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The #1 Thing You Need to Do Before Implementing an ERP System

The #1 Thing You Need to Do Before Implementing an ERP System

The implementation of an Enterprise Resource Planning (ERP) system is likely one of the most critical business initiatives that any organization will face. A new ERP brings many potential positives, including better integration of key business processes in the areas of marketing, sales, financial management, production, delivery, quality management and delivery management. An ERP system can also reduce operating costs, better manage data and provide a more robust, objective way to plan strategically.

While these positives and benefits are achievable, they do not come easily and require a solid understanding of how the ERP system will affect and impact the organization and each end-user of the new technology. In other words, implementing an ERP system can be a significant change for an organization, and change is hard!

Why Is Change so Difficult?

Simply put, people are creatures of habit. If you think about it, much of what we all do on a daily basis is built around routine. Whether it’s what we do when we get up in the morning or the route we take to work, we tend to do things in the same way or follow the same steps without really thinking about it. When change is introduced to people’s lives (even a small change), it creates a feeling of discomfort. No longer can an individual follow a routine. They now must put more thought into how to accomplish even basic tasks. People become attached to the processes and procedures they are familiar with and, even if there is belief that there is a better way to do something, will often struggle with any change that disrupts the status quo. What complicates the matter even more is that no two people deal with change the same way. Some people move through the phases of change more quickly, while others require a great deal of support.

If we circle back to the implementation of an ERP system, it’s easy to see the volume of change. People will need to learn not only how to use and navigate the new system but also new work processes and reporting capabilities. This is compounded even more if the system being replaced has a long history at a particular organization. From an accounting perspective, the new ERP could change the way processes are done, including those that affect the reporting of revenues, expenditures, assets and liabilities. The bottom line is that this type of change is significant. The new ERP affects critical areas of the business or organization, and getting people to become effective users of the new system is key to achieving the benefits mentioned earlier. In other words, resistance to change must be managed.

Use Change Management to Overcome Challenges

While implementing an ERP system can be very challenging because of the change impact to an organization, there are ways to minimize disruption by embracing the concept of change management. The Association of Change Management Professionals, an international organization, defines the practice as “a deliberate set of activities that facilitate and support the success of individual and organizational change and the realization of its intended business results.” In practice, these activities often begin with assessing an organization’s culture and dynamics through interviews, focus groups or surveys and gathering information on past change initiatives to see which tactics worked and which did not. A company’s historical track record with change is a key predictor of future success with, for instance, technology initiatives. Unfortunately, senior leadership often underestimates the lasting effects failed or unpleasant past initiatives have on front-line staff. If these front-line system users have good reason for cynicism and resistance, their past creates a huge hurdle to overcome. Because they are typically most affected by these changes, these users need to be in the right frame of mind before they are ready to embrace new technologies and processes.

Follow These Change Management Best Practices

Before beginning an initiative like an ERP implementation, the following are best practices to consider:

  1. Understand the change readiness of your organization by evaluating certain criteria:
    • History: What is your organization’s history with implementing change? If poor results occurred, think through why and how this initiative will be different.
    • Saturation: What is your organization’s change saturation? If you have many other change initiatives going on, be realistic with timelines and how quickly end-users will embrace the change.
    • Leadership: Do you possess the knowledge and understanding to lead and manage change? If you don’t have “been there, done that” leaders and managers who have successfully implemented change, determine how you will get that competency.

  2. Develop change management tactics to help maximize the success of the project:
    • Communication: Develop a detailed communication strategy and plan that addresses the unique information needs of those impacted by the new ERP. Think about things like stakeholder identification, communication frequency and the delivery channels to be used.
    • Sponsor Road Mapping: Identify who the executive sponsor will be for the project. Ensure they understand their role and that they are visible and engaged throughout the project. Create a road map to help the sponsor with the specifics of what they need to do, such as building coalitions and communication.
    • Training: Build a complete training plan to help people learn the features and functionality of the new ERP system. Leverage scenario-based learning to make the training real and applicable to the end-user.
    • Resistance Management: Develop customized plans to help the more resistant groups (discovered during the change readiness assessment). This includes special tactics to help groups through change that could include education and listening sessions.

  3. Reinforce the change once the new system is implemented. Reinforcement can include the following:
    • Celebrate Success: Highlight business successes the new system fostered to keep momentum strong.
    • Provide On-Going Support: Some parts of the organization will need additional training and support to become proficient users of the new system. This includes seeking feedback regarding what’s working and what’s not.
    • Incorporate Into Performance Management: Link effective usage of the new system to performance expectations.

Implementing an ERP system can bring tremendous value to your organization, but it also comes with some risk and a substantial amount of change. People are naturally resistant to change, even if that change is needed, but you can be successful at navigating it if you commit to the discipline of change management.

Author(s)

Jeffrey Wulf
Jeffrey H. Wulf
Partner
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