Top level executives at manufacturing organizations as well as most software sellers tend to view implementing new ERP software as strictly an IT and technical process. That approach sometimes leads to failure, particularly with extensive systems involving accounting, equipment, inventory and project management. A significant number of IT projects fail, with failure ranging anywhere from not meeting initial goals to having to abandon a new system outright. That is not to say that some elements of failure stem from technology issues, but a number have been traced to failure to provide change management.

The reason is simple: a number of employees are expectedly resistant to change and believe that change generates conflict. At the very least, they see the changes as a disruption that will interfere with their ability to do their job and may even put their job in jeopardy. Therefore, management must be prepared to deal with all parts of the change so that they can attain the positive results that they expect.

Effectively managing the change involves analyzing, communicating, and leading by example. Here are a few key issues that must be kept in mind if you realize that adopting new software will include some necessary and significant changes.

1) Hire a Change Management Consultant: Probably the most important issue is engaging a suitable consultant, as few mid-sized firms have the requisite skills internally. And software resellers are likewise not equipped to handle this aspect of new systems implementation. More importantly, they will almost never mention it. Why? They believe that it is:
• Not relevant to them, and outside the scope of their thinking
• A diversion of funds from their project
• A wild card third party is introduced, whom they may have to deal with

Consultants with years of experience in similar situations will help identify major problems and guide the company through the process of proactively dealing with them. They will have experience working with companies just like yours and will be an invaluable asset…although they will come at a price.

2) You need to make sure that all employees are involved in the new software implementation. Communication is key here. Employees should know what will happen, when it will happen, why the change is being made, how it will impact their daily tasks, and so on. This communication should be done early and often, not as an afterthought or after employees begin ask questions.

Without this communication, management should expect everything from people not understanding priorities to outright opposition (frequently covert). In addition to telling employees about the changing environment, they need to solicit specifications and suggestions about the system, alternatives and other issues. This is called buy-in and also helps to prevent mistakes and oversights throughout the process.

That being said, it is difficult to find the time to get input from everyone. One good way to open the communication channels is to conduct interdepartmental workshops that discuss, in detail, the ways that each business area will be impacted by the change, the reason for the change, and the other factors mentioned above.

3) Several organizations make the mistake of confusing “management” with “leadership” and wrongly assume that their common “mangement” systems (i.e. issuing a memo to get a certain task done) will work to meet the “leadership” needs required when new software is implemented. When a complex system change is made, more than some instructions from managers are needed to ensure success.

Further, many executives have the wrong impression, believing that complex new systems are plug-and-play, not realizing that leadership may be required to make them fully work, organizationally. Although large enterprises often, but not always, have both the understanding and resources required, that is often not the case with mid-sized organizations.

4) The new MRP software Must be ‘Sold’ to Employees: This means that all steps must be taken to ensure that all employees are “bought in” to the new system. They must understand that they have a stake in the ultimate success of the system that will impact the overall organization, and potentially their jobs. If they do not feel like they have a stake in the new software, it may ultimately fail.

5) You also need to be prepared to deal with fear that employees that may have. Anytime a big change is made in a business, employees become scared of the change if they don’t understand the motivation, and often if they do understand the motivations.

Fear creates the problem that it can lead to behavior that in some way is oppositional to the new system. Or it may lead to departures, from employees who can’t deal with the uncertainties.

6) Conflict Resolution: There will be some conflict with the new system. This is almost guaranteed. Turf battles may erupt. New communication between previously unconnected departments may lead to conflict. In most cases, these conflicts can be avoided if the fears mentioned above are addressed early and often.

Many companies choose to ignore conflict, feeling that it will go away over time. However, we all know that this is never the case. Unless management takes the necessary steps to deal with the conflicts, the problems will only fester and grow, potentially turning in to larger issues that they really are. Therefore, it is important that conflict resolution steps are taken at the instant that a conflict stirs up.

While the scope of this article is referring to mid to larger sized organizations ($20M and up) and their acquisition of ERP software, the principles involved effect companies of all sizes. Leadership and motivation carry the day even in small offices. All it takes is one or two uncooperative employees with key operational jobs to sabotage new software!