Written By: Masakazu Ryoto
Implementing a new ERP boosts efficiency but often leads to workforce cuts, which is a mistake. In competitive markets like Singapore, firing staff risks losing vital institutional knowledge. True ROI comes from investing in people, not short-term cuts.
What is the main risk of reducing staff after an ERP implementation?
- Primary Risk: The main risk is losing the core employees with the essential project and institutional knowledge required to operate, maintain, and adapt the new system effectively.
- Negative Outcome: This loss of talent creates a “hollowed-out capability.” The organisation is left with powerful technology but lacks the crucial human expertise to maximise its value, ultimately undermining the long-term return on investment (ROI).
Implementing an Enterprise Resource Planning (ERP) system promises efficiency. Still, it carries a hidden risk, particularly in Singapore’s competitive talent market: reducing headcount too quickly after going live can critically undermine the entire investment. The core lesson is clear: ERP success is not solely about technology; it is about the people who operate, maintain, and evolve it.
ERP success is not solely about technology; it is about the people who operate, maintain, and evolve it.
Organisations strive to streamline their processes, enhance accuracy, and improve decision-making by combining various workflows into a single cohesive platform. However, this significant and frequently overlooked issue lies beneath the attractive promises of increased efficiency and seamless integration.
The Pressure to Justify the Investment: Why Headcount is the First Target
In many instances, the choice to implement a new ERP system stems from the need for enhanced efficiency and urgent technical and operational requirements. Companies often rely on outdated client-server systems based on older technologies, such as Visual Basic, where the number of skilled developers is dwindling. This makes ongoing maintenance and future upgrades increasingly challenging. Transitioning to modern, cloud-based applications allows seamless integration with other cloud services via API connections, minimising manual data handling and boosting scalability. By moving away from on-premises infrastructure, organisations can also avoid expensive hardware upgrades and lighten the load on their IT teams. Additionally, this shift often frees companies from costly licensing models that no longer meet their operational demands.
These are all valid and compelling reasons to implement ERP. However, the substantial cost of such projects also creates an expectation, sometimes an unspoken demand, that the investment will be recouped quickly. Reducing headcount is one of the most immediate and visible levers for improving short-term profitability.
The ERP Paradox: Losing Your Most Valuable Players Post-Implementation
Unfortunately, when headcount is reduced immediately after implementation, the people who are often lost include those who understand the nuances of the old processes and the organisational context that makes the new system work in practice. Sometimes they are labelled as “redundant” because their manual work has been automated; other times, cost pressures override long-term considerations.
The damage is compounded when organisations unintentionally lose the core members who could have driven ongoing improvement in the ERP environment. These are often the people who were deeply involved in the implementation project—mapping processes, troubleshooting issues, and ensuring adoption across departments. ERP projects are demanding; the workload and stress can be intense, and completing the project can feel like crossing a finish line after a gruelling marathon. Having “given their all,” some of these key contributors may feel their contribution to the company is complete. Others recognise that their new skill set and project experience make them highly marketable, enabling them to secure higher salaries elsewhere. It is not uncommon for core project members to leave within one or two years after go-live, taking with them irreplaceable knowledge.
A System Without Stewards: The Dangers of a “Hollowed-Out” Capability
This creates a dangerous paradox: just as the organisation begins to rely on the ERP system for daily operations and strategic decision-making, it loses the people best equipped to fine-tune and evolve it. The result can be a hollowed-out capability where the system is in place, but the expertise to adapt it to changing business needs is gone.
This creates a dangerous paradox: just as the organisation begins to rely on the ERP system for daily operations and strategic decision-making, it loses the people best equipped to fine-tune and evolve it.
A People-First Approach to ERP Stabilisation
A standard narrative around ERP is the promise of eliminating manual errors through stronger data integration, ensuring that the numbers appearing in management reports are accurate and timely. Accurate data, in turn, enables executives to make smooth and confident decisions. Yet for this to be realised, leadership must recognise that seamless business data integration is often more critical than short-term labour cost reductions. In many small to mid-sized companies, many roles are filled by people who are difficult to replace. Cutting staff purely for immediate profitability can undermine the benefits the ERP was intended to deliver.
The lesson is clear: ERP success is not solely about technology; it is about people. Implementation should be followed by a stabilisation period, during which core knowledge is preserved and built upon. This means resisting the temptation to make sweeping cuts to headcount immediately after going live and instead investing in retaining and motivating those who understand the business and the system.
Masazaku Ryoto
An Independent IT Consultant with over 26 years of experience in business application implementation and process optimisation. Deep expertise in financial operations and ERP systems (NetSuite, SAP).
How GJC Acts as a Bridge to Retain Your Core ERP Talent
ERP systems are powerful tools, but they are not self-sustaining. GJC acts as a connector, helping you bridge the critical gap between your new system’s capabilities and the human expertise required to make it thrive. We empower you to retain and motivate the core team who understands your business and the new technology, ensuring your investment delivers long-term value.
Protect the investment you’ve made in your technology and your people. Contact a GJC consultant today at enquiry@goodjobcreations.com.sg for a confidential discussion on retaining your key talent post-implementation.
