ERP is Change Management

Businesses can sometimes have to make substantial changes in the ways they operate, or in the ways they monitor and measure operations. Changing substantially like this needs close attention and caution.

What is substantial change?

A big-scale change, such as a merger of companies, can obviously be substantial. Internal reforms within a company might appear smaller-scale but the changes can ultimately be every bit as substantial. For example, a company might alter processes, might restructure or bring in technological innovations, each of which can lead directly to a massive change agenda.

Many companies make large investments of both time and capital to achieve their business visions through internal changes, but they risk change-failure by underestimating the process. Significant risks are going over budget, being cancelled before completion, or failing to achieve the change’s business objectives.

Business expertise for change

Being well-prepared for change and having expertise in managing change are very valuable skills. According to surveys of global senior executives on managing change, the success rate of major change initiatives is sadly below 60 per cent. This is far too low.

The costs are high when change efforts go wrong -- not only financially but also in confusion, lost opportunity, wasted resources, and crucified morale. Within a “change-failed” company, employees can understandably become cynical if an important initiative fails, squandering effort and time.

One of the biggest challenges to change is staff resistance. There’s a fulsome evolutionary reason for this. Our human brains were originally designed to seek security and avoid danger. Millions of years of formative ancestry have made our brains into prediction machines, to keep us out of harm's way.

That’s relevant for how we organise ourselves in society and at work in modern times. Staff might also be over-accustomed to current work habits. They could feel unmotivated and under-informed about the purposes and benefits of change. They could be anxious if untrained and literally un-able to do what’s required.

Role of Change Management

Coping with this special category of change is indeed what Change Management (CM) consists of - a company’s planned actions to maximise benefits and to lower change-related potential risks.

Often a key aim is to build mutual trust and understanding between the company and its employees during the reform or implementation. If their expectations are unfulfilled or disappointed, staff will not be amazed with any state-of-the-art equipment, “bells and whistles”, or new business processes.

Costs of change and levels of staff performance

The sharing of insights and relevant information is important for smooth transitions in the process of change. Communication’s purpose is not to make everyone happy, which would be unachievable, but to deliver the message and request for cooperation within the company.

Change Management helps to restrain and minimise the costs of change while maintaining or improving staff performance.

A specific example of substantial change in a company is the implementation of an ERP system (Enterprise Resource Planning). Notably, the ERP system relates to Change Management in two ways which are distinct but intertwined.

First, the new software can be at the central point of disruption since there will almost certainly be ERP alterations to business processes.

In this respect, new software causes disruption because ERPs are enterprise-wide systems and their implementation involves multiple stakeholders, from top management to shopfloor staff, and with important possible consequences for suppliers and customers.

The more people affected, the more likely it is that the implementation project will need Change Management skills.

Secondly, the ERP software itself can be used to support the change process - a powerful potential which becomes the main focus of this article.

How to support Change Management?

By its very nature, corporate software performs roles which are crucial in Change Management. After all, software is already an active potent agent to connect people and departments, to inform, control, and monitor. Software is necessarily active throughout many company processes.

It’s worth considering how it can extend Change Management to complete the company’s transition from its past state to the new vision.

Fragmenting problems

An example of supporting Change Management in ERP system implementation is to divide the process into incremental, managed steps. By breaking down large change into manageable component parts, implementation’s problems and challenges become fragments of what they were.

This approach typically allows users to accept, become accustomed to and work well with changes step by step.

Altering software to match each one of the change-process steps increases the software cost, but it saves a larger amount in the Change Management budget and then it saves more in the entire change process.

Change support through step-by-step installation typically costs less and completes more quickly than the “shock treatment” of making big change in one giant leap.

For illustration, installing a new ERP system in place of an old one, a CM-supporting first stage can be to build old processes on the new platform. Users have continuing familiarity with previously established processes and find they have an “insider’s edge” in experiencing the new platform.

The second stage would be to introduce significant changes to work processes, which is much easier after the new system has been well worked with in stage one.

Throughout each stage, supporting users and being receptive to users’ feedback are solidly helpful for successful change.

Using an adaptive approach, the software itself forms the backbone of communication, laying out for everyone to see what each next step is going to involve.

There is also a huge potential advantage that an ERP system’s final state can have refinements which benefit from hindsight of already-achieved phases.

Taking pressure off management

Change is very pressuring for managers as well as other staff, but sometimes software can help with that too. CM-supporting installation can enable managers to communicate subtle messages which need time to sink in, and which gain from multiple reinforcement.

An example of this is when, through the software, employees see figures on individual or team actions and results during the change implementation period. Drawing attention to these indicative signs of how the change process is succeeding is generally very influential on staff awareness and cooperation.

When staff see and maybe share the picture of performance results, it usually has a bracing effect on what they do, and how they understand and respond to management’s expectations.

Also, regarding pressure on managers, in times of change, particularly substantial change, there is inevitably some possibility of conflict among management and employees. Software can relieve some of this pressure too. Software is tireless, and usually hard to weaken, which are good traits for CM!

Used sensibly, these characteristics can help guide staff towards the right procedures and workflow. The tireless software is always there, all day every day, as a constant ally and colleague of human staff, rather than relying on management’s prompts and nagging to get things done.

Training for best practices

When it comes to building people’s skills and knowledge, industry or in-house best practices can be built into ERP software. This helps standardize processes and develop staff.

If there is just one desired procedure left available for most customary tasks, it is much easier to achieve good practice than when everybody is left to their own devices.

Insights data

Because an ERP system is there for and with the users throughout different processes, it can gather valuable information about actions and behaviour. For example, do they look at their delegated tasks frequently, do they log on to the system, how much do they use the system?

This can give valuable insights to Change Managers about the current engagement of employees.

Conclusion

Successful ERP installations benefit from Change Management support, (whether or not explicitly named as such), and CM support is also facilitated by features of good and flexible corporate software.

Substantial change is a tough challenge for any company. Implementing ERP systems with Change Management support shows evidence of a very high success rate.

Mike Harsanyi

woodpeckersoftware.co.uk