What is ERP Change Management? And Steps to a Successful ERP Change Management Plan

• April 28, 2021
• Posted by: Pradeep
• Category: ERP Change Management

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The enterprise resource planning (ERP) system is a unified set of programs that is capable of providing support for main organizational activities like manufacturing and logistics, finance and accounting, human resource and sales, and marketing. The ERP system is able to help different parts of the organization to share knowledge and data, reduce costs, and improve the management of all business processes within the organization.

Improvement strategies, like ERP implementation, involve change commonly. Therefore, being responsive to internal customers is important for an organization to keep away from the difficulties that are associated with the change. In order to assist the top management with difficult organizational problem of the workers’ resistance towards implementation of ERP, it is suggested to integrate, a conceptual framework that is process-oriented and consists of three phases of knowledge: formulation, implementation of strategy and, status evaluation.

Upgrading an ERP system or implementing an ERP system is a great opportunity for manufacturer for the creation of lasting business change in an organization. This is why management strategies of change for an ERP project are very important. According to an ERP software system attorney who litigates disputes and negotiates contracts, there are four things that can destruct a newly-implemented or even an upgraded ERP software system:

The one-sided template contract for vendor being signed by user resulting in disadvantages for the user

Making of purchase decisions, the ultimate goal of the process by senior managers and executives
The vendor not promising the thing that it is capable of delivering and about what can be done

Employees at the organization making the effectiveness and use of the ERP software system lesser due to the changes it is bringing to the organization and their job

All of these problems can be a factor that will cause problems for the organization if not taken care of because they are problematic for the organization.

Organizational Change Management (OCM) is basically a framework for management of the effect that new business processes will create such as changing the organizational structure and change the culture within an organization. Generally, Organizational Change Management looks at the people side of management of change. It helps your employees and stakeholder to make this necessary move from current to new system. Even the most successful ERP integration and installation can be damaged by employees who may think that ERP system will make them lose their job or will change job a lot. Short-circuiting  the problems that may arise requires explaining how, why and what is the need of new ERP software system’s introduction as well as getting buy-in within the organization. HR and Management consultants dub the change management that actually means finding an effective method for introduction of an improved technology to the workforce. It is an essential step, whether the ERP system is being updates or new ERP system software is being installed.

Steps to a Successful ERP Change Management Plan

ERP change management is something that concerns many businesses. Obviously, it is very hard to adjust to a new system when u have been using a few processes and system for a long time and are comfortable with suing them. There are a few steps that can be followed for a successful ERP change management plan.

1. Align and Mobilize Leaders and Communicate the Need for Change

The first step involves clearly articulating the case for this change. It is encouraged to communicate the scope of the project for the teams, implementation schedule and rollout strategy as ERP project is in progress. The key factors of this step are:

Understanding of leadership of the implementation strategy and clearly defining actions of leadership to support this change

Communication of rollout strategy, project scope, as well as implementation schedule

Empowering the team for implementation and employees for a broad-based action that is done by authorizing them with authority of decision making

2. Identify and Then Manage Risks and Opportunity for People

It is important for an ERP project team to see both the risk and opportunities of a project. Addressing the cultural changes that will be created by the ERP implementation is where the team and change management strategy is put into place. The key areas that should be addressed include:

Conduct an assessment for people and organization readiness in order to identify both risks and opportunity as early as possible so that action can be defined to mitigate risks and realize the opportunities.

Monitor the risk management for people to check the progress by taking mid-course as well as post implementation assessment

Identify the key stakeholders that are present within your business and also across the business for implementation of best practices related to adoption.

3. Stakeholder Communications

An essential strategy for organizational change management is to explain and utilize a detailed plan of communication which will answer what and why it will be communicated, to whom (the audience) and by whom, how and when. The communications must include:

Definition of objectives, project scope, deliverables, milestones, approaches and critical factors of success

Information among and between all the project stakeholders

Plan for transition process throughout the implementation to the post go-live period

4. Future Organizations’ creation

Designing and developing the required future organization is important to the change management and also ERP. This step includes a job redesign, assessing and the requirements of competency for new environment. The efforts include:

Analyzing the present condition of location, business, and departments with regard to organization, people systems and processes.

Development of transformational plan that is able to define timeframe, responsibilities, and actions to get to conditions that are targeted.

Analyzing the implications for HR like classification and compensation, performance management, hiring, on boarding, and recruiting, etc.

5. Enable the Employees

An important part of change management strategies consists of enabling the employees to flourish within a transformed organization. This includes overall skill, job, and design of organization changes. You can focus on the following initiatives:

Assessing the workforce with regard to abilities, skills, capabilities and experiences

Implementation of training strategies

Before the go-live, assist and help leaders, end-users, process owners, implementation team members, suppliers, customer, to understand how the work and processes will be impacted with this change.