If you’ve been through an ERP conversion, you’ve probably heard the complaints from your users immediately after the “go live” date:
Our old ERP was better than the new one!
Guess what – this is almost always true! For a period of time after conversion, you’ll find that your old ERP was easier to use, much quicker, produced fewer errors and made customers a lot happier than the new system.
If you don’t understand and manage this dynamic, your customer-facing personnel will respond to their frustrations by telling customers:
“I don’t know why we got this new system; the old one was a lot better. Management must be out of touch with the business. Hopefully, they’ll straighten it out someday, but I apologize for how hard it is to do business with us right now.”
You want your team to rally behind your new ERP and align around a message to customers that the bumps in the road are worth overcoming to reach new levels of capabilities and service. You do NOT want the people on the front lines of your business commiserating with customers about how they’re both being victimized by a leadership team that made a dumb decision.
Distributors that invest in new ERPs really need them – the old one typically didn’t have the functionality or scalability to meet the future needs of the business. But if you don’t effectively manage your team’s expectations, you’ll alienate your customers and customer-facing employees at the same time!
The ERP Conversion “Trough of Despair”
The key to avoiding this problem – and getting through your conversion as productively and effectively as possible – is to understand and prepare your team for what I call “The Trough of Despair” in ERP conversions.
Entering the Trough of Despair is practically inevitable. Almost always, when you first switch over to the new ERP, it’s not nearly as fast, capable, reliable or easy to use as the one it replaced. There’s no mystery to this and this doesn’t mean you chose the wrong product or implemented it poorly. It just means that your new ERP is – necessarily – a stripped-down, highly simplified version of its ultimate form.
This is by design. There’s a lot of complexity and risk in installing a new ERP and one of the ways you ensure success is by simplifying everything. You only turn on essential features and leave out certain modules to make sure when you flip the switch, the new ERP functions well enough to manage the business.
However, this prudent strategy means that your users are now comparing this new, bare-bones ERP – which is only operating with a fraction of its ultimate performance, efficiency and reliability – with the old ERP that had been fine-tuned and customized for your business for 10 or 20 years!
The old ERP was at the very limit of its capabilities and effectiveness. It could never get any better. It certainly was not going to meet the future requirements of your business or your customers. But today – the day after the conversion – the old one was much better than the system you replaced it with because the new one is really only partially installed. It’s got flaws you haven’t worked out yet.
Also – and this is very important – your end-users barely know how to navigate the new ERP while they were absolute maestros with the old system.
Escaping the Trough of Despair
Distribution executives are often frustrated with the reactions from their field employees after putting in a new ERP. I’ve heard statements like:
- “We told them the cutover was going to be difficult!”
- “Field employees were highly involved in our ERP – from requirements to planning the conversion!”
- “We clearly communicated that it would take months to fine-tune the new ERP!”
These statements are all true, but they aren’t enough. Indeed, while the executive team tries to be forthright about the challenges, they also want to build excitement and get buy-in from the team (especially field employees). So, they extoll the new system’s virtues – new capabilities, improved ease of use, better reporting, etc.
But executives need to go beyond stressing that the conversion is going to be difficult.
They must communicate the reality that any newly installed ERP is worse at almost everything than the old system.
Then, ask field employees to help the company get through the Trough of Despair as quickly as possible by sharing direct, useful feedback about what’s working and what’s not and stress to customers that the conversion was necessary to deliver better capabilities over time.
Teach your team that the ceiling for the new system is vastly higher than the one you’re replacing. If you manage your communications effectively, your team will see this brief period of time post conversion (say, 12 to 18 months) as just part of adopting the new system – rather than a sign that management doesn’t understand the business.
Managing Internal Communications During an ERP Conversion
A growing number of distributors I speak with are either in the middle of an ERP conversion or they’re planning one soon. That’s no surprise – the backbone technology of a distribution firm must be up to date; the new systems enable fantastic new capabilities and allow you to deliver customer benefits that are either table stakes or provide differentiation. You simply cannot be competitive with old technology.
But it’s tough. It takes a great deal of hard, smart work just to pick the right ERP for your system and the conversion process is huge and complex. Unfortunately, some distributors tend to declare victory the day the new system goes live. This is like spiking the ball on the five-yard line – you haven’t really won until you get through the Trough of Despair.
That’s when the new ERP isn’t simply managing the business, it’s outperforming your old system.
Helping your team understand that the go-live date results in a system that’s initially worse than the old one – and that, with their help, you’ll achieve new levels of performance and capability – will help you quickly get through the Trough of Despair.
Or perhaps even avoid it altogether.
Because when employees have clear expectations, they’re much more likely to jump in and help. They’ll give you useful feedback about what’s working and what’s not rather than complaints about the new system. And they’ll help you manage customer expectations, too.
I’d love to hear your thoughts and experiences about ERP conversions and the Trough of Despair – whether or not you agree. Feel free to leave a comment below or email me at firstname.lastname@example.org.
Ian Heller is the Founder and Chief Strategist for Distribution Strategy Group. He has more than 30 years of experience executing marketing and e-business strategy in the wholesale distribution industry, starting as a truck unloader at a Grainger branch while in college. He’s since held executive roles at GE Capital, Corporate Express, Newark Electronics and HD Supply. Ian has written and spoken extensively on the impact of digital disruption on distributors, and would love to start that conversation with you, your team or group. Reach out today at email@example.com.