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Posts Tagged ‘Organizational change management’

erp-failureAs we conclude the month of November, it’s a time of year when many companies start thinking hard about their business information systems — well, at least those not deep in the throes of the retail Christmas market.  Late in the year and early in the year following are the times we see the most activity.  In that light, let’s look today at some key project success (or failure!) criteria…

Panorama Consulting, an ERP outfit in Colorado releases an annual survey of companies’ feedback compiled from the results, successes, failures, gripes and kudos of their own ERP implementations, all bundled into a report.  In this year’s report, they confirm what is commonly known on the “sell” side of the industry, but less well known, apparently, on the buyers’ side.

As their 2016 report illustrates, while “data” issues were technically the number one reason cited among respondents (at 15%) for ERP implementation schedule overages (i.e., projects coming in late, by a little or a lot), a better way to look at it we felt – and so did Panorama by the way – is to combine two essential and related factors: Training and Organizational Change Management issues.  When put together, these two factors were responsible for 17% of projects being delayed, often seriously so.

While data issues are indeed real – it’s almost always harder than anyone thinks, and more costly, to transfer data from old to new systems – those situations are eventually manageable, usually through comprise on both sides.  But training and organizational management issues fall squarely on the shoulders of the companies whose systems are being implemented.

What is meant by organizational change management?  Basically, attending to the needs of the people in your organization – and how they affect (or will be affected by) the improvement or implementation of your work processes and ERP.  These issues include involving your team (and seeking their input) throughout the ERP implementation process… reworking processes and the people that control them… establishing baselines for your key performance indicators with team buy-in… understanding how you will manage communication issues within the team… and determining your most effective training strategies for all involved.

Then, it’s important to execute on all of it, right down to – most importantly – ensuring adequate training for all your staff.  Because when projects fail, and they do, it usually comes down to the OCM plan, execution and subsequent employee training.

It’s important as well, as Panorama points out in a recent article to “tailor your organizational change strategy to fit your corporate culture and strategy.”  That means doing an internal assessment early in your project to determine what changes are necessary, how (and when, and by whom) they will be implemented and where training will have the most impact.

The bottom line: the most critical thing is to pay attention to is the people side of change.  As the authors conclude, it’s the path for getting to measurable business results, and affects your whole team.

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ocmBuried in a recent report on Organizational Change Management (OCM) from Denver based Panorama Consulting are five points that those of us who implement these systems would like to see every potential client embrace.

All too often we see ERP implementations viewed by their buyers as “a computer project” or a technology project – and that’s just so wrong.  It’s a BUSINESS project, and needs to be viewed at all times as the strategic business investment that ERP truly is.  Panorama’s report drives home five key reasons which we’d like to reprise for our readers today (with a healthy dose of our own commentary based on 30 years’ experience mixed in).

  1. Executive support needs to be focused on getting the job done right – not just “getting it up and running as quickly as possible.” Firms focused on getting it right understand the need for a balance between short-term implementation costs and long-term benefits.
  2. Business processes need to be well-defined up front. Given the amazing array of capabilities in today’s modern ERP systems, it is tempting to look solely to “how the software does things out of the box” to define your future stage.  That’s usually wrong too.  Successful businesses define how they want their processes to look first – because that is after all one of the keys to their competitive advantage — and then adapt the software to those processes, and not the other way around.
  3. Organizational change management is about more than just “training.” OCM is a structured approach to moving the business forward from its current state to a future state by taking stock of current processes and how they can be improved to deliver better future results.  Each stakeholder in an ERP project has a role in the process.   Stakeholders need to be empowered to embrace the change processes, contribute to them, and execute the changes.  An ERP implementation is the perfect time for all the above.  There is a lot of multi-directional communication required to make this happen successfully.
  4. Just getting the “tech part” of an ERP implementation alone is a daunting task. But much more is required.  Panorama says this one perfectly in our opinion, so we’ll quote them here: “Organizations need to focus on user acceptance testing, conference room pilots and other forms of testing the software against desired business processes and requirements.”  It’s not enough to make sure the software steps work or the modification doesn’t blow up – the business use must be vetted, validated and tested.  Otherwise, what’s the purpose of change?
  5. Benefits realization is focused on real business results. Tech-focused projects tend to set the bar relatively low: does it work as well as the old system?  Is it technically sound?  A business-focused project is more concerned with the higher vision of ensuring that the company is achieving tangible, measure improvement.  They set baselines for KPIs, and then use their implementation process – and many months thereafter – to tweak goals and performance.  What you don’t measure, you don’t improve – that’s the business-focused way of looking at ERP.

We wish every prospective customer would approach the purchase of their new or upgraded system with these considerations in mind – they’d be a lot happier, and more successful, in the end.

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invest techTechnology and ERP systems are too often presented as the panacea that will cure all your business ills.  But the fact is, technology without the right planning could actually end up hindering your efforts.  Recently, the folks at Panorama Consulting suggested four things a company should do before making a tech-investment leap.  We concur wholeheartedly and thus share their thoughts (and  few of our own) with you today.

  1. Without business process reengineering, new technology will simply pave the cow paths. Too often, companies jump into their enterprise software initiatives without redefining their business processes (in other words, simply automating already broken business processes). Business process reengineering is an important first step and foundation to an effective ERP implementation, so even if technology is a key part of your roadmap, make sure that you’ve done the heavy lifting to redefine key business processes prior to implementing a new system.
  2. Technology is useless without the right guiding enterprise and IT strategy. It’s easy to quickly embark on a new technology system because it will be an improvement over what you currently have – regardless of whether or not it fits into your strategic plan. There are simply too many options and variables to consider in the technology space, which can cause some to stumble when those decisions don’t fit your overall strategy. (Thus, we would add, be sure you have your strategic and business goals properly defined well ahead of your cash investment.)
  3. Organizational change management is what ultimately drives transformation – not technology. People and processes drive change.  (And here then we would add: This is where the “technology is not a cure-all” thinking comes into play.  You can’t throw tech at a people/process problem.  First define the problem, then map the process (old vs. proposed new), then factor in everyone’s feelings and input about proposed changes, and then, maybe… look at how technology can help improve your lot.)
  4. Even if it really is time for a new ERP system, the other non-technical aspects of your initiative will drive true business transformation. (Our comment: Technology is just one component of your transformation.  Be sure it serves your people/process needs first, and not the other way around.  Look at all your needs from all angles, and given the typical cost constraints under which most companies labor, choose your targets judiciously.  Map out just 2 or 3 key strategic objectives for starters, and build slowly from there.  Take it slow, keep it go, as my old Slovenian grandpa used to say.)

You can find the full text of Panorama’s thoughts here.

 

 

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it_challengesRecently, Panorama Consulting posted a piece we swear they must have written after overhearing some of the conversations we have among ourselves and with clients.  Their post concerns the need for companies today to leverage the availability of outside resources and expertise – so they don’t have to ‘go it alone’ when it comes to surmounting a few key IT strategy challenges.  The four they call into play include:

1. Creating an IT strategy and roadmap that fits your business. There is a bewildering array of choices in enterprise software and technology solutions.  SMBs have little room for error, given their modest budgets.  Thus it is critical to work with an outside consultant who can objectively assess your needs.  

The best of them can present two options: what at our firm like to call biased and unbiased.  An unbiased analysis will be largely software agnostic: just tell us what we need in tech and software by providing us with a roadmap, and we’ll seek out our own options. The biased approach says: You guys know the territory.  Apply your own filter or bias if you think you have a solution that fits, and we’ll factor your views into our thinking.

Either way, you want to end up with a ‘roadmap’ that has been vetted by external experts to give you that extra bit of assurance that you’re on the right track.

2. Organizational adoption of new systems. Whatever decision you reach about your IT future, it’s bound to stir up some change, both direct and indirect.  Never underestimate the need for organizational change management.  Tech firms often spend too much time on the “tech” and not enough on things like people, strategy, and the business.  Be sure you keep your eyes on the prize.  Good consultants can help ensure that you’re focused on all the right business objectives, and help you manage and direct the change within your organization.

3. Alignment between new technology and your current business processes. We can’t say it too often: your technology doesn’t mean much if it is not aligned with your business processes.  You need to define and chart your workflows, and work with your consultant or provider to ensure that your software and systems match that flow.  Be sure you’re thinking about future processes when you do this.  Focus on the pain points.  A consultant with Six Sigma experience can help greatly in ensuring that your technology is well aligned with your underlying needs and processes.

4. Realizing the ROI of enterprise technology investments.  New technology, as Panorama notes “may sound good in theory, but if it doesn’t deliver tangible business benefits, then it isn’t helping your organization.”

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Panorama-Consulting-3We once again borrow from a relevant and smart post by Eric Kimberling, CEO of Panorama Consulting, adviser to large companies implementing ERP systems.  We think they do a nice job in a recent post of asserting why some people are afraid of the change that often accompanies a new system implementation.

  1. Fear of losing your job. While the fear may be unfounded, the perception will drive resistance “that may not have been apparent when everyone was praising the opportunities for improvement during the ERP selection process.” A simple reassurance that employees’ jobs are not at stake will usually resolve this issue.
  1. Fear of perceived diminished value to the organization. Says Kimberling, “Even if employees do not fear losing their jobs, they may fear that they will no longer add the same value to the organization they once did. The person spending half of their time gathering data and putting together fancy spreadsheets for analysis is undoubtedly going to feel threatened if the need for that role no longer exists. An effective organizational change management plan is critical in addressing these concerns and helping them understand that while their role may change, their value to the company is not being undermined.”
  1. Fear of not being in control of business processes and procedures. How often have you seen an employee that takes pride in “owning” certain business processes or being the only one that can perform those functions? “Assuming a new ERP system will diminish the reliance on that one person – and in many cases, it will – they are going to resist the change.”
  1. Dislike of standard, shared business processes. Some employees like improvising, or being seen as critical to the operation, rather than following standard processes. Or they just don’t like being told how to do their jobs. Whatever the cause, this dislike of common and shared business processes across the organization is a very real and common source of resistance to change.
  1. Inability or unwillingness to accept change. Some people are more difficult than others, right? Training can neutralize resistance for the employee without the abilities or skill set to embrace the change. “In the case of simple unwillingness to change, it is unlikely that the employee will ever accept or support the change, in which case it may come time to sever ties with the employee.” It’s important to understand the root cause for the resistance and build an organizational change management plan specific to those root causes.

 

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OCM_dilbertFellow ERP consultants Panorama Consulting wrote awhile back about the importance of change management (here), particularly for companies in the process of implementing ERP.  According to a recent post by manager Eric Kimberling, here are three important questions to ask if you are a CIO, IT manager or project manager trying to decide how much to invest in an effective organizational change management strategy:

  1. How big of a role will organizational change management play in your ERP implementation success? A recent Panorama report noted that “100% of organizations experience some sort of material operational disruption at the time of go-live, such as not being able to ship products or close the books. Nearly half of those organizations experienced disruptions that lasted more than four weeks.”  The reasons have little to do with ERP itself.  Instead, they had to do with people and processes.  Most organizations (63%) reported finding changes to process difficult.   “Given these statistics, it is clear that organizational change management is very important to project success.”
  1. Are you more focused on short-term or long-term implementation costs? Because so many ERP projects go over budget, “many project managers are tempted to cut organizational change management activities to finish their initiatives as close to on time and on budget as possible,” notes Panorama.  They go on to say: “However, those that cut critical change management activities typically find that it actually takes them more time and money to implement than if they hadn’t cut those areas of focus in the first place. Simply put, companies that experience broken business processes and confused employees at the time of go-live are going to spend exponentially more on their ERP implementations than if they had invested in organizational change management in the first place.”
  1. Which exact organizational change management components are important to your project? OCM is not just an “exercise” in end-user training that happens just before you ‘go live.’  It’s more complex than that, involving people, processes and sometimes difficult change.  It requires a strategy.  Focus group, emails to employees, team meetings, scrums and status meetings can all be useful to help smooth the flow of change and implementation.  The most successful projects “leverage change impact assessments, process training and communications, and organizational risk assessments.”  As Panorama concludes: how successful do you want your ERP implementation to be?  “Organizational change management is the most likely determinant of success or failure, so the most effective project managers choose to invest in organizational change.”

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people first tech second imageIn an article entitled “People First, Technology Second” author Eric Kimberling points out that while the technological (and technical) landscape of ERP have changed much over the past twenty years (or in my experience, 30 years…), the basics have not.  People still matter most.

You might not know this by the emphasis sometimes placed on ERP implementations where it is sometimes placed highly on the software, less so on the people involved.  But that has it backwards.

While there may be a dizzying array of choices in ERP solutions these days, it’s the people issues that are most likely to make or break your implementation.

Too often, executives overlook this simple fact.

As Kimberling points out in his article: “The end-users of your ERP system are still going to either buy-in or resist the changes based on pretty simple and predictable criteria. Regardless of whether you were implementing ERP systems 20 years ago, you’re starting your implementation today or plan to 10 years in the future, the effectiveness of your impact and management of people during this business transformation will determine whether your project succeeds or fails.”

He goes on to tout therefore the importance of an oft-repeated mantra on the need for “organizational change management.”  It’s the critical component, he notes.  All the bells and whistles of the technology are for naught if your people don’t embrace, use and build upon the solution to improve business operations.

From not understanding the changes to be made… to not being a part of the process change development… to insufficient training in the software or the processes at hand… to processes not properly defined… to office politics… all of these “people” issues can lead to frustrated implementations that can be late on time and over-budget because management did not give proper time and consideration to the needs of the very people who will implement and use the system they’ve bought.

In the end it comes down to a key point, notes Kimberling: Don’t confuse activity with efficiency.  While technology is helpful to the cause, invest the time and resources in organizational change management necessary to train your people.

We would add to Kimberling’s comments by noting from our own experiences that it’s all about the basics of course: Communicate clearly.  Identify specific business processes and how they will be managed.  Map the software to the process.  Train the people, and listen to them.  Do the little things right.  And lastly, take ownership of your system.  It will all add up to a far more successful implementation in the end.

 

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