Over a century ago, Woodrow Wilson famously said, “If you want to make enemies, try to change something.” Indeed, business owners and executives who decide to change the way employees do their work are often met with fear-based resistance that occurs when the status quo is upended — no matter how much everyone stands to benefit. This may be the case when a growing company decides to integrate siloed software under one enterprise resource planning (ERP) solution, enabling it to better manage the business and improve decision-making.
But with a solid change management plan in hand, companies can mitigate that resistance, as well as other risks. Change management uses careful planning, detailed communication and training to prepare teams for the inevitable changes in technologies, processes, workflows and job responsibilities that ERP implementations often bring. Change management focuses on the people aspect of ERP implementation, ensuring that employees understand and support the project and dramatically increasing its chances for success.
What Is Change Management?
Change management is the application of a structured approach to transition an organization to a future state from its current state in an effort to achieve expected benefits. It’s a crucial business practice because as companies grow, each step of that growth impacts how they operate — and changes in operations affect the way employees do their jobs. The way a company manages change, whether the result of competitive pressure, the introduction of new technology or any other reason, can make or break adoption.
Change management considers the impact new processes have on employees and seeks to smooth the way for an effective transition through senior-level support and proactive communication that explains the reasons for change, outlines how it will be rolled out and provides regular status updates.
Key Takeaways
- ERP implementations are often transformative projects that significantly improve how companies operate, but also change how people work.
- When companies don’t communicate with employees about the implementation, how it will proceed and how it will help them, they may resist the change and increase the odds of project failure.
- Change management provides a structured approach to involving employees in the ERP implementation so they feel prepared, supported and invested in the project’s success.
- Frequent impact assessments, multichannel communication plans and training are some of the hallmarks of successful change management for ERP implementations.
ERP Change Management Explained
The global market for ERP software is forecast to reach $90.6 billion by 2029, a near 84% increase over 2022, with cloud-based solutions the most popular deployment method, according to Fortune Business Insights. Big picture, ERP software centralizes a company’s critical business data (increasingly in the cloud), automates processes, standardizes workflows and manages important activities, including finance, procurement, manufacturing, human resources and sales.
For many growing businesses and their teams, a first-time ERP implementation represents a major departure from the way they’re used to working — in siloed software, for example. Despite all the ways consolidating disparate software can lead to greater efficiencies, change can make employees nervous and resentful. Why are we doing this? Will I still have a job? What if the new technology is too hard for me? Such concerns can hamper implementation progress, lead to employee turnover and possibly result in project failure. Indeed, not properly preparing employees for change in a formal way is consistently cited among the top reasons that ERP projects struggle to get off the ground. Given the significant amount of time and money it takes to deploy ERP, removing obstacles that add to those costs is critical to success. A change management strategy helps by ensuring that employees understand and support the ERP implementation.
Why Your ERP Implementation Needs Change Management
When ERP implementations fail, it’s most often because companies focus on the technology and ignore the most important part of the rollout: the people who will be using it. A business or IT team should take documenting a change management plan as seriously as it does the process of evaluating potential ERP software vendors.
The number of people impacted by ERP implementations is often significant, including employees in finance, human resources, procurement, sales and IT. Even when implementing a flexible ERP system that adapts to the way an organization does business, the integration of new technologies and existing business processes can result in considerable changes to organizational policies, job responsibilities and workflows.
The sheer amount of change from ERP risks overwhelming employees, which can result in productivity drops — or worse, resignations. A change management plan anticipates the impact an ERP implementation might have on employees and uses clear communication, training and support to ensure the implementation runs smoothly and with minimal disruption to the business.
6 Change Management Tips for ERP
With so many moving parts, successful ERP change management ultimately comes down to communication. Building a team of stakeholders and change advocates, then sharing objectives, impacts, timelines and training — early and often — can be the difference between success and failure. When implementing a new ERP system, the following six change management tips will increase the odds of a smooth rollout.
-
Get stakeholder buy-in AND engagement.
A willingness to accept important changes, especially the introduction of an ERP system, starts with strong support from leadership and other key stakeholders. The fact that an implementation is on the horizon implies corporate buy-in — senior executives understood the reasons for the project, its timeline and scope, training schedule and anticipated challenges and gave their stamp of approval to move forward. Now they need to take the next step and become cheerleaders for the ERP implementation.
Corporate leaders can help explain why the transition is occurring, what it means for the company and, importantly, how employees will benefit — and perhaps even advance their own careers. Encourage stakeholders to participate in strategy sessions and other regular communication throughout the implementation. Not only is their feedback critical, but their continued engagement will keep the team performing the implementation excited, too.
-
Determine the impact of the ERP implementation.
The more you can analyze the potential impact of an ERP implementation on each employee group, the better the project will go. Not only will employees need to use new technologies after an ERP implementation, but they may also need to adapt to new tasks, policies and processes.
Business Impact Analysis (BIA), also known as Change Impact Analysis, is a key change management methodology that helps organizations gauge disruption by comparing the current state of the organization to a preferred state post-implementation. Most companies will assess initial impacts during the business requirements phase of the implementation and finalize them by the design phase. BIA defines various impact types (e.g., nomenclature changes, movement from spreadsheets to systems, automation changes, roles and responsibilities) and assesses how these might cascade throughout the implementation. It also evaluates a company’s tolerance level for each impact, as well as recovery times in the case of business disruption.
BIA ultimately helps companies anticipate surprises during the implementation, accelerate the time to ROI, address resistance before it happens and build support for the project. The more companies can anticipate employees’ questions and concerns, the more the employees will trust the plan.
-
Adjust your communication for each internal audience.
ERP implementations may affect a few or almost every department in the company, depending on how many business functions are involved, and each stakeholder is likely to have a different experience. As a result, cookie-cutter approaches to ERP change management communication won’t work. Here are a few tips to make sure you’re addressing each stakeholder’s needs.
- Consider an Organizational Readiness Assessment. Prior to the implementation, focus groups and online surveys can help an organization obtain objective data about how it communicates and how it can improve prior to starting the implementation. Don’t just do readiness assessments at the beginning of the project; use them throughout to gauge the effectiveness of the communication plan.
- Define stakeholders and their different information needs. Internal stakeholders for an ERP implementation can include finance, HR, manufacturing, sales, procurement and more. In addition to departmental differences, consider how varying levels of seniority require different communication. For example, managers need more information about how to communicate with their teams, while staff users need to understand how the implementation will affect day-to-day work. Keep in mind that stakeholders also include external partners, such as suppliers and customers, who are more interested in how the change impacts whom they work with and how.
- Identify project champions. While project leadership holds responsibility for broad communications, each department needs an advocate for change to help teams not only better understand the changes, but how employees will benefit in the long run.
- Use multiple communication channels. Different groups often prefer different modes of communication. Some respond to emails, while others only use messaging apps. In today’s world, companies need to use all of communication modes — often. Remember: Repetition isn’t a bad thing, and there’s no such thing as over-communication.
-
Create a structured plan that everyone can reference.
Think of your ERP implementation as a voyage, and understand that everyone on the ship wants a copy of the journey map. Be sure to build out a detailed implementation plan and share it widely throughout the company. An ERP implementation plan provides all stakeholders with information about:
- Objectives: What the project will accomplish.
- Key stakeholders: The project leadership team, as well as stakeholders both inside and outside the organization.
- Project scope: The specific functionality included in the implementation.
- Timelines: Milestones and deliverables, including dates for each.
- Budgets: Broken out by hardware, software, resources.
- Resources: Both internal and external resources necessary to ensure success.
- Risks: Potential challenges to the implementation and how they’ll be addressed.
- Communication: Schedule of key meetings and other types of information sharing (e.g., training), as well as various modes of communication.
Keep in mind that ERP implementations have many moving parts, and plans don’t always follow the original script. Regular progress assessments (through focus groups and surveys) will provide feedback about where the project is hitting — and missing — the mark. Take those lessons and use them to update the plan, creating a living, breathing document that everyone in the organization trusts.
-
Build a comprehensive training strategy.
Many organizations think of training as an add-on once a project is completed. A good ERP change management plan, however, includes a training program that starts early, during the implementation, and continues after. Addressing training during your rollout allows the implementation team to get necessary practice on the new system before it goes live (and mistakes become more costly). It also allows the team to hit the ground running when the implementation is ready to launch.
Training programs for ERP implementations can be substantial, given that ERP will affect many groups within the company in different ways. A training program should take the following aspects into account.
- Executive support: Employees may already undergo lots of training each year. Executive support for the importance of ERP training can go a long way toward increasing participation.
- Individual needs of various stakeholders: Role-based training allows each group to get the most from the program.
- Process change: Don’t just focus on technology training. ERP implementations impact processes as much, if not more, than systems. Make sure teams receive training on how those processes will change.
- Continuing education: Training doesn’t end with the launch of the ERP system. Businesses add new functional modules after the initial rollout, software evolves and improves and training is required for each new set of functionality that gets added.
- Training performance measurement: This should go beyond usage and completion rates and evaluate how long training takes, for example. Feedback from employees about their experiences, as well as their suggestions for improvement, is also critical.
-
Expect and accept resistance — change is hard.
Countless articles have been written about how people naturally resist change, at work and in their personal lives. Fear of the unknown — the devil you know versus the devil you don’t — is often at play. With ERP implementations, employees’ fears can stem from a number of places, including:
- Losing control: Particularly if employees weren’t involved in decision-making or critical communications, they may feel they’ve lost ownership of established processes and policies. Some may have actually been involved in establishing those processes and policies and may now feel left out.
- Fear of losing their jobs: ERP implementations often lead to changes in roles and responsibilities. In some cases, some responsibilities are no longer necessary. Employees who owned those responsibilities may feel they have less value to the organization and, as a result, worry about their jobs.
- Lack of understanding: When employees don’t understand why and how a change is taking place, they’re more likely to resist it. Strong communication and training can mitigate this risk.
Change management involves listening to employees — hearing their concerns, addressing their questions and explaining how changes will directly benefit them. Strong communication (about benefits, as well as potential impacts), along with a thorough training program and executive sponsorship, can help overcome resistance.
5 ERP Change Management Mistakes to Avoid
When ERP implementations fail, it usually stems from resistance by those who need to use the technology every day. The odds of success increase dramatically if companies use a strong change management plan to avoid the following costly missteps.
-
Changing too much too quickly:
There’s a temptation with technology implementations like ERP systems to get the project done as quickly as possible and the team swiftly transitioned from the old system to the nifty new technology. That’s understandable, but it’s often a recipe for disaster. ERP implementations have many moving parts, particularly when it comes to data migration and integration. Rather than looking at migrating everything at once, think about what data you need first. When integrating with data from other applications, be sure to consider your plans for those applications before deciding which to integrate. If you plan to eliminate certain systems, it might not make sense to spend the time to integrate them. -
Not consulting the people who will use the tool every day:
When companies over-emphasize technology changes in an ERP implementation at the expense of the impact on people, the results often don’t turn out as hoped. Companies may be tempted to assume the impact new ERP tools will have, but no one understands the implications as well as everyday users. Consult with the systems’ expected power users early and often in the implementation plan. Use their deep expertise in current business processes to recognize the real-world impact of the implementation. Feedback from power users shouldn’t be limited to post-implementation. Their feedback is critical in almost every phase of an ERP implementation, including system design, testing and training. Post-implementation, power users can offer critical assistance as a go-to resource for employees in their departments or across the organization. In addition, power users can serve as a critical liaison with outside vendors or consultants involved in an ERP project. -
Not considering how the ERP system will affect people’s jobs:
Sometimes the expectation for major technology implementations like ERP is that once the implementation has launched, the company will see results quickly and employees will experience immediate improvements in their jobs. As we discussed, however, ERP implementations are likely to significantly change how employees work — which takes time and training to adjust to. If employees aren’t well-informed about these changes, the likelihood of resistance to the new system increases, jeopardizing the success of the project. Important tools for meeting this challenge (already mentioned above) include Organizational Readiness Assessments and Business Impact Analyses, both of which help organizations anticipate the impact on employees’ jobs. Training efforts — before, during and after the implementation — can also help organizations prepare employees for change. Most importantly, show your support for your teams as they adjust. -
Insufficient information and communication:
It can’t be said enough: Clear, consistent communication is the hallmark of effective change management. Don’t fall victim to these mistakes that lead to insufficient communication.
- Not tailored to different audiences: ERP implementations affect different employees in different ways. Each audience’s specific needs must be addressed.
- Inconsistent frequency: Proper communication starts early in the implementation process and continues regularly throughout. Don’t wait to have all the answers before communicating with stakeholders. In lieu of clear communication, employees will begin forming their own conclusions, which can be difficult to undo.
- Lack of repetition: Experts say people need to hear a message seven times before it sticks. Redundancy is your friend.
- Limited communication channels: Speaking of redundancy, don’t use a single channel for each communication. Repurpose content for all channels employees use. Summarize live meetings and distribute notes via email and group text, for example. Better yet, share t in a newsletter and on the project’s page on the company’s internal network, too.
-
Siloed work efforts:
The whole point of an ERP implementation is to break down business silos. It’s ironic, then, that the implementation itself may be performed in silos, which only increases the likelihood of a poor rollout. A strong ERP change management plan involves not only IT, but project managers, end users, training resources and often an implementation partner, among others. In order to avoid silos, each of these important stakeholders should have some involvement in the decision-making process, which leads to a sense of ownership and a desire to collaborate throughout the implementation. In addition, build cross-functional teams for certain aspects of the implementation to encourage more collaboration. Clear, frequent and transparent communication is ultimately the greatest weapon to combat silos. Implementation teams need to not only communicate up (i.e., to executive sponsors), they must also provide detailed, consistent communication about progress, timelines, impacts and changes in the plan across all departments on a regular basis to avoid costly mistakes.
Avoid Common ERP Implementation Pitfalls With NetSuite ERP
The flexibility of NetSuite ERP to adapt to the needs of a particular business simplifies the implementation process and minimizes unwanted organizational change, helping companies avoid business disruption and speed time to ROI. For example, NetSuite’s cloud-based ERP solution offers more than a dozen different modules covering most business functions, including financial management, revenue management, inventory management, order management, supply chain management, human resources, marketing automation and more, which means businesses can choose implementations requiring fewer integrations with other systems. But NetSuite also supports integrations with many different point, so customers that prefer an existing app can keep it in place. That kind of flexibility make implementations faster and more efficient. The same kind of thinking makes NetSuite ERP adaptable to the specific needs of each of its customers’ unique processes, policies and workflows, rather than the other way around.
The first step in a successful ERP implementation is acknowledging the importance of the project and being realistic about the challenges you might face. A strong change management plan recognizes the wide impact an ERP implementation can have on a company and strives to involve all stakeholders and users from the beginning of the process. With early involvement and steady communication, all participants will feel a sense of ownership of the project, ensuring that it has the best chance for success.
#1 Cloud ERP
Software
ERP Change Management FAQs
What is change management in ERP?
ERP implementations have the ability to transform companies by making smarter use of important company data. Because ERP systems touch so many functions in an organization (financial, sales, human resources, IT), implementing them can dramatically change workflows and processes for many employees. Change management strategies assess these changes prior to and during the implementation so companies can better support employees, thereby increasing the chances for a successful rollout.
Why is change management important for ERP?
ERP systems are one of the few technology implementations that have the ability to transform how a company operates. But they often require employees to work in new and unfamiliar ways. Unfortunately, humans aren’t often comfortable with change and may resist it. For an ERP implementation to succeed, employees need to embrace those changes and understand the potential benefits to them. Effective change management prepares the entire organization for what’s to come and ultimately helps employees feel comfortable with the implementation process.
What is ERP transformation?
ERP systems gather into a single system information from across a company, including financial, sales, human resources and other operational data. Having this central knowledge base allows companies to analyze data more effectively to make smarter decisions that help the company succeed. In many cases, companies implementing ERP systems discover entirely new ways to understand their businesses, which often leads to growth.
Who are the key players in an ERP implementation?
The most obviously important players are the project manager who will lead the implementation and the business leaders and IT team members who will define the requirements for, design and configure the ERP system. But perhaps equally important are senior executives and/or the business owner, whose support is necessary to foster the organizational change that ERP systems require, and the anticipated super users of the system to tune the design and configuration while testing. Other players crucial to a successful ERP implementation include a finance leader (possibly the CFO), training resources and an external implementation partner, if the organization is using one.
What are the seven Rs of change management?
The seven Rs of change management refer to the work of John P. Kotter in his book, Leading Change. They are:
- Raised: Who sought to make the change?
- Reason: Why is the company making the change?
- Return: What are the anticipated benefits of the change?
- Risks: What are the risks of the plan? How severe will they be? How tolerant is the organization?
- Resources: Does the company have the resources to implement the change? If not, what’s needed?
- Responsibility: How will responsibilities be allocated (communication, testing, training, etc.)?
- Relationship: How does this change interact with other changes happening in the organization?
Is ERP implementation a transactional change?
In some ways, yes. In other ways, it can be much more. Transactional change refers to changes in an organization meant to improve efficiency by streamlining some processes and automating others. ERP consolidates data from multiple systems into a single shared hub that improves processes, workflows and decision-making.
In other ways, ERP can go beyond transactional change to what’s known as transformational change, which refers to change that fundamentally alters a company’s goals and culture. While transactional change looks at how a company operates, transformational change alters how a company thinks. By integrating data from across financial, sales, manufacturing and HR systems, among others, ERP systems impact decision-making, helping an organization redefine its mission and target completely new avenues for growth.