Ensuring a high ROI on your ERP implementation is no easy task. Many organizations have tried to accelerate their projects by implementing out-of-the-box ERP software, minimizing process changes and cutting change management from their budgets. While this may result in higher financial returns in the short-term, it does nothing to position your organization for long-term growth.
So how do you maximize ERP ROI without reducing your project budget to the bare necessities? One answer is organizational change management. In other words, your employees will determine your ROI.
The Human Factors That Influence ROI
- Speed of Adoption – How quickly are employees adopting new technology, business processes and job roles?
- Ultimate Utilization – How many employees are using the ERP system and demonstrating buy-in?
- Proficiency – How well are employees performing their jobs with the new ERP system?
If one of these factors is negatively impacting your ERP project, you may want to conduct an ADKAR (Awareness, Desire, Knowledge, Ability, Reinforcement) Assessment. Evaluating how well you’re meeting employees’ needs will help you develop a change management plan, which is a key pre-implementation activity.
What Employees Need During a Change Initiative
- Awareness of the need for change
- Desire to make the change happen
- Knowledge about how to change
- Ability to implement new skills and behaviors
- Reinforcement to retain the change once it has been made
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Desire is one of the key components of ADKAR that organizations overlook. They see change as a mandate that employees will follow whether or not they desire it. While this may be the case with some employees, software usage isn’t the ultimate goal. Employees must be proficient with new software for your organization to realize business benefits, but they are unlikely to become proficient without the desire to change.
Reluctant software users are almost as bad as employees who refuse adoption altogether. It’s important to begin change management activities before ERP selection, so you can proactively build desire among employees and give them more time to process the changes. While SAP and Oracle may be infinitely better than your old ERP system, employees may still be reluctant to adopt a new system if you don’t give them reasons to desire change.
Another aspect of ADKAR that many organizations forget to address is employees’ need for reinforcement. When employees revert to old processes, this may indicate the need for reinforcement. The best way to reinforce change is through recurrent training and frequent communication. Our experience as a software implementation expert witness has revealed that a lack of communication is a leading cause of ERP implementation failure.
It’s helpful to think of ADKAR as sequential. You cannot meet every need simultaneously, and each employee will go through the process at a different pace. Managers should be the first to complete the ADKAR process followed by the employees they supervise.
How to Be a Change Leader
- Prepare yourself for change – What changes will impact your team and how? Why are these changes being made? Answering these questions is the first step to becoming a change leader.
- Adapt to the change that is happening to you – Just because you’re a manager doesn’t mean you like all the proposed changes. You should share your concerns but ultimately commit to supporting change.
- Develop competencies to manage change – A manager should have the competencies to take on the roles of a communicator, liaison, advocate, resistance manager and coach.
If your organization is experiencing low productivity, high turnover and low morale as a result of organizational changes, the role of coach will be essential to your digital strategy. Managers who assume this role significantly impact how employees perceive change. By listening to employees’ concerns and using ADKAR, these managers are able to identify barriers to change and develop plans to address them. Executives can also play the role of coach. In fact, they can be some of the most effective coaches because of their level of influence.
6 Tips for Coaching Employees
- Remove barriers – Barriers to change may relate to family, personal issues, physical limitations or money. Coaches should fully understand the individual situation of each employee to determine how to remove barriers.
- Build desire by providing choices – Employees need to know in simple and clear terms what their choices are and what consequences they face for making a particular choice. This puts a level of control back into the hands of employees.
- Create hope – Employees are more open to change when you frame it as an opportunity for a better future. Coaches can create desire for change among employees by expressing their own excitement and enthusiasm. While this tactic is effective, it can be misused if coaches create false hope and don’t believe in the change themselves.
- Convert the strongest dissenters – By focusing their energy on the most vocal dissenters, coaches can reduce the spread of negativity. Another reason that converting vocal dissenters is worthwhile is because they may be some of the most vocal advocates when converted.
- Highlight the tangible benefits – Case studies and testimonials can tangibly demonstrate the benefits of change. Conducting pilot programs and sharing the successful outcomes is also useful for generating buy-in.
- Use money or power – This tactic works well with mid-level and senior managers that are critical about the success of the ERP project. Offering higher pay in exchange for project support can be worth the investment.
Aiming for a Higher ERP ROI
While many organizations aim for short-term cost savings, some organizations understand the importance of long-term ROI. They expect more from their ERP software because they know its true value lies at the intersection of people, processes and technology. They know that technology alone cannot deliver long-term ROI.
However, this is easier said than done. If you know the true value of ERP software but need a little guidance to achieve it, hiring an ERP consultant is great investment.