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Managing change key to successful ERP implementation

The most innovative and successful ERP implementations invest in the organizational change management required to make their projects succeed.

It's no secret that organizational change management is a key ingredient to a successful ERP implementation. In...

fact, the recently published study, "The 2014 ERP Report: Organizational Change Management," reveals that organizational change is one of the most overlooked and neglected aspects of ERP implementations. Here are a few summary findings from the report:

  • A full 100% of the organizations in the study experienced some sort of material operational disruption at the time of go-live, such as not being able to ship product or inability to close the books at period end.
  • 60% of organizations experienced operational disruptions of one month or greater after go-live.
  • 50% cited organizational change management as the primary issue causing those operational disruptions.
  • 63% of CIOs, CFOs and ERP project managers classified organizational change and people issues as being either difficult or very difficult to navigate throughout their implementations.

Although the report noted a slight increase in organizations that dedicated at least a moderate amount of focus to organizational change management, the above data demonstrates the "soft" challenges that most companies still face. The bottom line is that ERP implementations simply do not succeed without an adequate focus on organizational change management.

But why is organizational change management so important? The above data may suggest some of the symptoms of inefficient organizational change, but it doesn't necessarily tell us why or how this critical success factor reduces risk, increases business benefits and makes for a successful ERP implementation.

Below are a few examples of how organizational change management makes ERP implementations more successful than those that overlook this important detail.

Organizational change management is imperative to translating new business processes and system functions into "real" changes. Although most ERP systems feature enough bells and whistles to deliver potential improvements to your business, those changes won't materialize without effective organizational change management. Simply turning on the new software doesn't prevent the confusion, material workarounds and regression to old business processes so inherent in most implementations. An effective change plan, on the other hand, will identify the specific changes that affect every work group in the organization.

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For example, every employee in your organization probably has a number of spreadsheets, manual processes and unique ways of doing things that are well established in their work routines. An effective organizational change management strategy will identify why those processes will no longer be, along with how exactly they will be performed in the "to be" model going forward. Only through this tailored and specific approach can employees grasp, understand and execute what is expected of them in the new system environment.

Employees are generally overwhelmed with the amount of change required by ERP implementations, so it is important to craft a targeted communication strategy. Just as specific changes need to be clearly defined for employees, the communications delivered to each work group and individual employee also need to be tailored to their specific work requirements. The what, when, why and how of the changes specific to individual work groups need to be communicated to employees.

In addition, those messages should be delivered via the multiple channels most effective for those specific work groups. For example, executives might respond better to brief bullet points, sales reps may respond better to in-person meetings and shop floor workers may respond better to bulletin board announcements. It is also important to remember that the changes resulting from your ERP implementation will need to be communicated at least seven times to each employee affected in order for the messages to resonate.

Training is meaningless unless it is tailored for your specific organization. Finally, training should be crafted to fit your specific industry and business processes. However, most ERP vendors' boilerplate training documentation will reflect generic business processes not applicable to your industry and unique configurations of the software. With this in mind, it is extremely important to invest the time and resources required to make your training materials and courses unique to your business. Without this approach, it is highly unlikely that employees will understand or remember how exactly new business processes should look.

Implement your new ERP system only when your organization is ready. Many executives assume that their organizations will be ready because they tell them to be. However, this is simply not the case. More effective project teams, on the other hand, identify ways to measure and remediate organizational readiness issues. For example, employees who have wanted more communication from management will generally respond better to organizational change messages originating from the management team. Potential points of resistance can be easily identified in organizational surveys and focus groups and incorporated into a custom organizational change management plan for your company.

Organizational change management continues after implementation. Most companies are thrilled to simply have reached the finish line of their implementation, and the last thing they want to do at that point is to continue project activities. However, the only way to realize and optimize the business benefits expected from an implementation is to measure post-go-live results, identify root causes of underwhelming business benefits, and implement corrective actions to accelerate those benefits. Often, this can be as simple as implementing remedial training for select employees or redefining a broken business process.

The effort, time and cost associated with organizational change management may be a drop in the bucket relative to an overall implementation, but too many companies neglect this important success factor. The most innovative and successful ERP implementations, on the other hand, invest in the organizational change management required to make their projects succeed. Simply put, effective organizational change management delivers higher business benefits and less risk, while allowing more projects to finish on time and on budget.

Next Steps

Operational changes begin with cultural transformation

Executive buy-in is needed for a successful ERP upgrade

Avoiding the pitfalls of SAP ERP implementation

This was last published in January 2015

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Is organizational change management a priority within your company?
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I believe it should be a priority, since any transitioning of a company's current state to a state geared towards the future is critical to success. By effecting change in the organization, costs are minimized, which in turn helps maximize the effect of change efforts.

As it is known, businesses today need to undergo change with regard to the rapid technology growth, if they aim to achieve a mark and survive in current competitive markets.
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Unfortunately, after all the data and case studies for successful change, many companies still don't prioritize the people aspect of the journey. 

I recently interviewed at an organization implementing an ERP in health insurance. One question told the story. Where are you at in the process? They had the transition team in place, conducted employee surveys and were ready to implement the pilot. What this told me was that having a change leader as part of the readiness assessment and risk analysis wasn't important. Demonstrating the importance of people change to the transition team is essential. Having the change agent as part of the process from the beginning, to gain valuable insight,  add value to the team and start influencing those stakeholders was not taking place. This painted a very clear picture of what the culture of the company is like, what their expectations will be for people change and adoption (unrealistic) and the results they will realize.

Will someone take this role? Of course. But, I certainly won't.
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