Change management – the key to ERP success
ERP system implementations involve significantly more thought and effort than simply selecting and implementing the right system. They provide the opportunity to remove process and organisational inefficiencies which evolve over time, acting as a catalyst for the cultural and business transformation required if the full benefits from the ERP investment are to be realised.
In this blog, Grenville Allman from independent business and ERP consultants AHC outlines how developing a plan for change management are critical in achieving truly successful ERP implementations.
Develop a Formal Change Management Plan
An effective change management approach involves introducing best practices throughout the entire organisation to increase efficiency, improve overall business performance and maximise the ERP system’s value.
As with any complex project, resistance to change is the norm, not the exception. Expect it, prepare for it and manage it to minimise the impact that it can have. Ignoring it and hoping it will go away is not an option. It needs to be presented as an opportunity to improve and should be led from the top.
Whilst this may sound daunting, it does not need to be if you plan for it, but there are challenges to overcome, including:
- Finding time for change – and this is most typically when change is most needed – as existing processes would benefit from an improvement to release people’s time
- A lack of in-house experience – managing change requires a somewhat specialist set of skills to coach and encourage others to adapt to new ways of working.
- Visioning – many people struggle to see opportunities for change, particularly when they are engrained in the day-to-day existing processes and ways of working.
Seek external support but retain ownership
It can be difficult for employees to break away from ‘it’s always been done this way’ and often an independent external view can ask the obvious questions such as ‘why?’ and ‘could it be done this way?’ whilst providing evidence from other businesses who work differently.
External independent ERP consultants can help this process by challenging existing working practices and helping people to think differently, but responsibility for change management cannot simply be handed over to a third party. For change to be effective, it must be driven internally with board-level sponsorship and senior management buy-in.
Asking a consultant to come in and simply deliver a change programme will inevitably result in significant resistance and failure without this. Their role is to facilitate and manage change, suggest new ways of working and engage with the company at all levels to secure an agreed way of working.
Set Realistic Timescales
Our experience is that many businesses increase the risks of not achieving a successful ERP implementation right at the start of the project, by setting unrealistic timescales based around a perceived internal deadline for go-live (e.g. a financial year-end).
To secure a project, ERP vendors may then agree to work to such a target go-live date, but, in order to achieve this, encourage clients to implement a new system based around existing processes, thereby managing project scope and reducing the level of change and impact on the business.
Whilst this approach seems logical, it can be used as an excuse for ignoring the “elephant in the room” of addressing the change needed within the business, which is likely to be difficult to manage and require challenging conversations.
The result can be that the business invests a significant amount of time and money in a new system that supports existing inefficient processes, with little in terms of return for this. Whilst the intention at the outset may be to move onto changing processes (and, inevitably, reconfiguring the system), it can then be difficult to motivate people, or find the time to do this, having just gone through the disruption caused during implementation.
It is therefore important to set achievable timescales for implementing an ERP system, that consider the impact of the changes within the business that will be needed if it is going to deliver you the benefits to justify the investment. This will also help you avoid configuring a new system around existing processes that you already know are going to change.
Five strategies for effective change management
As independent ERP consultants, we work collaboratively with businesses to successfully select and implement the right solutions for them, whilst focusing on the changes to business processes needed to provide the desired returns on what is a significant and critical investment.
We guide our clients to work through these key change management strategies:
1 – Mobilise and Align leaders
Encourage teams to communicate project scope, rollout strategy and implementation schedule before an ERP project gets underway.
Key aspects of this include:
- Education – It is essential that leaders understand what ERP is, what is involved in implementing ERP, why the business needs it and what the benefits will be
- Leadership – Management teams need to understand the impact of an ERP implementation (it will be hard work) and their role and responsibility in supporting the change, always leading by example and releasing funding where additional resources are needed to provide cover for the project team day to day tasks.
- Communication – of project scope, implementation schedule, roles and responsibilities, impact on workload, the criticality of the project to the business
- Empowerment – the implementation team needs to be given the authority to make decisions. Establish a Steering Committee, which the implementation team report to on a regular basis, who will also need to approve changes which impact on costs or are considered business-critical
2 – Identify and Manage “People, Opportunity and Risk”
It is critical to look at both the opportunity and risk of a project and develop strategies to address the cultural changes that independent ERP system selection will create.
Key areas to address include the following:
- Organisation and people readiness assessments to identify both opportunity and risk as early as possible and define actions to realise these opportunities and mitigate risks
- Monitor the “people” risk mitigation progress by conducting mid-project and post-implementation checks
- Identify key business process leaders across the enterprise, who are able to motivate their teams and identify and implement business improvements
3 – Communicate the Case for Change
Define and deploy a detailed communication plan – which answers:
- What will be communicated
- The reason for the communication
- By whom (audience) from whom
- The method and frequency of communication
Communications should include:
- Definition of project scope, objectives, milestones, deliverables, critical success factors and approaches
- Information between and amongst all project stakeholders
- Reports on progress actions to address issues as they arise
4 – Design the Future Organisation
Developing and designing new, leaner processes will involve changes to lines of responsibility and the end to end management of processes. This is likely to require redefining job roles and the competency requirements of the business.
Areas to consider include:
- Analysis of the current condition of the business, locations, and departments in terms of processes, organisation and people systems
- Development of a transformation plan that defines actions, responsibilities and sets the timeframe to get to the target condition
- Analysis of the implications for HR such as performance management, compensation and classification, recruiting, hiring and on-boarding, etc.
5 – Enable the Workforce
Enabling the workforce to thrive in the transformed organisation is more than simply providing training on the new system. It is likely to involve defining overall job responsibilities, the skills and capabilities required and organisational design changes.
Recognise that roles will change and become more proactive than reactive. Whilst this will enable the business to get more from its people and should make jobs more rewarding, there could be fear of such change.
Focus on the following initiatives:
- Assess the current workforce in terms of skills, abilities, experiences and capabilities; assess staffing impacts
- Develop/implement training strategies and plans to close learning gaps
- Well before go-live, help end-users, leaders, process owners, customer, suppliers understand how their processes and work will be impacted.
- Secure buy in to change by involving people from all levels in agreeing on the changes to be made.
Investing in a new ERP system for your business is a crucial step towards increasing business efficiency and having greater oversight and management over all areas of your business. However, if your business is not prepared for the changes that occur with such implementations, your system could fail to deliver the desired benefits. With change management techniques, you can achieve success.
As independent ERP consultants, AHC has over 20 years of experience of helping businesses to successfully select and implement ERP systems and, importantly, maximise the return on their investment by avoiding the potential pitfalls of such projects.
We have a proven track record of helping businesses select and implement ERP systems and maximise return on investment. Change management is a key element of our approach and we help our clients identify and develop a tailored plan for managing the change involved in their business.
Contact AHC today to see how we can help your business get the most from your ERP investment and manage the associated change.