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Learning & Development Blog

Change Management Key To ERP Implementation Failure

Change Management Cited - Again - as Key Contributor to ERP Failure

In his IT Project Failures blog, Michael Krigsman frequently discusses the importance of change management, communication, and training in successful ERP implementations. In a recent post, he cites a recent poll by Panorama Consulting, in which IT executives are asked about the “deadliest sin” of ERP implementations. Organizational change management, as usual, is right near the top of the list:

erp-change-management

A major contributor to the importance of change management stems from the impact on workers’ job roles, and the degree to which those changes can affect their careers. In another post, Krigsman writes:

Communications in [the context of ERP implementation] means explaining the business impact of technology decisions to a non-technical audience. That impact likely includes process changes that may affect employees in a variety of ways. For example, a new CRM or ERP system can change workers’ jobs, roles, and even dictate future employment status. Obviously, these changes have a potentially large impact on people working in the organization.

Because of these job role changes - and the potential impact on employees' careers - large pockets of passive resistance to the change can develop. Let’s say a company is centralizing accounting functions like Accounts Payable and Accounts Receivable. If you’re an employee in Finance at a non-headquarters location, chances are good that some corporate “right-sizing” is in the cards for your office.

If you are lucky enough to survive the employment-cut after go-live, chances are also good that your job has changed significantly. You may be asked to focus more on reporting and analysis, vs. transaction processing. While this should theoretically be good for your career, it can also be a very threatening change.

Without a robust communication and training plan, employees are left wondering how their jobs will look in the future. And when employees are left wondering, resistance to change is a natural and predictable result.

To avoid this problem, companies must build significant financial and human resources into ERP project plans for communications, training, and other organizational change management activities. Because the return on investment for these activities can be difficult to quantify, it is often overlooked. In order to succeed, however, it is imperative that managers pay attention to this critical element of ERP project success.

change readiness assessment