Change and Risk Management in ERP Implementation

An ERP system is a process and not an end in itself. Perfunctory Implementing of ERP system will not boost efficiency. Reasons for failure of an ERP project such as lack of commitment from management and employees, lack of communication, knowledgeable employees not available for the project, are mostly organizational issues and have nothing to do with technical matter. Hence, to alleviate the risk of failure due to organizational issues, adoption of proper change and risk management process, plays a crucial role.

Change/Risk management

Implementation of ERP necessitates a broad based organizational change which is more disruptive than incremental. Change management effectively deals with the process of managing such changes, and broadly encompasses all major segment of the organization such as:

• People-Employees education and competence.
• Organization- Organizational structure, Business functions and processes
• System-Information planning, Hardware and Software.

Effective change management is interconnected with risk management which minimizes risk of failure and ensures avoidance of unpleasant surprises, both during implementation and post implementation phases.

Processes of change/risk management: Starting with project kick off, following Processes should be beneficial:

1. Engaging a change management agent: He may be a project sponsor/ project champion and well conversant with business process of the organization. For a large project, an outside consultant, specialized on change management may be engaged. The project manager is usually not given this task.

2. Risk analysis: At the outset, detailed analysis of perceived risk is drawn with active participation of change agent, project manager, consultants and key users. Perceived risks are classified into different categories. After deliberation of their likely impact, what action is to be taken by whom and when, are agreed upon. Some of such risk categories are:
   1. Risks perceived by key users and project sponsor.
   2. Risks resulting from project size, excess customization and multi location implementation.
   3. Risks resulting from organizational structures, general motivation and procedures.
   4. Risks resulting from communication structure.
   5. Risks resulting from stuffing availability.
   6. Risk arising from knowledge and expertise of users.
   7. Risks arising from knowledge and experience of project manager, consultants and project team.
   8. Risks arising from supply of hardware and software and network bottleneck.

3. Communications: One of the important function of change management process is communication of scope, purpose, progress of the ERP project all across the organization. This may be in the form of news letter (or an bulletin board if intranet is available). The news letter should include up to date news of the project, upcoming milestone, individual/group achievement and should highlight benefit of the project.

4. Dealing with the people factor: Resistance to change is usually encountered from employees with longer years of service. There may also be apprehension of redundancy. User buy in of the ERP system is a critical success factor and there is always difficulty in adapting to a new culture of computerized environment. Recognizing such behavioral issues and developing a plan to address, is one of the most important responsibility of change agent.

5. Training: For user understanding of the new system, organizing multiple and on going training is an important function of change management process. Training methodology includes classroom training, workshop, hands on practice, streaming video etc. Training manual with screenshots and user feedback at the end of any training programme, augment effectiveness of the training.

6. Monitoring of activities during go live: This period is a crucial part for change management process as some nasty surprise may emerge, needing immediate resolution. Change agent must check and ensure that all transactional data are entered into the system and any system error is resolved forthwith. If a legacy system is needed to be maintained temporarily for fall back purpose, then he needs to ensure entering of data in both the system and organize additional resources wherever required.

Conclusion

ERP implementation is a complex process as it involves both technological and functional issues. Pre defined plan for managing the associated risk and effectively changing process of the organization will go a long way to ensure success of the project.