The Effects of ERP Implementations on Long-term Staffing

Given the fact that most of our clients are mid-size, high-growth organizations, few have the employee bandwidth to take on something as challenging and time-consuming as an ERP implementation. Longer-term, few can fathom the concept of reducing staff after go-live to account for more operational efficiency. A relatively weak economy and financial uncertainty have combined to create situations in which ERP implementations can have unpredictable impacts on staffing levels during projects and after the projects are complete.

This begs the question: what is the typical impact of an ERP implementation on staffing? According to our 2013 Organizational Change and Business Process Management Report, nearly half of organizations that recently implemented ERP systems cited “lack of staffing resources” as a key challenge that affected the outcome of their initiatives. In addition, the same reports reveal that nearly half of respondents cited resource constraints as a key reason why their projects took longer than expected, while more than 40% cited these constraints as a root cause for budgetary overruns. Clearly, most organizations don’t have a good handle on what it takes to appropriately staff their enterprise software projects.

While these data points illustrate the effect of staffing on the short-term implementation costs, other data suggests that it may also affect the other side of the ROI equation: business benefits. Our 2013 ERP Report shows that most ERP implementations fail to deliver at least half of the expected business benefits, a significant part of which are typically related to labor or staffing benefits. In other words, companies expect that business benefits will materialize by either cutting staff or, more commonly, continuing to grow the company without having to hire as much additional staff going forward. However, these same companies simply aren’t achieving their anticipated business benefits, which includes projected staffing levels.

As useful as these data points may be, they don’t suggest what one can expect when it comes to staffing as a result of an ERP implementation. The first step is to develop a realistic project plan, which most ERP vendors, system integrators and implementation companies aren’t equipped to do. Although internal resources are critical to help with business process design, system testing, training and a host of other activities, few vendors have the foresight and experience to fully understand what internal resources will be required to support the implementation successfully at the beginning of the project, which leads to problems later on. So the first step to a successful resource plan is a realistic implementation plan. Click through to view our webinar, The Path to ERP Implementation Planning.

The second step is to understand how you expect the ERP system to affect staffing levels after the implementation, which requires a solid business case. Only by making assumptions regarding business benefits can these numbers be projected. Even if your organization isn’t planning to downsize after go-live – again, most of our clients don’t begin an ERP implementation with this mindset – it is still very helpful to define how you can leverage more efficiency from existing staff as the company grows organically and/or through mergers and acquisitions. This activity can be overwhelming without a solid framework to begin with, which is why we typically create business cases and benefit realization plans as an output from our business process reengineering and organizational change management activities. In other words, the business processes and organizational changes will largely help determine expected staffing levels after go-live. Click through to view our webinar, Organizational Change Management a Critical (and Often Overlooked) ERP Implementation Success Factor.

In summary, long-term staffing needs can be boiled down to two things: a solid implementation plan and a good business case and benefits realization plan. These two project deliverables are critical if you want to understand how your organization’s staffing levels will likely look during and after your ERP implementation. Our clients that follow this framework are much more likely to come in on or under budget, and just as importantly, are likely to realize the business benefits they expect from their ERP systems.

Learn more by visiting our ERP Staffing page and be sure to use our ERP ROI calculator to estimate your organization’s potential ROI from your ERP implementation.

About Eric Kimberling

After 15 years of ERP consulting at large firms including PricewaterhouseCoopers and SchlumbergerSema, Eric realized the need for an independent consulting firm that really understands ERP. He began his career as an ERP organizational change management consultant and eventually broadened his background to include implementation project management and software selection. Eric’s background includes extensive ERP software selection, ERP organizational change and ERP implementation project management experience. Throughout his career, Eric has helped dozens of high-profile and global companies with their ERP selections and implementations, including Kodak, Samsonite, Coors, Duke Energy and Lucent Technologies. In addition to his extensive ERP experience, Eric has also helped clients with business process reengineering, merger and acquisition integration, strategic planning and Six Sigma initiatives. Eric holds an MBA from Daniels College of Business at the University of Denver.

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One Comment

  1. I really enjoyed the article. The staff has to be carried along for long term success.Implementation plan has to be fully integrated into the business case. Well done.

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