The introduction of ERP projects are certainly among the supertankers of digitization. They present every company – regardless of size – with a major challenge and a considerable risk. The financial cost is considerable and possible restrictions in production and delivery capability an additional danger. However, the biggest danger lurks not in the technology, but in the acceptance of the employees. Change Management addresses exactly this risk.
ERP projects affect many business units and connected systems
The tight integration of processes is a major reason for the complexity of ERP projects. Many core processes are touched by the implementation or an upgrade: Finance, Logistics, Production, Planning, etc. are classic areas of an ERP implementation. This means that many people are involved in the introduction – project managers then speak of complex stakeholder management. The project manager should be aware of these stakeholders and actively involve them throughout the duration of the project. The stakeholder matrix helps with the evaluation.
Just as important as looking at the different players is understanding the interfaces involved. ERP systems today form the center of a networked system landscape. It is therefore important to recognize this at an early stage and to take it into account in project planning. An initial interface description should include at least source, destination, connection type, timing (synchronous, scheduled, etc), etc.) and contacts include.
- Constant new requirements during the project,
- Too many wishes at once and
- Unclear communication between business units and IT.
Attempts to counter these risks technically will fail. An ERP implementation, like any other digitization project, is a combination of
- functioning technology,
- Efficient processes,
- an effective organization and
- empowered users (mindset and skillset).
Reducing technical risks with standardization and cloud offerings
Technical risks can be minimized by using standards. The standard process is still well tested by the software provider and often represents a widespread industry standard. Every adaptation, every in-house development and every customizing costs additional effort for setup, testing and maintenance. Especially the third factor is often underestimated by new customers. Today, an adaptation to a standard software costs 10.000 Euro, then a flat rate of 20% can be allocated for this as an annual maintenance expense. With every update and customization, the customer-specific enhancement must also be considered. It is better to adopt the manufacturer’s preconfiguration for standard processes.
Adaptation is always worthwhile if the company differentiates itself from the competition with its own solution. For example, if in-house development can undercut delivery time compared to direct competition, it may be worth the money.
Cloud solutions provide fewer opportunities for individual customization anyway. If proprietary enhancements are required for cloud systems, these must be docked onto the standard processes in an update-capable manner.
Mindset determines acceptance
The right mindset is needed for the acceptance of standard processes and the necessary adaptations to the existing processes. Departments and key users must be met and trained prior to introduction. Decision makers need to be able to better assess the impact of customizations.
In this preliminary phase, the foundations are laid for harmonizing and simplifying processes. In this way, the project team lays the foundation for successful implementation.
Elements of the pre-phase are:
- Harmonization of processes,
- Cleaning up master data,
- Analysis of the organizational structure (for suitability to the processes),
- Inclusion of the technical interfaces,
- Establishing and training the project organization,
- create a mindset for new software solutions and
- Creating the ability to make decisions.
These activities are, as it were, the beginning of transformation management.
Transformation is more than change
When the term change management is used, many think of making dealing with change more bearable. Freely following the motto “the change is coming anyway – how can we teach it gently to the stakeholders?”. The term does not do justice to the core of the task.
In the case of new software systems, the company must undergo a transformation in order to benefit from the new possibilities. In a transformation we not only move from A to B, but change our shape to reach new areas. Similar to a butterfly, which can reach new regions after its transformation process from caterpillar to butterfly. For users, processes and organization, this means a profound change process. This can be divided into three main phases for ERP projects:
- Pre-phase: preparing structures, harmonization and analysis;
- Implementation: Deploying the new technology, designing the new processes, and communicating the goals;
- Go-Live: Empowering and guiding users in the new processes;
These activities take place alongside the technical implementation and support the added value provided by the new software.
Enablement: Empowering users
The most important goals of transformation management are to prepare and empower users for change. Communication activities play an essential role. In this way we create transparency and orientation. Depending on the project phase, the methods are divided into three areas:
- Inform: Informing about the project, the upcoming change and the common goal;
- Dialog: Dialog with the affected users about their personal situation and the effects of the project on their work;
- Support: Enablement of users for the new world through education, training and collegial concepts.
The measures in these three areas are planned, implemented, monitored and continuously adjusted depending on the project phase and the target group.
Measure effect – no one doubts brushing teeth either
Many studies confirm the benefits of accompanying change measures in digitization projects. Of course, it is possible to save effort in ERP implementation projects – that would be like foregoing daily tooth brushing. Similarly as with the teeth it shows up frequently “precaution is better than aftercare”. Early action can accelerate the adoption of new solutions. This increases productivity and risks during implementation can be reduced.