Handling the Change Process When Implementing New ERP Software

Companies that undertake the process of implementing a new ERP software system often mistakenly view the task as one that is entirely IT and technical. This belief is one of the most common reasons that new software often takes longer than necessary to be successful, particularly when the new software impacts multiple departments of the organization. While some of the reasons for this failure can be attributed to IT 'reasons,' a number of them can be attributed to a lack of proper change management on the part of top level executives and managers.

The reason is really no surprise. Most people that work for companies are somewhat resistant to change and believe that change generates conflict. At the very least, they see the changes as a disruption that will interfere with their ability to do their job and may even put their job in jeopardy. Therefore, management must be thoroughly equipped to manage this change so that they can attain the positive results that they expect.

Properly managing the change process requires analysis, communication, and adequate leadership from the beginning of the software evaluation process until well after the new manufacturing software goes live. Below, I've listed some key issues to consider throughout the change process:

1) Hire a consultant: This is probably one of the most important issues and steps that must be taken. Most small to mid sized companies simply do not have the proper skills on their staff to effectively manage and monitor the change. Even if they do, they will still have other jobs to do that will limit their ability to adequately monitor the software change. Software sellers are likewise unlikely to have the necessary skills because serving as a consultant to companies that are switching software is:
- Outside of their core competency, which is developing and selling software.
- Essentially a sunk cost - they receive no additional funds for doing so
- A situation where they may be forced to work with parties they are unfamiliar with and business models that they are not intimately familiar with

An experienced consultant can help identify major problems and guide the company through the process of proactively dealing with them. They will have experience working with companies just like yours and will be an invaluable asset...although they will cost a decent amount of money.

2) Employee Involvement and Communication: All employees that will be impacted by the software change need to be notified early and often. This communication needs to be a two-way street as well. Their input must be sought as they will be able to identify problem areas that management may not think of. At the very least, they need to know:
- What will happen
- When
- Why the change is being made
- What the change is expected to accomplish
- Who will be impacted by the change
- How the change will impact them

If this kind of communication is not provided, management should expect a number of different responses from employees. This communication may range from simple misunderstandings to outright opposition, which is frequently hidden and extremely detrimental. Again, the importance of soliciting input from employees should not be understated. Not only may good issues come to the forefront, but employees who are consulted will be more "bought in" to the change, which will help prevent mistakes down the road and will lessen the covert opposition.

That being said, it is difficult to find the time to get input from everyone. One good way to open the communication channels is to conduct interdepartmental workshops that discuss, in detail, the ways that each business area will be impacted by the change, the reason for the change, and the other factors mentioned above.

3) Management Must be Leaders: Most organizations in today's business world are led by management, but those managers are not necessarily leaders. Most decisions are annouced in memos or similar manners. This will not work when a big change like a change in MRP software is made. This is because if employees receive a memo from their direct supervisor mentioning the upcoming change, they are unlikely to believe that the top level execs are behind the decision and may ignore it. In other words, all levels of management must be actively involved in the change management.

Further, upper management often wrongly assumes that new systems are simply "plug and play" and do not realize that a much larger leadership presence is necessary. This is especially a problem in small to mid sized companies.

4) The New Software Must be 'Sold' to Employees: This is relatively self explanatory and simply means that all steps must be taken to ensure that all employees are "bought in" to the new system. They must understand that they have a stake in the ultimate success of the system that will impact the overall organization, and potentially their jobs. If they do not feel like they have a stake in the new software, it may ultimately fail.

5) How to Deal with Fear: Rest assured, any new software conversion will not come without fear on behalf of employees. Some common fears they may have are:
- Will this change make my job obsolete?
- What will happen if I struggle to learn the new system?
- What if the new software makes my skill set less valuable? Will I still be paid for the skills I have?
- Will the new system take away some of my power? (This is a common fear for mid level managers)

If fear is not confronted, it can lead to oppositional behavior or employees leaving that feel they cannot deal with the new uncertainties. Thus, upper management needs to make sure that all uncertainties are addressed.

6) Conflict Resolution: There will be some conflict with the new system. This is almost guaranteed. Turf battles may erupt. New communication between previously unconnected departments may lead to conflict. In most cases, these conflicts can be proactively dealt with by addressing the fears noted above.

However, if conflict does erupt, it cannot be ignored, despite the fact that most people think it will eventually 'work itself out.' Do not send signals that conflict should be hidden. Instead, confront it head-on and resolve it as quickly as possible. Honesty is key here and it may be advantageous to bring in an objective third party to deal with conflict.

Finally, keep in mind that this this article is not meant to be all inclusive, although it does point out some key elements of a successful ERP software conversion. The concepts discussed here are likely to be more prevalent in larger companies, but certain aspects of them all will be seen in companies of all sizes. The key is proper leadership from management that focuses on honest and open communication. Without that, you would be surprised how much of a negative impact one or two unhappy employees can have.