Best Practices for Successful ERP Implementation
by Nikki Kaul
According to a recent Gartner Research study, somewhere between 55-75% of Enterprise Resource Planning (ERP) implementations fail. In our recent conversations with clients, we have uncovered some of the biggest mistakes companies make when implementing ERP software.
Many of the CIOs we speak to assume that the implementation of a new ERP is an exercise in organizational improvement, mostly involving executive sponsors and the IT department. We have also seen that, even when decision-makers have the foresight to incorporate change management into the project plan, they are quick to drop it as soon the budget tightens in any way.
An ERP system evolves an organization’s most critical operations and processes, and its impacts are much larger and much more widespread than leaders estimate. The implementation will likely introduce new business processes and change day-to-day interactions for your employees. Holistically, the company will experience palpable changes to technology, process, and people.
Most mid-sized companies consider an ERP implementation to be a significant investment that demands demonstrated ROI. That can be a strong reminder to leaders that they need to be budget conscious. But remember, you are also changing the way employees have been doing day-to-day tasks for a long period of time – sometimes decades. Negatively impacting business operations and people may slow down your implementation and even cost more than you planned.
If you are in the middle of or in the process of considering an ERP implementation, here are a few key things to keep top-of-mind:
Change Management ≠ Communications and Training
Change management is often set on the back burner because leaders think change management only includes fluffy communications and training – things that can be handled later. When in reality, planning and designing communications are only a small part of an end-to-end change roadmap. Even if a change roadmap only consisted of those two components, communication is also not as simple as sending an email to your employees letting them know your decisions along the implementation journey. Training too is just a single aspect of change management, one for which strategy and planning cannot be an afterthought.
We have seen employees walk out on several occasions because of frustrations stemming from poor handling of just these two components. Change is complicated and the nuances of your audience, culture, timing, involvement, and messaging must be mindfully considered. Getting business results from the change you are implementing is the real heart of change management.
Timing Is Part of a Strong Strategic Vision
One of the CIOs we recently engaged told us he had not budgeted for change management in his ERP implementation plan and thought he could consider it after the system was in place. On the other hand, some of our clients with more segmented employee groups (i.e. salaried, hourly, union workers, etc.) are even warier of incorporating change management strategies earlier in all their projects because the sensitivities around each employee group are more obvious.
The truth is that considerable change implications exist across all ERP projects, regardless of industry, culture, or employee landscape. So, when’s the right time for you to start thinking about your change management strategy?
When leaders are intentional about incorporating change management into their implementation strategy from the inception of the project, they keep productivity up, cause minimal disruptions, and overall see a faster implementation process than clients who neglect the change management piece.
Don’t Ignore the Most Important Characters in Your ERP Success Story: End-Users
Good product marketers have long understood that people are not rational consumers. Companies can’t just build a technically great product and assume that people will want to use it. In order to get to a successful product, you have to start from the customer’s perspective and work backward.
As leaders within specific areas of an organization are considering or undergoing an ERP implementation, end-users in other areas are often the last to be engaged in the process. Consider, if end-users don’t adopt your new technology to the degree that would create a significant return on investment, the whole project will be considered a failure. It’s essential to recognize that a new system will result in changes for most end-users – some may see an increase in responsibilities and some may see a decline. In the absence of careful planning, each of these scenarios can insight emotional reactions, the likes of which can significantly disengage your workforce. A significant part of change management is making this aspect of the journey seamless. Are you managing expectations? Are you starting from your people and working backward to the system?
Rise Above the Valley of Despair
After conducting an ERP implementation, many organizations tend to experience a temporary decline in performance. This commonly occurring dip, known as “the valley of despair”, takes place because we often place most of our emphasis on only one aspect of “technology, process, and people ”. Readiness for any ERP also includes the change acceptance of key stakeholders, confirming their understanding of why it is necessary and how it will ultimately affect them. Without their understanding and acceptance, most ERP implementations will fail. Failure results in additional costs for support, training, and development of solutions. This could be avoided or at least minimized if there is a change strategy in-place with dedicated hands-on support around people and process before, during, and after the implementation.
If orchestrated correctly, change management will be the reason your implementation is a success. It will help your organization identify change impacts and knowledge gaps, align leadership and key stakeholders on the vision and strategy throughout the project, reduce uncertainty and share resources with all stakeholders, including the very important end-users.