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ERP Change Management 5 Key Considerations about ERP and Change Management

 
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By Jeff Carr, Principal, Ultra Consultants

Implementing or upgrading an ERP system is a good opportunity for a manufacturer to create lasting business change within an organization. That’s why ERP change management is so important.

We define ERP change management as more than simply selecting and implementing an ERP system.

Instead, we see ERP change management as transformational business process improvement. It involves introducing best practices throughout the entire organization to increase efficiency, improve overall business performance and maximize ERP system value.

5 Key Considerations

Over the years of teaming with mid-market manufacturers, we’ve seen five key issues to keep in mind when it comes to ERP and change management.

  1. ERP as a Means to the End: One of the most important components of change management is thinking about ERP as more than the information system “end game” or final destination. The ERP system is in fact the “means to an end” – the tool to enable improved business performance. The priority must be on leveraging modern technology to streamline operations, improve employee productivity, and improve performance of the business – reflected in improved profit and loss metrics on the company’s balance sheet or P&L.

  2. Move Beyond Features and Functions: Another key component is moving the conversation beyond an examination of software features and functions. Before an investigation of ERP systems begins, we’ve found that a business mapping exercise is very useful. This approach tracks Key Performance Indicators (KPI) for insight into where waste resides, where bottlenecks occur, and where there is a possibility for improvement. Business process mapping helps elevate the conversation beyond features and functions, and stress the business case for change.

  3. Organizing for Success: We can’t overemphasize this one. Organizing the ERP selection team is a key success factor for ERP change management. Establishing a cross-functional selection team is important, as is gaining internal consensus and participation from all parties. Engaged commitment is needed from the shop floor, shipping, accounting, the front office, inventory, quality, production and more. Be sure the right people are on the ERP selection project, and that they are in alignment with executives. And finally, does the ERP project have sponsorship within the entire enterprise? We see a direct correlation between the involvement of a CEO or other executive sponsor and the overall success of the ERP project – the more involved the sponsor, the better the chance of ERP success.

  4. Educate for Success: It’s been our experience that there will be organizational resistance to an ERP system if there isn’t an emphasis on educating the team about ERP and change management. All parties must have insight into what the new system will mean for their departments, and for the entire organization. Education must stress the new capabilities, new processes and the expected value after implementation. Change follows when there is shared understanding.

  5. Clear Communication: Effective, enterprise-wide communication goes hand in hand with education. It must be crystal-clear to the entire organization what capabilities will come from the new ERP system, and how they will specifically help improve business performance. We suggest setting up formal and informal channels of communication in the form of online updates, in person briefings and large meetings designed to keep the entire team apprised of what is going on with the ERP selection, and how departments will be impacted. These channels help eliminate rumors and misinformation, and help achieve enterprise-wide consensus and commitment.

Changing With the Times

All in all, an ERP selection is a chance for a manufacturer to “change with the times” and apply the needed resources for the implementation to make lasting business change.

When looking at ERP and change management, the goal is to eliminate waste, improve productivity, optimize existing resources, handle growth without adding resources, and streamline existing operations. A company can’t expect the ERP vendor to take on this responsibility. The right approach to the team, the resources, and organizational commitment helps insure that staff can function as “change agents” within the company as opposed to those that block or resist. change. End

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