Significance of Change Management in ERP Implementation

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Significance Of Change Management In ERP Implementation

Compiled By: Shwetha H.
Siddalinga
Sindhu
Soumya D.
Sumanjali

Abstract:
As the companies are slowly moving from individual system modules to more integrated systems, a lot of opportunities have been created, costs have been reduced but at the same time it has created few challenges and complications for the management at different levels in an organization. Organizations invest on Enterprise Resource system software’s from vendors such as SAP, Oracle, PeopleSoft, Siebel to gain powerful computer-based information systems more cheaply than through custom built software development. The main advantage of Enterprise Resource Planning (ERP) systems is it assists the companies very well with centralized data bases, quick access to information and easy management of data in terms of backing up of data and restoration of data as required by the organization.
The main problem lies in system usage, which relates if the employee users are trained enough to perform the different tasks with less or no errors. IT personnel also play an important role in making sure that the systems are functioning well, this also calls for functional and technical training for IT personnel. For an organization to benefit, any system has to function properly. This could also mean spending more money on consultants who will be called to assist in the operations of the ERP system. In addition to the system modifications, there should be proper change management as this will assist the organization in going forward on what changes caused errors should there be any.

Introduction:
For the information to flow smoothly within organizations, the business processes should be redesigned when the firms implement Enterprise Resource Planning. ERP thus results in changes in processes and responsibilities. Unless these changes are effectively managed, firms cannot realize expected returns from ERP investments, after ERP systems are put into operation. Deciding to implement an ERP system is an exciting time for any business, filled with potential and possibilities. Choosing to invest in an ERP solution is a momentous decision that carries the opportunity for enormous rewards, for most people. However, for others, these emotions can be tempered by anxiety about the changes that ERP can create within a business. This is the reason why ERP change management is so important.
Change Management:
Strategies of Change Management vary from company to company. Change management can be defined as: “the effort to manage people through the emotional ups and down that inevitably occur when an organization is undergoing massive change.”
In the context of the organization Goff (2000) defines change management as “a planned approach to integrating technological change. This includes formal processes for assessing the impact of the change on both the people it affects and the way they do their jobs. It also uses techniques to get users to accept a change caused by technology and to change their behavior to take advantage of the new IT functionality”.

Important attributes of ERP are its abilities to:
• Automate and integrate an organization’s business processes
• Share common data and practices across the entire enterprise
• Produce and access information in a real-time environment.
The value of ERP lies in its ability to help organizations improve efficiency and productivity across many different functions and departments. Below are some of the benefits of ERP
 An organization’s IT environment is simplified by replacing multiple legacy systems, including siloed department applications and spreadsheets, with a unified set of tools. Cloud ERP breaks down information silos and lets users receive real-time updates, since it uses a single database for the entire enterprise.
 Employees are given direct access to accurate information even when it originates in other business areas
 Every department is enabled to gain a consistent and unified view of data throughout the company
 Daily use of the system is brought to ease because all ERP modules share a single user interface

ERP Change Management:
ERP can change a company in several ways, including:
Job Changes: Some employees may be reassigned to new departments since ERP may make some jobs redundant. For employees whose roles change, it can be helpful to remind that them that this is a chance to add new skills to an already impressive career and help move the company and the individual in a new and forward-thinking direction.
A Switch in Focus: A business is shifted from a task-oriented approach to a process-oriented one with the implementation of ERP. For some task-oriented employees it may be frightening, but once they realize how much more efficient it is to focus on processes, they’ll likely adapt to the system.
Changes in Employee Relationships: The way many of your employees interact with one another may be changed after the implementation of ERP . The people in charge may shift, departments may merge or separate and workers may move throughout the company.

Strategies for Implementation of ERP:
• The Key Objectives, Benefits, and Expectations have to be defined before Starting the Implementation:
It is difficult to make an ERP implementation a success if there are no objective set at the commencement of the project. The business has to define what benefits they expect or the implementation will never be deemed a success. Defining expectations after implementation has started could be a waste of resources if parts of the implementation have to be restarted.
• The Involvement of senior Management has to be ensured:
ERP implementations have failed because important decisions cannot be made by middle management and require top level management. Without senior management understanding and approving of the direction of the project, key decisions may be incorrectly made. This could lead to the final implementation processes being contrary to the vision of the senior management.
• Ensure That The Management Of The Project Reflects The Business:
The organization of the project management team should be inclusive so that all aspects of the business have a say. ERP implementations often fail when the management team has excluded certain business functions, and the project is just seen as finance project or a technology project. Once a business function has been excluded it is difficult to then get them to participate in the project at critical times, such as integration testing or user acceptance.

• Change Management:
Even the simplest ERP implementation will cause changes. It could be as simple as the way in which parts are delivered to the production line or major changes to processes across the company. No matter what the changes, any ERP implementation should have a change management team comprised of business and change specialists who can develop a plan of how the changes will be communicated with the business.
• The possession of Right Resources should be ensured:
The implementation of an ERP system can be costly and it is important to have the right people on the project from day one. This can be very difficult as it is difficult to ask employees to work their own job and be on a six or twelve month project at the same time. Sometimes this is possible, but can end up with the employee not being successful in either position. In large ERP implementations, the company will find the best and the brightest to be involved with the ERP implementation as these will be the people with the knowledge when the project is finished.
• A plan should be developed and followed throughout:
The plan for your ERP implementation is the roadmap which determines the milestone deliverables, resource requirements, costs, and ultimately the success of the project. Too often the plan is thought of as guide, but it should be the yardstick that everyone is held to. Changing the plan means more resource, more costs, and less faith in the project’s success.
• Documentation and Training:
During the implementation decisions are made and without adequate documentation it may be impossible in the future to understand why they were made. In addition it is important to keep documentation current, so when changes are made to the system after the initial implementation, the existing documents can be amended. Training is equally important for a company. Training documents can be developed from the implementation documentation and delivered to the relevant personnel prior to the implementation of the system. Like the system documentation, the training documents should be amended when processes are updated.

Conclusion:
ERP implementation projects which are successful are less about technology and more about people and processes. In fact, resistance to change can take many forms and many causes of resistance are listed in enterprise resource planning research. It is the duty of the top management to, therefore, proactively deals with this problem instead of reactively confronting it.

References:
1. http://blog.sageerpsolutions.com/the-importance-of-change-management-in-erp-implementation/
2. http://www.jatit.org/volumes/research-papers/Vol23No2/5Vol23No2.pdf
3. http://it.toolbox.com/wiki/index.php/ERP_Change_Management
4. http://modernenterprisemanagement.blogspot.in/2011/12/worlds-ten-largest-erp-implementation.html
5. http://logistics.about.com/od/forsmallbusinesses/a/Strategies-For-A-Successful-Erp-Implementation.htm