Change Management: Eliminating Risks in ERP Implementation

Change Management: Eliminating Risks in ERP Implementation

Successful change management contributes to risk elimination in an ERP implementation. Often, with change comes the customary stepping outside of the commodore zone which for individuals and businesses alike can be very painful. But if handled correctly, change will see the seed for long-term growth and business progress. Implementation of ERP systems for the first time or change of existing ERP is usually a giant step for a business and is associated with operational transformation. It affects not only top management but the whole team.

ERP project failures happen for many organisations, Gartner estimates that 55% to 75% of all ERP implementations are not meeting their initial goals. But even with these statistics, business owners must ensure they do everything possible to facilitate the success of an ERP implementation by applying the same effort in choosing the correct vendor to make sure that they manage changes inside their own team correctly. In this way, the risk of failure is mitigated and ERP implementation becomes smooth and transparent. Change is inevitable as companies shift their goals, evolve and, by consequence, transform. Avoiding risks completely is almost impossible because uncertainty is always present, but through specialist know-how, the process of vagaries of change can be tamed and project energies translated into reaching an achievable goal.

In this article, we will have a deeper look into successful change management and the main elements that are included in this process.

Change Management Failures

ERP implementation change management doesn’t occur by itself. It’s a process which starts before implementation and requires careful planning and well-thought-out approaches with proven methods.

Change management includes preparation, support, planning and help to companies and teams with making organisational changes. There are common key reasons for change management failures that can be found in projects:

  • Making too many changes at the same time

Every business depends on the input of people. And habits form from familiar processes being undertaken day in, day out. It can be overwhelming for employees when they are asked to change the way they perform tasks without the necessary time to learn new technology. Forcing change through too quickly can be catastrophic and damage the perception and acceptance of the project completely.

  • Lack of sufficient information 

Stakeholders maybe not be aware of what is included in ERP implementation, which timelines are set when changes are to happen, what are the expectations from them and at which stage they should participate.  Or changes are implemented without prior consulting and feedback from people who will be direct users of the system, what they believe about the system and how their use of it will influence their daily routine, performance and general satisfaction from the job.

  • Lack of cooperation between departments 

Lack of cooperation includes also a lack of communication. But it is not the only element. Different departments might have different ideas of what the project should look like, have different expectations, not agree on certain things and not understand their roles in the process, then lack of cooperation between departments slows down the overall progress and in complicated cases might cause project failure.

  • Resistance and sabotaging of changes in the team 

No matter how good your system is, if the team or individual departments are not willing to learn how to work with it to utilise the features to the full extent or they are sabotaging the use and keep using old tools for work, it will lead to failure of change management. For example, people get used to keeping important company data in separate databases such as Excel spreadsheets, and the use of ERP systems is something that requires a different way of working with data and its storage, then it might take time and effort to develop new habits and adapt to new business processes. But if there is no will to commit to it and people want to keep old good ways of doing things, they start sabotaging the use of the new system or using it partially.

Change Management: Eliminating Risks in ERP Implementation

Managing Changes for ERP Implementation

Changes might bring a lot of discomfort to the established routine of companies. But when handled properly it can be a game-changer for the entire company.

  • Communicate the need for change to company top management 

It is very crucial to make the top management of your company understand why the ERP implementation or ERP change is important at the current stage of the company’s development. Key stakeholders like the Financial director, Operations management director, IT director, eCommerce director, Manufacturing director or Supply chain director should not only be aware of the overall project implementation scope, timing and future outcomes. They should be involved in all stages of decision-making, understand the changes in management strategy, and define the key responsibilities of each department and employee.

What is also important is a positive attitude to changes. It is the task of team leaders to set the expectations of the changes associated with the ERP implementation as good and positive for business in general and employees in particular.

  • Conduct SWOT analysis for ERP project 

Before starting any changes in your company concerning ERP implementation, you will need to conduct a comprehensive SWOT analysis of strengths, weaknesses, opportunities and threats. All key stakeholders within your company should participate in that task.

Weaknesses and threats should be mitigated at the early stages of project planning or if it is impossible, you should have them defined and monitored in different stages of project implementation.

  • Develop a stakeholder management plan 

Communication is a key to successful project management. And one of the most crucial elements if it is the development of a stakeholder management plan, which should clearly define what type of information should be communicated to which stakeholders when it should be communicated and through which means, as well as what is the level of detail of that information.

  • Develop a change management plan 

A clear vision of what you want to achieve allows splitting the final goal into several actionable items and simplifies the route to achieving that goal. In your change management plan, you should take into account all elements of the business and keep an eye on how changes you plan might affect each element.

  • Make sure the whole team is involved in ERP implementation 

It is important to include in the ERP implementation process all people who will be using the ERP system, not only top management. Cooperation between different departments is key to successful implementation and further use of the system. Involving leaders and key employees from purchasing departments, accounting departments, production departments, sales and marketing departments or any other departments that are going to use an ERP system is going to help to grant a holistic approach to implementation and will significantly help to overcome resistance to changes. People should know ‘what is there for them’ in the upcoming changes and understand that the ERP system is going to make their life easier and work smarter, not harder.

  • Make sure the team is ready for change

Human resources are the most precious in any business. And the level of competency of your employees influences the overall success of ERP post-implementation period when the changes in software lead to changes in operations within the company. Make sure that your employees have enough skills to be able to follow the changes, but more important is to make sure that they get enough training on new approaches to work, and working processes. ERP implementation in any company assumes that as a result all operations will be streamlined, and there will be required less manual work and less paperwork. Communicate it to employees and make sure that their work routine is really improved with new potential changes.

  • Take into account past experience and best practices

Take into consideration past successes and failures in change management. Strategies will be different for different types of companies and will have their own peculiarities according to cultural backgrounds. Consider a retrospective of previous projects and what was easily accepted by employees, what wasn’t accepted, what went well and what was handled in a wrong way. Make sure that lessons learned in the previous projects related to change management are taken into account in ERP implementation change management too. Customise best practices of change management for your unique company and your unique situation.

  • Analyse how ERP implementation affects current business processes 

ERP automates most routine business processes and makes them significantly easier to handle. But what if processes are disorganised, or organised with gaps in logic or mistakes. Then things work some way in business, but there is space for improvements. And before automation, you need to make sure that all processes are aligned with each other and work smoothly. It is very important to make sure that current business processes most likely will need to change or adjust before automation happens and before ERP implementation is possible. The main question here is: ‘Are we ready as a business to make the necessary adjustments and start doing things in a different way?’ and ‘How end users of the system and their daily operations will be affected, what can lead to failure of adopting new approaches?’

If business processes are incorrect and automated it will result in to incorrect output for the whole company and increases the risk that end-users will be sabotaging any changes.

  • Test and sense-check all the changes 

Any changes should be tested again and again to make sure everything works smoothly and really improves the workflow of the company. It should be a planned process of thorough testing and gathering feedback from end-users before and after making any changes. Implementing changes too fast just to meet the deadlines is more destructive than going slowly and spending time on testing. Ongoing tests before going live with the ERP reduce the risks of resistance to using it.

Conclusions

Changes are inevitable as the company grows. But ERP implementation is not an easy process, it usually requires changes in business operations and processes, changes in technologies used and changes in cooperation between company departments. It can be very frustrating and challenging if handled without prior planning and might lead to the failure of the whole ERP implementation project. The most crucial element of a change management plan should be managing employees’ readiness for change. Because in the end, it is people who use the system on a daily basis. Failures in change management lead to project delays, budget overruns, employee resistance and sabotaging and as the result – ERP abandonment. We consider proper planning and a comprehensive approach to communication of all upcoming changes a key to successful change management. A clear understanding of the changes needed, and open communication of all details and the results of these changes will help to decrease the level of change resistance and grant smooth ERP implementation and further use. Developing a resistance management plan will help to identify weak spots and analyse the ways of early resistance management.

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Kateryna Sloboda
Kateryna Sloboda
Head of Digital Marketing
Digital marketing consultant with expertise in growth marketing, branding, paid marketing and social media marketing.