ERP systems for manufacturers present a wicked combination of power and pitfalls: the built-in technical ability of the software is smarter and more flexible than ever, but the biggest stumbling block is ERP change management.
Whether a manufacturer is implementing a new ERP system or managing a new ERP project, at the heart of the project is organizational change management (OCM) and the realization that people ultimately drive the value for the business.
"When ERP implementations fail, it is rare that the reason is a technical problem -- these systems, in the overwhelming majority of cases, are perfected. They are up and in production, people have configured them, and they are able to run," explained Cliff Simms, director of OCM for Panorama Consulting Group. "What is sometimes tougher is getting the people to come along and use it."
Because software doesn't deliver benefits or performance improvements -- people do -- effective ERP change management is an integral and critical success factor. This doesn't mean that good OCM is about making people happy or giving them what they want, Simms noted.
"Change management is not a warm and fuzzy part of the process, it's quite nuts-and-bolts oriented, it's about discipline, accountability, measurability, and deadlines and deliverables," he said.
The objective is to make the human interface a success, to make people successful with the tools they have, and that includes traditional system users as well as non-system users like warehouse order pickers who might be impacted by a process change even though they rarely touch a keyboard.
"When stuff goes wrong, there's always a reason, and the reason is not that people are stupid or rebellious, and the reason is also not that the system is lousy -- those are excuses and they are virtually never true," Simms saidf. "Usually there's some hard work that needs to be done to make the implementation successful."
Here are Simms' four top ERP change management best practices:
- Get buy-in from the top. This means no lip service to the importance of the initiative;
your executive leadership must be personal stake holders in the same way they would bird-dog
everything involved in moving the company from one state to another or relocating a distribution
center or plant.
- Create separate, dedicated change management resources. Too many manufacturers build
their change management team by dipping into their technical implementation teams, and when
deadlines start slipping, the techies focus on the software and hardware processes at the expense
of human preparation.
Instead, you need someone thinking, "OK, I've got dozens of people behind me, and what are they going to need? What kind of support? What kind of communication to make them ready to use these cool new tools?"
- Anticipate resistance to change. If manufacturers are going to fully exploit the power
of an ERP system, they are going to embrace dramatic change, and big change equals big resistance.
It might not show up in terms of overt rebellion, but it might show up passive aggressively in
Organizations may need to be a bit militaristic with new rules to enforce using new processes. But those companies must also ensure that every user has the tools they need to get their jobs done.
- Align employee goals with a successful implementation. Successful ERP implementations
and projects for manufacturers shouldn't be limited to being on-time and on-budget. Success should
be defined by whether the solution is delivering the desired business case. In order to ensure that
business goal is immediately achieved and continues to be achieved in the future, smart
manufacturers will make sure its users have goals that are aligned with the business case around
This means creating training bonuses and proficiency bonuses that keep people in line with the goals. The amounts don't have to be huge, and could become a permanent change."
Too often companies try to be winsome and fun and hope their users will buy into the new ERP methods, but it's just not enough. "You can't charm people into going through big changes," Simms warned. "You're going to have to order them or pay them, just like everything else."
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About the author: Chris Maxcer is a freelance writer.
This was first published in January 2010