Change management is very important when implementing an enterprise resource planning (ERP) management software into a company's business. It is a large investment, but can be a very large benefit to the company. A communications chair of the Indiana chapter of the Americas SAP users group, Lester Burch, recently was a guest lecturer for an Information Systems class at Ball State, and he gave insight into the benefits and the difficulties with implementing an ERP into a business.. There are many benefits to using an ERP such as streamlining essential business processes, tracking financials, supply chain management, and many others. It increases the efficiency and effectiveness of a company. However, planning and implementation are very important to the success of the system. The keys to the implementation are planning and employee buy-i. It forces many business processes to change because it is different, and customizing the system to fit the old business practices are much more difficult to achieve than changing the business practices to fit the system (Burch). This is where change management comes into play for making this system successful to the company. The implementation is difficult because it usually takes over a year to stabilize (be a functional working system, with little issues), and the initial implementation usually involves a lot of technical issues and hurts productivity (Burch). Many employees will want to revert back to the old practices because of the initial negative impacts it has on them (Burch). Management, at this point, needs to keep up the encouragement and continue moving forward. It would be very costly to cancel a multimillion dollar project. The state of California spent $254 million on an SAP (an ERP software development company) software system, then cancelled the contract due to the many issues that were having with the implementation of the system (Kanaracus). There is nothing wrong with the system, as evidenced by the fact the nearly 80% of the Fortune 500 companies use SAP (Lev-Ram). However, the planning and implementation cost the state a lot of money. Once their is trust in the system and employees have bought into it, then it is a good time to start adding more functionality to the system. It is important for the employees to have already bought-in to the system before implementing new things. These additions are easier to manage because the employees have already experienced a change that they have bought into, and now, they are just doing the same type of change (from old business process to ERP process), but in another part of the business. So they have seen success in a change, and they can better react to the new change.
Kotter's 8 step model for change is application in this situation (Kotter). First, they start with having a sense of urgency by communicating how ERPs can streamline their business practices and connect everything together in this efficiency driven and information rich world. Second, the would need a group to push an ERP and generate interest and buy-in in the new system. Third, they would clarify how this ERP system will be utilized and the benefits and changes that will need to take place, such as changing the business processes to fit with the way the system is setup. Fourth, they would communicate the vision for ERP, how activities will change, and the many benefits from the new system, and how the ERP will make each individuals jobs easier and more enjoyable. Fifth, empower action and be in line with the vision . Sixth, the short-term wins would be really easy to quantify in the ERP implementation because it is a tracking system, so they could look at getting certain business processes through the new system in a certain time or counting how many times a certain type of process is completed by an employee, or they could track how many tickets are created overtime with the company's help desk, then reward those involved if the ticket frequency goes down. Seventh, they would keep pushing through the resistance to keep moving forward with the ERP implementation as well as introducing new functionality. Finally, prove how the ERP system has increased efficiency, reduced costs, and made employees jobs easier, then reinforce the new norms that come with the changes that took place to adapt to the new ERP system making the system a part of the culture (Kotter).
Burch, Lester. MBA 621. Ball State University. Muncie, IN. 24 Nov 2013.
Kanaracus, Chris. "California Ends Contract with SAP Over Troubled IT Project." 8 Feb 2013. Computer World. http://www.computerworld.com/s/article/9236662/California_ends_contract_with_SAP_over_troubled_IT_project
Lev-Ram, Michal. "Inside SAP's radical makeover." Fortune. 29 March 2012. http://tech.fortune.cnn.com/2012/03/29/sap-makeover-mcdermott-hagemann/
Kotter, John (1996). Leading Change. Boston, MA: Harvard Business School.
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