ERP and Organisational Change Management

Long time no see …

So, once again, something must have prompted this article. Correct ...

And before you say it, I know this subject has been written about many times but hey, it does no harm to raise it above the parapet again because it is an ongoing debate and, for some strange reason, people still don’t get it.

Setting the Scene

I recently made a comment here on LinkedIn as a result of someone posting what they viewed as an ideal ERP Project Team structure (see title graphic). My comment was “your org chart lacks the one role that is consistently quoted as being key to a successful ERP implementation ... where is the Organisation Change Manager?”

This was followed by a somewhat lengthy exchange between the author, myself and a few others about the advantages/disadvantages of “internal” and “external” Consultants (not necessarily OCM).

Here are some of the comments related to OCM:

•  “Totally agree with Ron, you’re missing a fundamental part for successful implementation!”
• “Most organizations don't have anyone capable of doing "change management" for the simple reason that organizations do not do change management on a regular basis.”
• “Did you leave out CM team? Oh wait, everybody does - no worries then, you’re not alone!”

However, judging by the ongoing comments of the original poster, it was evident that they felt it was unnecessary to engage “external” Consultants ... see comments at the end of this article.

A few days later I noted yet another post on the same subject which read “External ERP consultants can't ensure ERP success but Internal ERP consultants (Organizational ERP project team) can. External consultants can just help Internal consultants by providing guidelines of ERP software”.

NOTE: Both posters are ERP Project Managers.

Regarding that note I did get a comment against another post I made about my SSI Index which went “I enjoy reading your educational comments about Change Management especially when IT Project Managers are not sure how it fits into the project space” that kind of sums things up for me.

Time to take a little journey

Reasons for ERP Failure

ERP implementations have become larger and more critical in recent years. Despite improved technical functionality and reliability there are still project overruns, delays and sometimes downright failure. There are many examples of ERP failure and Gartner recently stated that “75% of all ERP projects fail”. Problems are typically not related to the system or to technical issues surrounding the software but instead are often due to business related issues. Here are a few examples which, in my book, all come under the OCM domain:

•  Business Leadership was not committed to the implementation.
• Lack of, or too little Communication
• Failure to engage Stakeholders.
• Insufficient Training/Support.
• The Business was not ready for new Ways of Working.

Despite the above, to this day, people still question the need to have OCM for ERP implementations using the argument that it’s a technology implementation and once implemented the business should just be able to “get on and work with it”. But guess what it’s not quite as simple as that because it will completely change the way a business operates. 

The impact an ERP implementation has on a Business

 If you break down the main impacts of an ERP implementation on a business it would go something like this:

• Processes will change from an As Is to To Be.
• Organisation Structures may/will change.
• End users will need to be trained in the new ways of working.
• There will be a need to ensure that the business is ready for new ways of working at go-live.
• Once employees gain competence with the new technology they should be encouraged to continuously improve ways of working into the future.

That sounds very simple but actually it’s not because all of these things involve people and they will need to have their expectations and perceptions managed.

The need for OCM in an ERP Implementation

Every implementation of ERP should take advantage of OCM. ERP's long history have helped develop good practices that include a lot of tools and better ways of working within an organisation. It is important to take these issues into account when defining the scope of ERP implementations.

When organisations begin an ERP implementation, the first thing they need to do is to ensure that the Project has an equal focus on OCM and Technology Change. This means building an OCM plan and aligning it to the overall Project Plan that identifies all necessary aspects of the People Side of Change. Projects driven from a technical perspective will have specific deliverables and milestones to achieve but will pay little attention to the People Side of Change therefore so managing this aspect alongside the technical delivery is critical for the following reasons:

• Senior leaders will demonstrate their own and the organisation's commitment to the change.
• Resistance is identified and dealt with early in the process.
• Employees will have a solid understanding of why change is happening.
• Employees will be engaged in both the solution and the change.
• Training will be used to build knowledge after employees have made the personal decision to support the change.
• Communications are segmented and customised for different stakeholders answering the questions that they care about.
• Momentum is built throughout different areas and levels within the organisation.
• Changes will become less painful to the organisation and to the employees.
• A coalition of support among senior leaders and managers creates momentum throughout the organisation.
• The probability of meeting project objectives is increased.
• The organisation begins to build a history of successful change, creating a better 'backdrop' for the next change initiative.

Key components of Organisational Change Management

So what are the key OCM components that are needed to help ensure a successful ERP implementation?

The Foundations

I believe, and a lot of research confirms this, that there are three “core” components (which I call “the foundations of change”) that underpin OCM which are as follows:

Sponsorship

... is a key ingredient that makes ERP implementations successful. Without a Sponsor there would be no project! Senior Leaders and Executives provide the authority and credibility needed for a change to be successful. A Sponsor must be present to demonstrate their own and the organisation's commitment to the change. They provide resources required for change and have the ultimate responsibility for the program or project, building commitment for the change particularly at the senior management level across the organization. The sponsor can minimize barriers to change and ensure the rapid and effective implementation of project outcomes.

Stakeholder Management

... involves taking into account the different interests and values Stakeholders have and addressing them during the duration of the ERP project to ensure that they are all happy at the end. A properly managed Stakeholder can be your greatest asset, clearing organisational roadblocks and supporting your project in times of need. In order to ensure the success of your project you must properly manage all of your stakeholders.

Communication

... is about engaging staff in discussions about the impact to the business is absolutely critical to successful implementations but on its own will not guarantee success. is a starting point in any ERP implementation is to clearly communicate the rationale behind the change goals. It is the employees who will be doing most of the groundwork to make a new strategy work, so they must understand the aims and objectives. They must also be clear on why the plan has been introduced, how it will be implemented and what is expected of them e.g. their roles & responsibilities. Ultimately, employees want to be kept in the loop and informed of any internal developments.

The Building Blocks

The above three components are augmented by a further six “complimentary” components (which I call the “building blocks of change”) but are equally as important consider:

Process Change

... is about looking at the processes that are going to be impacted by the implementation the process side of a change initiative is critically important. When embarking upon change the goal is to eliminate waste, improve productivity and efficiency, optimise existing resources, handle growth without adding additional resources and to streamline existing operations to name but a few. Companies with defined processes are better able to evaluate their strengths and weaknesses and identify opportunities for improvement. Processes provide a blueprint for employees and enable cross-training to minimise business interruption.

Organisational Change

... follows hot on the heels of Process Change and refers to the way tasks are divided up and the patterns of co-ordination, communication, power distribution and workflow associated with this. Any change scenario will invariably involve some kind of organisational impact. You can be sure that the value of the marginal improvements won't be anywhere near the costs of an expensive, time-consuming and resource-intensive implementation project. If your organisation doesn’t take the opportunity to restructure its business, the change initiative will be part of the statistical number of ERP failures that you so often read about.

Business Readiness

... is a measure of preparation and is a term that means the business’s ability to take on or adopt what a project delivers so in effect anything that involves a change to Business Operations requires an organisation to be ready for and adopt the change. A business that is ready will have made all the preparations necessary to accept the deliverables of a project and begin operating them. Failed ERP implementations often come when organisations attempt to by-pass the readiness and ownership transfer activities and go directly to capacity building.

Training

... is about preparing end-users for go-live and directly contributes to bottom-line results and a successful change. Your company will invest lot in their ERP implementation, but if you don’t train people on the resulting changes, the investment will be largely wasted. Failure to make training a critical component of an ERP implementation is the number one mistake many organisations make. Effective training is the cornerstone of every successful ERP implementation.

Business Benefits

... is about planning and managing the overall delivery of benefits related to the ERP implementation. When undertaking an ERP implementation, it is often the case that businesses spend so much time and energy on the preparation stages they overlook what comes after implementation. It is the “after” implementation part (how we measure the success of the implementation ... adoption) that is often neglected. Measurement should entail a holistic approach that assesses how well the implementation has established the foundation for business transformation thereby providing the organisation opportunities to achieve substantial business benefits.

Continuous Improvement

... should start at the go-live date of your ERP implementation. With the pace of change and customer expectations, every business needs to be as agile as possible. By constantly evaluating and improving processes in the light of their efficiency, effectiveness and flexibility, organisations can quickly respond to change. The only way to ensure that your business can keep up is to take a proactive and continuous approach to improvement of your systems, processes and output.

What about the "internal" vs "external" + the PM vs CM debate?

Internal vs External

Just returning to the the post I mentioned at the beginning of this article I said the following "most organisation do not have an internal Change Management capability and will tend to appoint someone they think might be good at it just to save some money. So just to "avail someone internally to plan and execute change management strategies for ERP is a recipe for disaster."

So if there is an internal "change" capability that can satisfy all of the OCM areas I mentioned in this article then using and "internal" resource is fine. However if there isn't then an organisation needs to invest in "external" expertise but doing so they need to stipulate that the "external" resource should work together with an "internal" resource to transfer their knowledge so an organisation is left with a "change" capability after the contract ends.

PM vs CM

Now this has been an ongoing debate for more years than I care to remember and I wrote about this very subject in 2014 ... https://www.dhirubhai.net/pulse/20140804002003-7145156-project-management-vs-change-management/

My view, and it is still the same as it was all those years ago, is that a CM and PM model of working in partnership is the way forward but unfortunately this is an overhead a lot of organisations will not want to bear.

The PM with a responsibility for Change Management or conversely the CM with a responsibility for Project Management just puts too much pressure on an individual and they may not necessarily have the right experience and skill-set to manage both elements 

That's it and as ever ...

I am happy to be questioned, quizzed, interrogated, challenged, corrected, ridiculed, mocked or whatever ... so bring it on I say.