as project failure, cost overruns, and low user adoption. Without proper change management, employees may resist the new system, leading to poor usage and decreased productivity. Additionally, unforeseen problems can arise, causing delays and increased costs. Overall, failing to manage change effectively jeopardizes the entire ERP implementation, wasting time and resources.
The Need for ERP Change Management
Common challenges faced during successful ERP implementations
ERP systems integrate multiple business functions, which means change management must address various challenges, including resistance from employees, disruption of workflows, and technical difficulties.
- Resistance to change from employees: They may fear job loss or struggle with new processes.
- Disruption of existing workflows: Existing workflows will change, causing initial disruption.
- Technical difficulties and data migration issues: Moving data and ensuring the new system works can be technically challenging.
Benefits of ERP Change Management
Effective ERP change management brings numerous benefits to an organization. For example:
- It leads to higher user adoption rates. When employees are well-prepared and understand the new system, they are more likely to embrace it, leading to smoother transitions and more effective use of the ERP system.
- Change management minimizes operational disruptions. By addressing potential issues and providing continuous support, the business can maintain its operations with minimal downtime.
- It improves ROI (Return on Investment). When the ERP system is fully utilized, the organization can see better performance, efficiency, and cost savings, making the investment worthwhile.
Additionally, effective change management fosters a positive organizational culture, enriches employee satisfaction and improves overall productivity. These combined benefits underscore the critical importance of thorough and thoughtful change management during ERP implementation.
Key Principles of ERP Change Management
Communication: The importance of clear, consistent communication
Clear, consistent, and transparent communication is vital throughout the project. It helps ensure everyone is on the same page, reducing misunderstandings and resistance. By keeping all stakeholders informed about the project’s goals, progress, and any changes, you build trust and cooperation. Effective communication also allows for timely identification and resolution of issues, mitigating potential risks early on.
Training: Comprehensive training programs designed for different user groups
Comprehensive training programs customized for different user groups are essential for a smooth transition. Proper training ensures that employees understand how to use the new ERP system effectively, which increases their confidence and competence. When training is customized to address the specific needs of various departments or roles, it enhances user adoption and reduces the learning curve, leading to quicker and more efficient system utilization.
Support: Ongoing support mechanisms to address issues
Ongoing support mechanisms to address user queries and technical issues are crucial for maintaining momentum after the system goes live. Providing continuous support helps users overcome any difficulties they encounter, reducing frustration and downtime. This support can come in various forms, such as help desks, online resources, and dedicated support staff, ensuring that employees have access to the assistance they need whenever they need it.
Adhering to these core principles of change management—communication, training, and support—can significantly reduce project risks and facilitate a smoother transition to the new ERP system, ensuring its successful implementation and long-term benefits for your organization.
Steps to Effective ERP Change Management
a. Planning
Evaluate your organization’s readiness for change. Understand the current state and what needs to be addressed. Your plan should include:
- Conducting a readiness assessment to gauge the organization’s preparedness.
- Defining the scope, objectives, and key performance indicators (KPIs) for change management.
- Creating a detailed change management plan with timelines and responsibilities.
If you need help, we have a change communication plan.
b. Communication
Form a team dedicated to managing change. This team should include members from various departments. Develop a robust communication strategy that includes regular updates, feedback mechanisms, and stakeholder engagement. The plan should utilize various communication channels (emails, meetings, newsletters) to reach all employees. Finally, address concerns and misconceptions proactively.
c. Training
Comprehensive training is a critical step in effective ERP change management. It ensures that all employees understand how to use the new system, which boosts their confidence and competence. Tailoring training programs to different user groups helps address specific needs, leading to higher user adoption.
d. Support
Establishing robust support mechanisms is a key step in effective ERP change management. Setting up a dedicated support team for ERP implementation strategies to handle post-implementation issues ensures users have immediate assistance when problems arise, minimizing disruptions.
Additionally, establishing help desks and user forums provides accessible platforms for users to get answers and share knowledge. Providing ongoing training and resources for continuous improvement helps keep employees updated and proficient with the system, encouraging a culture of continuous learning and adaptation.
Involving Stakeholders in ERP Change Management
Readers of Mike’s book will know how important stakeholder identification and management is to any project. This also fits perfectly with change management as involving the stakeholders is key to the success of the project.
Strategies for involving stakeholders:
- Regular Meetings and Progress Updates, Involving Stakeholders in Decision-Making, Collecting and Acting on Feedback
- Regular meetings and progress updates.
- Involving key stakeholders in decision-making processes.
- Collecting and acting on stakeholder feedback.
Overcoming Resistance to Change
Resistance to change is natural. Some team members might be worried about learning a new system or afraid it will make their jobs harder. Address these concerns head-on:
Practical strategies to overcome resistance
- Listen to Feedback: Encourage your team to share their thoughts and concerns. Listening shows you value their input and helps you address any issues early on.
- Show the Benefits: Highlight how the new ERP system will make their jobs easier, improve efficiency, and benefit the company overall.
- Provide Support: Ensure there’s a support system in place to help your team transition smoothly during the ERP transition. This could be through training sessions, help desks, or dedicated support staff.
Continuous Monitoring and Evaluation of ERP Change Management
There is no point in putting together an ERP Change Management plan and then filing it without reviewing it again. That may seem obvious, but it is astounding to see that many businesses do exactly that. That plan needs to be continuously monitored and controlled to ensure it is being implemented effectively.
Methods to measure the success of change management
Establish KPIs to measure the success of the change management process. These might include user adoption rates, system utilization, and employee feedback.
Then, follow up on these with employee feedback surveys, system usage statistics, and the achievement of the pre-defined KPIs
Tips for continuous improvement include:
- Regularly review and adjust the change management plan.
- Encourage a culture of feedback and openness.
Example / Case Study of Good ERP Change Management
We were brought in as project managers to manage the ERP implementation and change management for a large events company based outside of Detroit. The company had several offices in the UA and around the world. The business had the foresight to bring in an external consultancy to help manage the change.
This was a challenging project because the software was untested for a business of its size, and the software supplier team was inexperienced. The change team did an excellent job of planning and executing the change in the business. They planned all the communications and training. They managed user expectations and concerns. They provided excellent training materials.
There is no doubt that their presence made what could have been a tricky implementation into a success.
Lessons learned and best practices for ERP change management
Although it is tempting – Don’t be like Mike’s ex-boss. ERP Change Management is not a nice to have so make sure it is incorporated as part of your overall implementation plan. Invest in external experts if possible. This is a worthwhile investment and will save you a lot of time, headaches and money.
Common Mistakes to Avoid
Identifying typical pitfalls in ERP change management
Even if you do have change management in place, it is not all plain sailing. There are some common pitfalls to avoid. For example:
- Lack of leadership support
- Underestimating the complexity of the change.
- Inadequate training and support.
- Lack of continuous communication.
Advice on avoiding these mistakes
- Ensure top management is fully committed to the change.
- Communicate early and often. Keep everyone informed about what’s happening and why.
- Provide comprehensive training to all employees. Ensure they understand how to use the new system and how it benefits them.
Conclusion
ERP change management is not just an add-on to your implementation plan – it’s an integral part of ensuring your new system’s success. By planning carefully, communicating effectively, and providing the necessary support, you can lead your organization through this transition smoothly and reap the benefits of your new ERP system.
Frequently Asked Questions
What is ERP change management?
ERP change management involves preparing, supporting, and helping individuals, teams, and organizations in making organizational change.
What are the risks of not having a change management plan?
Without a change management plan, you risk low user adoption, project failure, and wasted resources.
How can we ensure continuous improvement after ERP implementation?
Regularly review the change management process and make adjustments based on feedback and performance metrics.
How long does the change management process typically take?
It takes as long as the ERP implementation itself. The duration varies depending on the organization’s size and complexity, ranging from a few months to several years.
How can we involve middle management in the ERP change management process?
Involve middle management early and give them ownership of parts of the process. Their support is significant for success.
What role does organizational culture play in ERP change management?
A supportive organizational culture can significantly ease the transition. Encourage a culture of continuous improvement and openness to change.
Can small businesses benefit from ERP change management?
Yes, ERP Change management is vital for any business size to ensure the successful adoption of the new system.
How important is training in the ERP change management process?
Training is very important for ERP management. Without proper training, employees won’t be able to use the new system effectively, leading to frustration and decreased productivity.
