Ensuring a high ROI on your ERP implementation is no easy task. Many organizations have tried to accelerate their projects by implementing out-of-the-box ERP software, minimizing process changes and cutting change management from their budgets. While this may save you money in the short-term, it does nothing to position your organization for long-term growth.
So how do you maximize ERP ROI without reducing your project budget to the bare necessities? One answer is organizational change management. In other words, your employees will determine your ROI.
The Human Factors That Influence ROI
- Speed of Adoption – How quickly are employees adopting new technology, business processes and job roles?
- Ultimate Utilization – How many employees are using the ERP system and demonstrating buy-in?
- Proficiency – How well are employees performing their jobs with the new ERP system?
If one of these factors is negatively impacting your ERP project, you may want to conduct an ADKAR (Awareness, Desire, Knowledge, Ability, Reinforcement) Assessment. Evaluating how well you’re meeting employees’ needs will help you develop a change management plan, which is a key pre-implementation activity.
What Employees Need During a Change Initiative
- Awareness of the need for change
- Desire to make the change happen
- Knowledge about how to change
- Ability to implement new skills and behaviors
- Reinforcement to retain the change once it has been made
Desire is one of the key components of ADKAR that organizations overlook. They see change as a mandate that employees will follow whether or not they desire it. While this may be the case with some employees, software usage isn’t the ultimate goal. Employees must be proficient with new software for your organization to realize business benefits, but they are unlikely to become proficient without the desire to change.
Reluctant software users are almost as bad as employees who refuse adoption altogether. It’s important to begin change management activities before ERP selection, so you can proactively build desire among employees and give them more time to process the changes. While SAP and Oracle may be infinitely better than your old ERP system, employees may still be reluctant to adopt a new system if you don’t give them reasons to desire change.
Another aspect of ADKAR that many organizations forget to address is employees’ need for reinforcement. When employees revert to old processes, this may indicate the need for reinforcement. The best way to reinforce change is through recurrent training and frequent communication. Our experience as a software implementation expert witness has revealed that a lack of communication is a leading cause of ERP implementation failure.
It’s helpful to think of ADKAR as sequential. You cannot meet every need simultaneously, and each employee will go through the process at a different pace. Managers should be the first to complete the ADKAR process followed by the employees they supervise.
How to Be a Change Leader
- Prepare yourself for change – What changes will impact your team and how? Why are these changes being made? Answering these questions is the first step to becoming a change leader.
- Adapt to the change that is happening to you – Just because you’re a manager doesn’t mean you like all the proposed changes. You should share your concerns but ultimately commit to supporting change.
- Develop competencies to manage change – A manager should have the competencies to take on the roles of a communicator, liaison, advocate, resistance manager and coach.
If your organization is experiencing low productivity, high turnover and low morale as a result of organizational changes, the role of coach will be essential to your digital strategy. Managers who assume this role significantly impact how employees perceive change. By listening to employees’ concerns and using ADKAR, these managers are able to identify barriers to change and develop plans to address them. Executives can also play the role of coach. In fact, they can be some of the most effective coaches because of their level of influence.
6 Tips for Coaching Employees
- Remove barriers – Barriers to change may relate to family, personal issues, physical limitations or money. Coaches should fully understand the individual situation of each employee to determine how to remove barriers.
- Build desire by providing choices – Employees need to know in simple and clear terms what their choices are and what consequences they face for making a particular choice. This puts a level of control back into the hands of employees.
- Create hope – Employees are more open to change when you frame it as an opportunity for a better future. Coaches can create desire for change among employees by expressing their own excitement and enthusiasm. While this tactic is effective, it can be misused if coaches create false hope and don’t believe in the change themselves.
- Convert the strongest dissenters – By focusing their energy on the most vocal dissenters, coaches can reduce the spread of negativity. Another reason that converting vocal dissenters is worthwhile is because they may be some of the most vocal advocates when converted.
- Highlight the tangible benefits – Case studies and testimonials can tangibly demonstrate the benefits of change. Conducting pilot programs and sharing the successful outcomes is also useful for generating buy-in.
- Use money or power – This tactic works well with mid-level and senior managers that are critical about the success of the ERP project. Offering higher pay in exchange for project support can be worth the investment.
Aiming for a Higher ERP ROI
While many organizations aim for short-term cost savings, some organizations understand the importance of long-term ROI. They expect more from their ERP software because they know its true value lies at the intersection of people, processes and technology. They know that technology alone cannot deliver long-term ROI.
However, this is easier said than done. If you know the true value of ERP software but need a little guidance to achieve it, hiring an ERP consultant is great investment.
If you’re considering digital transformation, you probably know it entails significant operational changes. Whether you’re changing your entire business model or certain business processes, these transformational changes
are challenging for organizations and their employees.
Many executives and project teams struggle to integrate organizational change management into their projects. Here are five ways you can prepare your organization for change:
5 Ways to Prepare for Change
1. Ensure executive alignment
Most organizations have at least one executive who is not on board with the goals of the project or is working against the project. Your executive team needs to be aligned – the success of all other change management activities depends on it. Executive involvement precedes executive buy-in. Asking executives questions, such as what they would like to achieve with new technology, can help establish buy-in.
2. Facilitate organizational readiness assessments
How can you implement transformational change without understanding your employees and your culture? Conducting an online survey and series of focus groups can give you an idea of the strengths and weaknesses of your organizational culture
. This insight can identify the root causes of change resistance and help you determine strategies for implementing change.
3. Conduct organizational impact assessments
You can simply inform employees that their jobs will change, or you can explain exactly how they will change. An organizational impact assessment helps you understand the degree of change and nature of change so you can effectively communicate this to employees. Communication should be targeted, personalized and continuous.
4. Customize your training materials to fit your business processes
While most ERP vendors have training materials for their products, the training isn’t customized. When you train employees without considering the nuances unique to your organization and industry, employees may experience confusion, and training won’t be nearly as effective. Training materials should be tailored to your business processes. A training program should cover more than just how to use the ERP system. Employees also need to know what processes and decisions need to happen outside the system.
5. Develop a comprehensive organizational change management plan
Merely focusing on end-user training and basic employee communications will not lead to long-term transformational change. An independent consultant can help you define the change management activities that will enable digital transformation.
How to Communicate With Employees
1. Look for signs of resistance
While employees may appear to embrace change, subtle forms of resistance may still exist. Be on the lookout for signs such as reduced productivity, absenteeism and conflict. When developing a communication plan, you should pay attention to change resistant employees.
2. Develop a communication plan
A clear understanding of stakeholder needs allows you to develop a targeted communication plan outlining key messages for each stakeholder group. The plan should also specify when and by whom information should be communicated.
Executives should provide clear, consistent and repeated communication of project goals, and they should explain how these goals align with the organizational vision. Without this type of communication, employees won’t understand how new technology will help the organization grow, better serve customers and become more efficient. Instead they’ll assume the organization is using technology as a cost-cutting measure and a strategy for eliminating staff.
4. Facilitate two-way communication
When will training occur? When will changes roll out? How can I express my concerns? These are common questions employees have during ERP projects. Executives and the project team should hold meetings throughout the project so employees can ask questions and express concerns.
5. Establish a project brand
A brand is a value proposition that encourages loyalty. A brand for a digital transformation project should reinforce the importance of the project. A branding contest is a fun way to engage employees and help them feel a sense of ownership. When communicating with employees, don’t underestimate the power of branding.
6. Create a project portal website
This serves as a central location for employees to find timely project information. Available materials should include implementation plans, upcoming events and training schedules. Smaller organizations sometimes use a bulletin board to disseminate information in lieu of a website. A central location for information encourages collaboration and participation from all stakeholders.
These are people inside the organization responsible for communicating key messages to end-users. As trusted advisors and super-users of the new technology, they are likely to hear different thoughts, concerns and reactions than executives hear.
Is Organizational Change Management Really Necessary?
Many executives believe organizational change
management is a luxury rather than a necessity – even if they’re undergoing a digital transformation that’s radically changing their operational model. Time and resource constraints prompt executives to cut organizational change management from their project budgets in an attempt to complete the project as quickly as possible.
Unfortunately, executives that forgo change management typically find their projects require more time and money in the long run as they scramble to increase system usage after the technology is already implemented.
Executives that do believe in organizational change management often struggle to develop an actionable plan. If this describes you, we hope this blog post is a good starting point in preparing your organization for transformational change.
You may have noticed the ERP consulting industry moving away from the term “ERP implementation” in favor of “digital transformation.” This isn’t surprising as ERP implementations have a bad reputation – they often go over budget and over schedule and fail to realize significant business benefits. While digital transformation does involve ERP or other technology, “ERP implementation” insufficiently describes initiatives involving large-scale change to people and processes.
Rarely will an ERP implementation return a positive ROI. Digital transformation, on the other hand, can create competitive advantage and position your organization for future growth – but not without a detailed change management strategy and a strong change management methodology.
What is Large-scale Change?
If your initiative is truly a digital transformation, that means you’re changing more than your technology – you’re undergoing large-scale change and fundamentally altering structures, processes and employees’ day-to-day jobs. If new technology is merely enhancing one of these elements, then you’re likely experiencing small-scale change. You’ll still need a change management methodology, but it will account for a smaller percentage of your project budget.
Whenever an organization implements new technology, it should consider the possibility of large-scale change. New technology is an opportunity to reengineer business processes and improve efficiency. This proves more difficult after a technology solution is already in place. Maybe you want to stick to business as usual for now, but what about five years down the road when you want to pursue digital transformation? Technology configured for your old business processes may not support new processes, at least without extensive customization.
That’s not to say you can’t pursue a change management initiative without implementing new technology. Many organizations want to transform their culture or introduce incremental process improvements without touching technology. However, a full-scale business process reengineering initiative typically necessitates at least an evaluation of your current technology.
How to Implement Large-scale Change
Three words: Organizational change management. That’s the only way to successfully change your people, processes and technology. You may have heard it called people enablement
, workforce transition
or business process implementation
, but the most accurate term is organizational change management
, as it encompasses everything from communications to training.
Here’s a high-level overview of an effective change management methodology:
You should perform a risk analysis and assess your organizational readiness. This involves identifying the characteristics of change as well as organizational attributes, such as culture and leadership style. These assessments set the stage for developing a change management strategy roadmap, which includes a proposed change management team as well as a sponsorship model.
Executive sponsorship is key for project success. Executive sponsors should secure resources for the project team, encourage manager buy-in and educate employees about upcoming changes.
Following your change management roadmap, you can develop a communications plan, resistance management plan and training plan. A communications plan
involves a stakeholder assessment and an outline of key messages. When developing a training plan, you should conduct a needs assessment and gap analysis, then document your business requirements.
Employees and executives have different perspectives on change. While the executive might see process efficiency and cost savings, the employee sees new required skills, changes to their work environment and a possible loss of status. That’s why you need a change management methodology that addresses communication, resistance management and training.
You should gather feedback from employees to assess the results of change management activities. Identifying root causes and pockets of resistance will help you implement corrective action. If some of your changes are successful, you should celebrate these to ensure continued success.
Reducing Resistance to Change
Executives hear the word “change” and think of cost savings and efficiency gains. Employees hear the word “change” and think of additional responsibility and possible job loss. Unsurprisingly, employees almost always resist organizational change.
Employees may refuse to learn new processes, or they may speak negatively about the project amongst coworkers. This can slow down your digital transformation, and you might experience quality problems and reduced productivity. If employees don’t use your new software or follow new business processes, you won’t achieve the business benefits you expect.
One way to reduce resistance to change is to increase employee involvement. For example, employees can help brand the project. You can run a contest and ask them to submit potential project names and project logos.
You can also reduce resistance by answering key questions: Why are we changing? What are we changing? Who will be changing? Most importantly, you should answer the question, What’s in it for me? You should explain how employees will benefit from the project, not just how the organization will benefit.
Why are Most Change Efforts Unsuccessful?
Lack of Executive Sponsorship
Executives should demonstrate support for the digital transformation and remain visible throughout the project. They should also build a coalition of other sponsors.
Ignoring the “People Side” of Change
You may be changing processes and technology, but employees will need to change too. They will have new roles and responsibilities, and if they don’t embrace these, your change management initiative may fail.
Lack of Dedicated Resources
The number of project resources you will need depends on the nature of change, scope of change, geographical distribution and project phase. A lack of resources translates to a lack of ownership and accountability.
Ignoring Resistance to Change
You can identify resistance to change by seeking feedback through meetings, interviews and focus groups.
Your plan should outline messaging, timing and audience. Typically, senior leadership and project leads will deliver these messages, which will be unique to each audience and each project phase.
Success of Change Management
The ideal change management methodology depends on the scope of change. Digital transformation typically involves large-scale change that entails strong executive sponsorship, a targeted communications plan and a large team of dedicated resources.
Some organizations believe the right technology and processes are all they need for strong cybersecurity. However, they are overlooking their strongest defense: their people.
Hackers know that employees are the quickest and easiest route to company data. Naturally, everyone in your organization should be responsible for protecting this data. But, how can employees be vigilant if they don’t know what to look for? It’s your responsibility to prepare them for the inevitable phishing scam, ransomware attack or public wifi hack.
A Change Management Plan for Cybersecurity
An ERP implementation shouldn’t be the only time your organization considers improving its cybersecurity. Cybersecurity is a continuous battle that requires a long-term change management plan.
You can implement all the cybersecurity control frameworks you want, but your processes will become ineffective as soon as an employee clicks a phishing link. That’s why you need more than technical frameworks – you need clearly communicated best practices and recurrent training.
Why Employees Need Cybersecurity Knowledge
Imagine a world where you never need to change your passwords and you’re allowed to “work from home” at your nearest coffee shop. This is the world employees are leaving behind when they adopt new cybersecurity practices. This loss shouldn’t be treated lightly. Convincing employees to change familiar patterns will require compelling reasons. Your organization should communicate the importance of cybersecurity and emphasize what’s at stake in the event of a security breach.
Annual trainings aren’t enough. As technology grows in sophistication so do the techniques for hacking it. New vulnerabilities are created daily, and employees need to learn to recognize potential threats in all shapes and forms. Your organization should develop a continuous training plan addressing the different types of attacks each department might encounter. Some organizations go so far as to conduct simulated cyberattacks, so employees can learn from their mistakes – which is often the best form of learning.
Access Points are Numerous
The increased use of mobile devices and cloud technology presents a new challenge for organizations trying to secure company data. Employees can now access this data from anywhere via their mobile phones, which are vulnerable to mobile malware and infected apps, not to mention Wi-Fi hacking. However, it’s not difficult to equip employees with the knowledge necessary to protect their devices. Your organization should gain executive support for a cybersecurity change management plan, so you can implement training and communication initiatives that result in long-term behavior changes.
A Few Notes About Communication
Communicating with employees about cybersecurity is no different than communicating with employees about an ERP implementation. Both require strong leadership that fosters trust and two-way communication. Both entail precise timing and personalization. Both necessitate an organizational change management team with defined roles and responsibilities.
If you dread organizational change, you are not alone. Any type of work-related change, regardless of how large or small, is typically met with resistance. These sentiments are universal and affect everyone from part-time employees to C-level executives. Why? Because it’s built into our biology.
Here’s what you need to know about the science of change resistance:
1. We are creatures of habit
Researchers have determined that humans are most comfortable when involved in “high levels of repetitive activities within the same context day after day.” (1) Any deviation from this routine can be difficult to manage. This is true even when changes may be beneficial.
2. Change makes us feel stressed and overwhelmed
Change, particularly in the workplace, can trigger anxiety. New job responsibilities may make employees feel incompetent. As they worry about their job performance, they become increasingly fearful of organizational change. This is especially true for long-time employees who’ve been following particular business processes for a very long time.
3. We hunger for certainty
The human brain yearns for certainty, and makes every effort to avoid uncertainty. Organizational change can cause employees to feel uncertain about their job security. Could process automation make their position obsolete?
4. We know that change can result in unforeseen problems
In everyday life, humans instinctively anticipate negative outcomes, regardless of how unlikely they may be. It goes without saying that the fear of negative outcomes leads to change resistance. What if an employee was greeted on Monday morning with the news that their supervisor was replaced by someone new? This may be good news if the old supervisor was a poor manager, but the employee may still focus on the negatives.
It’s impossible to deny that organizational change is difficult, even when changes are beneficial. Humans are wired to fear change, which is why organizational change management consultants exist.
Enterprise Resource Planning (ERP) systems have proved effective in streamlining business processes in many highly urbanized countries. The enhancements it brings to organizations like private institutions and even governments are significant, especially in terms of delivering better customer service. By integrating data systems from various departments and subsections of an organization, ERP systems save money and improve decision-making time.
The benefits of ERP implementation are readily apparent in most developed countries, even though it’s not without its own challenges. For developing countries, however, those challenges appear steeper by comparison.
Addressing Complexities and Habits
ERP is fundamentally complex for a single person to grasp. Opting to use ERP in an organization means a massive overhaul in existing processes and habits to adopt wholly new ones. If that sounds hard, think of how people struggle when they try to quit smoking, or pledge to start a grueling exercise regimen. It’s often not a pretty picture, and people are likely to give up halfway and fall back to old habits. Now imagine doing that with hundreds or thousands of people, and we’re looking at a tremendous organizational change management challenge.
Compounding the challenge for developing countries is a particular set of factors unique to their setting. The most prominent of these key challenges is the inherent design of ERP systems as a product catering to western audiences. ERP’s implementation strategies were developed with western firms in mind, which makes their adoption in a market like India an exercise in futility.
Another key factor is the number of iterations that ERP systems embedded in western companies have undergone since its inception. This gives developed countries better capabilities and flexibility in adapting to changes. For developing nations with relatively new enterprises, tackling such changes that come with ERP can be much tougher.
Legacy systems like spreadsheet software (or even pencil and paper) often get in the way of implementing ERP. In relation to the previous points, it can be hard to pry old systems away from people who have been using them for years, even if it means replacing them with more efficient ones. Humans are creatures of habit, and resistance to change is quite natural especially in business settings.
Crucially, ERP stakeholders seek simplicity most of all. If we’re proposing increased efficiency in an organization’s work processes, an IT approach (as most ERP solutions are nowadays) is bound to reduce interest due to the perceived complications it brings in terms of usability, features, etc.
Using ERP Competencies to their Advantage
This doesn’t mean that ERP can never work with businesses in developing countries. These systems have plenty of promise when utilizing its core competencies. One study observed how a company in Asia used an ERP system to reduce ideation-to-implementation time, slash operational costs by 40%, accurately identify planning errors, and use the centralized data system to generate reports and devise unified strategies.
The advent of cloud computing brought a new dimension and agility to ERP solutions. Using cloud-based ERP systems ensures businesses with more savings in operational costs, constant and timely system updates, and faster deployment compared to on-site ERP systems. The continuous expansion of internet access across the world makes it even easier for a business in any part of the world to acquire cloud-based ERP.
We can therefore infer that ERP systems have tremendous potential in accelerating progress in developing countries by introducing their local enterprise to the opportunities offered by such systems.
This is precisely the reason why experienced independent ERP consultants like Panorama Consulting exist: to provide expert insight on ERP systems that suit an organization’s requirements and conditions, be they infrastructure- or location-wise. Contact us today, and let’s work together on an ERP solution to optimize your burgeoning business for growth.
There’s a reason why some companies have a gag reflex to the term organizational change management. It’s because most change initiatives fail.
Organizational change management is one of the most misunderstood, nebulous, and ignored terms in the world of digital transformation and ERP implementation initiatives. For some:
- It describes “touchy feely” activities that don’t deliver measurable business value;
- Others have no idea what the term means, or maybe it’s nebulous at best;
- It’s deemed noncritical, thus the choice to ignore it becomes an option;
- Understand it, but don’t realize the direct correlation to ERP implementation success;
- Chop it out of an ERP plan, with the goal of saving time or money;
- Confuse it with new software training (it’s much bigger than just training).
Additionally, most ERP consultants have very myopic views of organizational change. Most are more comfortable with activities like software selection etc., it’s little wonder that organizational change has a severe perception problem, too many incomplete, mismanaged, or missing change management initiatives have led to implementation delays or failures, which has resulted in the aforementioned severe perception problem.
I was having trouble reconciling perception with reality, so I recently posed a hotly debated question on LinkedIn: since the term organizational change management leaves a bad taste in many people’s mouths, what are some alternative, more descriptive terms? I received some good suggestions in the comment thread, such as workflow alignment, people enablement, and stakeholder management. Others suggested that the name shouldn’t be changed since resistance to the term is a form of resistance to change in and of itself. Others called me out for allegedly not being enough of a supporter of organizational change.
After engaging in this online discourse, I realized that I was missing the bigger picture. Rather than trying to find a better name for organizational change, I realized that I needed to focus on defining what organizational change management is and should be – rather than relying on people’s perceptions.
There’s usually someone at the executive or management level who isn’t on board with the changes. You may not win over everyone, but you should be able to convert most. For extreme resistors, your focus should be on neutralizing their negative impact on the change initiative(s). This can be accomplished by identifying key stakeholders and implementing a targeted plan to engage and “sell” them on the importance of the changes. Ensure there are solid lines of two-way communication with the key players within your organization. This might include the need to get your CIO to buy in. Some CIOs may be focused intently on the technical vision for the ERP project, to the detriment of the path that must happen to ensure success.
Business Process Change Impact
Business process management and change efforts are arguably the most important part of any digital transformation. I’m not talking about the way employees enter information into the system. Instead, I’m referring to the higher-level business process changes, as well as changes to people’s roles and responsibilities. How well do your newly defined processes meld with the new software? These changes can add up to death by a thousand cuts, so it’s important to ensure that the change impacts have been clearly defined and repeatedly vetted with employees. It’s harder and more time consuming than it sounds.
Employee Communications and Training
Everyone wants to know what the new system will mean to them personally. They want to know how their jobs are going to change. Some may fear being laid off, so address this early and spot on. They want to know what’s going to happen to that set of spreadsheets that only they understand, because they created them. Once specific processes and job changes have been identified, it is important to roll them out through a series of multi-channel employee communications. And these communications shouldn’t wait until training – they should start months before. A best practice is to vary your types of communication. Don’t rely on any one communication method, e.g. anticipate that some employees won’t read the emails.
Organizational change management shouldn’t just be a “touchy feely” work stream in your project. It should instead deliver measurable business value. Otherwise, it will always be perceived by some as a nice-to-have rather than a critical component of your project. Make sure that your organizational change activities all tie back to measurable business benefits, performance metrics, and key performance indicators. This is the best way to get executive attention and ensure that the entire project delivers a positive return on investment.
You and your team will probably feel ready for the changes well before the rest of your employee base. Rather than relying on your gut to gauge whether or not your people are accepting the necessary changes, you need objective and quantifiable means of measuring employee readiness. This should be done via a series of online surveys and focus groups multiple times throughout your project so you can evaluate how the organizational change needle is moving. It will also identify ongoing pockets of resistance that should be addressed before going-live. Only flip the switch on the new system once the organization is ready for the changes.
Misunderstood perceptions of organizational change management won’t change overnight, but doing it and doing it right will ensure that it is well received within your organization.
If all of this sounds overwhelming, there are independent consultants like Panorama that know how to execute and facilitate comprehensive organizational change management efforts. An outside consultant can also be an effective way at getting employees to open up about their true feelings about the upcoming changes.
Every single ERP project, no matter the size, is about change. We all know that a new ERP system demands that organizations change the way they do business, otherwise why else would a company go through the painful process of an ERP implementation, right? The whole purpose behind selecting and implementing a new software system is to improve the organization and its processes. Most of the time the challenge is not the system itself, but the people using the system. Bringing a new software system means that people will have to adapt to a new way of doing things, and let’s be real, people do not like change. Even though most companies out there talk about how important their people are, somehow they seem to leave the organizational change management topic for a different conversation.
Many organizations seem to be very enthusiastic in the early stages of an ERP project about executing an organizational change management strategy, but for some inexplicable reason, the initiative vanishes slowly as the project moves on until they finally decide the budget is not enough to invest in the human factor. It is also common for organizations to think that it is the responsibility of project managers to execute an OCM strategy. Unfortunately, most of the time project managers do not have the necessary experience or what’s more important, the time – remember they are managing the project – to run an effective organizational change management plan.
A comprehensive organizational change management strategy must be an integral part of any organizational transformation. It is indisputable that those projects that include a solid OCM strategy have a higher likelihood of success. A positive organizational change management strategy calls for a holistic take in regards to preparation and readiness. Companies need to plan ahead in order to overcome the resistance to change. If an organization hasn’t started organizational change management until end-user training comes along, then the project may be set up for a failure and the financial implications will reflect eventually by reducing benefits realization.
Do not wait until is too late and your own internal resources are depleted. Take charge of your ERP project from day one and make sure that the backbone of your implementation is in fact your team. Don’t focus just on getting to the Go-Live date, instead focus on getting to the Go-Live successfully; these are actually two different things. Your organization should not only prepare for an initial decline in production, as well as for an initial increase in resistance from its people, but also for the fact that no matter how great your organizational management strategy is, you will never eliminate the human challenge completely.
Unless your organizations have a firm plan for training and a clear and committed organizational change management strategy, your new ERP system will just be another expensive effort to increase the bottom line. You must commit to your people and your people’s strategy before selecting your new ERP system.
No matter the size or complexity of your organization, ERP implementations entail significant organizational changes. From new technology to reengineered business processes, your employees are likely to feel the full impact of digital transformation. And you better believe they will resist it. Why? Because their roles and responsibilities are changing, and it feels like starting from square one.
What’s the most effective way of preparing employees for the impact of change? That would be organizational change management. An essential component of ERP implementations, change management focuses on communication, training and benefits realization with the goal of helping employees embrace change. By preparing for employees’ resistance to change, your organization can achieve a higher level of efficiency and maximize the ROI of your enterprise software.
The Importance of Organizational Change Management
When you develop and implement an organizational change management plan, you can expect to see increased employee buy-in, even to the point of excitement and enthusiasm at go-live.
However, when you don’t put the right change management activities in place, you face the following risks:
- Resistance to change due to lack of communication
- Lack of system usage since employees aren’t adequately trained
- Elusive business benefits because you didn’t assign accountability or establish metrics
The first step to developing a change management plan is to conduct an organizational assessment early in your project – ideally during the software evaluation and selection stage. This will identify sources of resistance within the organization so you can target your organizational change efforts. Your organization also should conduct change impact assessments, process training and organizational risk assessments.
In addition, you’ll want to develop a business case that can be translated into a benefits realization plan used to measure actual business results. If you can’t achieve business benefits with your core business as is, you can’t expect the ERP system to enable effective growth in the future.
An Organizational Change Management Success Story
A large organization with locations across the globe assembled an organizational change management team with representatives at each of their sites. Team members were assigned different tasks such as communications and training. As a result, the organization saw greater alignment and buy-in throughout implementation and following go-live.
No matter how many people you are able to dedicate – 1 or 501 – building an organizational change management team is essential.
More Than Cool Technology
While organizational change management might seem like a simple concept, many organizations don’t understand its value. However, if you’ve lived through an ERP implementation, you can attest to the fact that it’s not just about cool technology – if it was, employees would be more excited about it.
It’s up to you to find the right resources to help your organization benefit from digital transformation – whether that means attending a training such as Digital Enterprise Boot Camp or hiring an independent third-party. Information is power.
While digital transformation initiatives can be challenging, organizations that focus on organizational change management can greatly increase their chances of success by prioritizing people and processes over technology.
For years, people have struggled to understand why ERP projects fail. The reality is that the outcome of most ERP implementations depends on organizational change management. An effective change management strategy helps organizations manage expectations, reduce fear, increase buy-in and ensure a focus on performance optimization within their new ERP system. All of these benefits can have a material impact on the project’s success and return on investment.
Project risks can include anything from operational disruption at go-live to cost overruns and extended duration. These risks are often increased when an organization can’t persuade employees to use new ERP software the way it was mean to be used. When you think of risk in this context, then organizational change management becomes one of the most powerful risk mitigation strategies. Focusing on training, job design, process gap analysis, business process testing and communication can go a long way in mitigating project risks.
If an organization hasn’t started organizational change management until end-user training comes along, then the project may be in trouble. While end-user training is important, it is just one component of what is ultimately required to ensure employees embrace new enterprise software. An organizational change management plan should include organizational readiness assessments, change impact assessments, change discussions, communications plans and a number of other people-focused activities.
Just How Much is This Going to Cost?
While many executives want to focus on organizational change management, they often don’t know how much to invest in this important success factor. According to our 2016 Change Management Report, few organizations invest in sufficient change management. In fact, 54-percent of respondents allocated 25-percent or less of their project budget to organizational change management.
Budget cuts that look good on paper can have disastrous consequences in the long-term. Organizations need to understand where it makes sense to pragmatically minimize costs without compromising results.
Buy-in and Business Benefits
Focusing on employee buy-in will ensure that your digital transformation isn’t just another IT initiative. Digital transformation should be an enterprise-wide effort that helps your organization grow and achieve its goals. Don’t be afraid to be different.
That was a rhetorical question. In truth, it’s an oxymoron. Organizational change management is anything but sneaky.
The introduction of a new ERP system should never feel like an ambush by a hawk – employees need a bit more advance notice than that. With adequate warning and preparation, your employees won’t feel “eaten alive” by your new ERP system.
Think of an ERP implementation as more like a whale – it’s approach is felt long before its within sight. With a call at 188 decibels, blue whales can be heard from many miles away. Similarly, the decision to implement a new ERP system, should be announced many months in advance. Your project team and your executives need to communicate the right message at the right “volume” to adequately prepare employees for the “whale of an ERP system” that is coming their way.
While many organizations understand the importance of organizational change management, few understand how to develop a plan that effectively prepares employees for change. If your organization wants to minimize the effects of employee resistance, read on.
One aspect of an organizational change management plan is the communications strategy. Employee buy-in depends on the timing and nature of your communication. In terms of timing, communicate early and often. In terms of the nature of your message, be sure it is clear and purpose-driven – what does your organization hope to achieve by implementing new ERP software?
Another important aspect of an organizational change management plan is the training strategy. While ERP vendors provide decent “out-of-the-box” training, it isn’t specific to your organization’s business processes. Employees should receive multiple rounds of both technical and process training that pertains to their specific functional area.
Obviously, this is a broad overview of a full organizational change management plan. Other essential components include organizational readiness assessments, change impact assessments, key performance indicators and workforce transition plans. Together, these elements will mitigate risk and make a noticeable impact on your ROI.
A Hawk’s Organizational Change Management Methodology
- “Change management is too expensive. Let’s throw it out.”
- “Oh, by the way, we’re going live with a new ERP system in a couple weeks.”
- “Reasons aren’t important.”
- “No one needs to like the system. We just need to use it.”
- “Address your complaints to . . . the trash can.”
A whale is actually a pretty appropriate metaphor for an ERP implementation. This project may be the BIGGEST undertaking your organization has pursued in a long time. It makes sense that your communication needs to be equally astronomic.
ERP implementations entail significant operational changes. Whether it’s new business models or new business processes, these types of changes are never easy for organizations and their employees. This all means that organizational change management is critical to the success of your ERP project. However, most organizations don’t know how to integrate change management into their projects – assuming they understand what “organizational change management” means to begin with.
With this in mind, there are a number of “hacks” that executives can leverage to address the people side of their ERP project without investing too much time and money. These hacks may not be shortcuts, but they are the low-hanging fruit that can typically deliver the most value at the least cost. Here are three hacks that we’ve seen work very well with current and past clients:
1. Facilitate Organizational Change Readiness Assessments
It’s impossible to know how to best effectuate change without first understanding what cultural and people issues you’re up against. Conducting a brief online survey and a series of isolated focus groups with key employees gives you a sense of the strengths and weaknesses of your current culture. You also will gain an understanding of necessary activities for migrating your organization from current to future state. Organizational readiness assessments are extremely low-cost activity and they deliver a great deal of value.
2. Conduct Organizational Change Impact Assessments
While it may be easier to focus on the future state of business processes, it is also important to understand how these processes will be different from the status quo. This enables the change management team to communicate to employees how exactly their jobs will change. For example, the employee that created that sophisticated Excel spreadsheet ten years ago will want to know how new technology is going to change that process. Only by conducting an organizational change impact assessment can your team understand how to effectively communicate changes to employees.
3. Customize Your Training Materials to Fit Your Business Processes
Most ERP vendors have developed great training materials for their products, albeit generic ones. For example, Panorama was once involved in an ERP implementation at a large beverage manufacturer. When it came time to train employees using the vendor’s canned materials, most examples and case studies used a laptop manufacturer as an example. This created a great deal of confusion with employees and failed to consider nuances unique to their company. It is important that training materials be unique to your company, business processes and the specific ways you have configured and customized the software.
Every digital transformation has time and resource constraints, but that is no reason to cut change management from the mix. These three hacks are three good places to start when developing your initial organizational change management plan.
Hierarchy (Noun): A system or organization in which people or groups are ranked one above the other according to status or authority.
Think about it when it comes to royalty. It’s like a pecking order. The King or Queen make the decisions and then everyone “under” them will follow suit.
Change starts at the top, and in today’s world it is coming faster than ever. For a company to gain and remain successful, you have to be nimble and constantly be looking toward the horizon of innovation. Unfortunately, as humans, we are (usually) resistant to change.
Think about it when it comes to royalty. It’s like a pecking order. The King or Queen make the decisions and then everyone “under” them will follow suit.
Change starts at the top, and in today’s world it is coming faster than ever. For a company to gain and remain successful, you have to be nimble and constantly be looking toward the horizon of innovation. Unfortunately, as humans, we are (usually) resistant to change.
The “Discomfort Zone” takes three “P’s”:
The three of these are necessary for a successful ERP implementation. While the C-suite must initiate the change, it is imperative that employees are fully involved from the get-go. To have a comprehensive organizational readiness and communications plan means identifying the gaps that lead to the resistance. In turn, this will help with issues stemming from new ERP software. As you can see, this is a slippery slope, but a slippery slope that can be avoided.
Let’s go back to the hierarchy reference, every organization (of any kind, really) needs a leader. Business-wise, this typically stems from the C-suite; however, that isn’t always the case. By giving employees power from the beginning, they can help identify issues that could potentially paralyze a project. Leadership has many faces and it is up to you to find out who (can be multiple people) that may be.
About this time of the year, people start making their new year’s resolutions. We all know that local gyms will get more crowded, grocery stores will go through more fruits and veggies and people will want to “spend less and save more” – especially after the holidays. However, the business world has their own set of resolutions. With the new year comes new budgets and typically a new focus. Everyone wants to “do better” in every coming new year, but how do you know if you truly will?
The key is: plan for it.
Have you already started with your strategy plan? Post-holiday blues are real. It is hard to get refocused after the end of the year festivities. This can make starting a new project in January difficult. Do some preliminary research on ERP vendors (download our 2017 Top 10 ERP Systems Rankings Report to see how clients have ranked their vendors of choice) to find out what ones could potentially suit your organization’s needs.
Have any leftover funds from 2016? Near the end of the year, some organizations get very picky (with reason!) about what they spend their money on. Every bit counts! However, check to see if there is any money left over to allocate to your IT and operations budget—check if your fiscal year coincides with the calendar year. Also, keep in mind that you should invest in activities that will increase your odds of success so that you don’t waste money on software that doesn’t fit your business needs. Independent ERP consultants can look at your business from an outside perspective to see where you can use some help. They can recommend the right software or help with organizational change management to see if your employees are ready for a new ERP system.
Speaking of organizational change management… It is important to know that it is NEVER TOO EARLY to start organizational change management. It is a necessary in any organization—whether you decide to deep dive into an ERP implementation or not. No matter what technology you have, your employees have to run it. If they don’t get it—or don’t like it for that matter—what is the point in having it? By investing in organizational change management, your employees will get the proper training and understanding of your business and will help make it run MUCH smoother.
With the new year right around the corner, it is important to start thinking about what your professional focus will be. Make it a healthy 2017 in all of your endeavors, personal and professional alike.
By now, Christmas is in full steam. There are Christmas tunes on the radio, every store has decked their halls in wreaths and bows and there are sales around every corner. While you may be in full on Christmas spirit, have you thought about if your employees are feeling the joy?
What a lot of organizations fail to realize is: your business is run by your people. You can have all the new technology there is to offer, but if your employees are not having a holy jolly time, then the software is worthless.
While most people avoid change, there are ways to have your employees jump on board the Polar Express to success! (cheesy I know, but go along with it) Change starts from the top and trickles down. There must be executive buy in for your project to work. If your C-Suite isn’t on board, then why should your end users be? As our 2016 ERP Report outlines, only a small percentage of project teams feel as though their process and organizational changes were easy. It is vital to understand that organizational change and training issues account for the number one reason(s) why ERP implementations take longer than expected. 17-percent of projects attribute their number one implementation challenge to their organization’s organizational change and training issues.
So what needs to happen?
For starters, organizational change needs to be thought of as a necessity instead of a nice-to-have. Organizational change management (OCM) is VITAL to the success of your project. OCM is typically the first thing to go when the budget starts getting too high, when it should be the highest priority in the entire project. Effective change management have tangible and quantifiable results on a business’ digital transformation.
OCM is NOT a one-size-fits all
Even though Santa is tailored for children, not all kids are going to like him. Same goes for OCM. You can’t use the same OCM strategy for a $30M / year corporation that you would for a $5M / year family ran business. The specifics that go into creating an organizational change strategy must be tailored for the company. Ideally, this would happen during the software evaluation and selection stage. This way, the executive team will better understand the organizational dynamics, sources of resistance to change and the pockets of resistance within the organization.While it may not quite be Santa’s workshop, but your employees can be on board with change if you push them in the right direction.
When you head into an ERP project, you may have hesitations, but you hope for the absolute best. The easiest way to avoid failure is to hire a third party to help in the decision making. They have experience doing all kinds of ERP implementations across a multitude of industries and know what to look for. However, in the worst case scenario that you are headed for an ERP failure, here are the services to look for:
There are three main aspects throughout expert services. Independent validation and verification (IV&V) is the first. It’s like an outside audit. We are retained by the client and ensure that not only they are fulfilling their role, but, more importantly, the integrator is doing what they are supposed to. We typically report to the executive teams or to a board of director rather than the project management team because the project management team may be where the issue is.
The next aspect would be the recovery. A recovery focuses on an implementation that is facing difficulties. Our main role is to try recuperate and save the software. It may mean that we have to work closer to the vendor and the client to be able to get their relationship back on track, or it may mean that we have to consider replacing the integrator. The worst thing we may have to do is to change the software, but, in some cases, they may have selected the wrong software and that will be the only option.
The last phase is expert witness. In an expert witness engagement, we are retained by an attorney either for the client or for the integrator or software developer. We are brought in to forensically look at the implementation and determine what were the root causes for failure are. In many cases those have similar components such as organizational change management or poor project management. Our main role is to help provide our educated opinion as to why the implementation has faced the problems that is has had.
The bottom line is that we are here to help. We have a great team who know how to help to avoid a failure of this proportion. Nobody wants to clean up that mess, so it’s important to avoid it from the beginning.
Download our whitepaper, “The Importance of Independent Verification and Validation.”
More than ever before, high performing government agencies are resembling well-run corporate organizations. They both set defined goals, are both process-oriented and they choose effective leaders. However, one of the biggest mistakes that any company or government agency makes is underestimating the need of change management during an ERP implementation. Any organization that perceives it as an avoidable piece that can be cut at any time is set for an unsuccessful ERP implementation.
While both sectors are dealing with people, the main difference between the public and the private sector in regards to organizational change management is their employee’s motivation for changing. Public sector organizations have their roots in social objectives and they are created to promote a particular aspect of the public’s welfare. Maximizing shareholder’s investment is not a concern for government staffs, taxpayers pay for an effective and efficient execution of their mission–this is what motivates agency workers. The reception to change and acceptance process in the government environment also differs substantially from commercial enterprises. Public careers are considered safe; longevity in the system gives seniority, creating employees who feel protected from internal pressure and have no obvious needs to respond to process and organizational change since there is no financial measurement of success with direct implications for them.
An ERP implementation is quite a complex project, and assuring buy-in across all the levels of the organization is vital for success. This is especially challenging for many government agencies that have had long time employees. Agencies’ leaders come and go and often technology and process improvement initiatives have no impact over time. However, longevity can also be helpful for change management. Long-time employees know a lot about how the organization runs and where it falters. By taking advantage of their operational knowledge, agencies’ leaders may not only obtain the intellectual foundation for the change, but also help gain the employee support needed for it to succeed.
Within the organizational change management strategy, a well-designed Communication Plan must be in place. The agency team should not only understand where the overall project stands, but they need to know exactly how their individual jobs are going to change due to the new system and processes. The plan should include a strategic external communication to the citizens, informing the constituents about anticipated benefits. By doing so, the agency creates accountability and the public perception may improve in regards to its accomplishments.
Finally, the organizational change strategy must be customized to fit the agency’s culture. Not all government organizations are the same and every agency may have a particular set of needs. Conducting an early risk and readiness assessment prior an ERP implementation determines the most appropriate strategy. It will also identify the root causes of resistance within the organization so organizational efforts can be better targeted.
For more information, visit www.panorama-government.com.
Most, if not all of us, have heard of Pavlov’s theory of classical conditioning. Pavlov used dogs to demonstrate stimuli and their responses. Here is a brief recap on what Pavlov found: there is a neutral stimulus (bell) which, by itself, will not stimulate a response—in this case, salvation. There is also a non-neutral/unconditioned stimulus (food) which will produce an unconditioned response (salivation). However, when you pair the neutral stimulus along with the unconditioned stimulus together, the dog will eventually learn to associate the two. After some time, the neutral stimulus alone will produce the same response as the unconditioned response (A.K.A. a dog drooling when they hear the bell).
While I am not here to talk about dog training, let’s associate this with a human element throughout organizations. When employees are introduced to their roles and responsibilities, it usually takes them some time to learn. They may learn that they have a procedure to follow on a daily, weekly or monthly basis. After time, these duties become part of a conditioned response.
However, when a company is trying to stay competitive, it may be time for a digital transformation or new ERP software. No matter what, this change causes disruption. If there is one thing most people do not like in their jobs—or even in their lives—it is change. You have been conditioned over a period of time to know what it is you are supposed to do. Even if this new software is going to make your life easier, it is still going to require changing the way you do your job and that can easily create resistance or, even worse, fear.
This is when you must do a mix of classical conditioning and counterconditioning. I know that this sounds strange, but you must countercondition your employees out of their old work habits and then classically condition them into their new ones. Sounds difficult? Well, it is.
The only way to alleviate these fears and to teach them their new duties is undergoing an organizational change management (OCM) initiative. The idea of OCM is to assess employees’ concerns, effectively communicate to alleviate those concerns, increase system usage via training on the new software, and, most importantly to a lot companies, maximize your ROI. While this can be a solid undertaking if you have never done this before, it can be done with the right help. This is not a job to simply assign to your HR. It must be done with extreme caution to not enhance the negative emotions employees are already experiencing. Somethings can’t be done overnight and this is one of them. It is going to be a process of training employees and allowing them to ask all of their questions to address everyone’s fears. This is a delicate process and is honestly a 100-percent necessity in all organizations going through a new initiative. Employees aren’t going to change simply because they are asked to.
You can’t expect to get a new puppy and have them to know all their tricks right away. It’s the same thing with humans. It takes time and training. Take a hint from Pavlov and get yourself some OCM.
It’s that time of the year again! You are glued to the TV every Thursday, Sunday and Monday rooting for your team. You’re making sure your players, offense and defense are playing up to par for your fantasy lineup. You notice that some team members aren’t paying attention to the correct calls, plays and/or coaching while on and off the field. This results in missed opportunities for improvement and overall attitude toward both the game and the team. When your organization is going through a business transformation project, it is vital to keep people and processes in mind as the technology will not make a significant difference without these two pieces in place. Communication within the organization regarding the change that is expected to occur and how it will benefit job roles in the long-run is crucial to success of the project for several different reasons.
Educate employees on best practices
There are similarities between football teams and organization’s employees when it comes to providing the proper education before the game or project kickoff starts. Without the appropriate knowledge of best practices and the overall game plan, employees or team players will start to feel negative about the process and will lack the needed participation. It is important to communicate about the change that is going to occur and the benefits that will result, while allowing every department the ability to express concerns, what they would like to see within a new software and some of their everyday pain points. This provides employees with the comfort that their opinions and ideas are important to the overall success of the project and will result in full adoption of the improvements ahead.
Practice makes perfect
Training of the new system is vital to the overall success of the implementation and start in the beginning stage of the project. Each employee’s understanding and speed of adoption will vary during training as each user’s technical background is different. Some users will respond better to certain types of training delivery methods which should be kept in account and thought out early on. Some of your NFL team players may retain information and perform the plays live in action while others might like to study the plays by paper initially. The preliminary groundwork for structuring OCM, training and communication activities can be determined through organizational readiness assessments and survey groups. Having a dedicated person for training per department is a good idea as new employees join the organization or current employees switch to new roles and need the proper educational training. Creating goals, plans and strategies will help keep all users motivated along with provide early adoption of the system and improved processes.
Achieving business benefits
A majority of organizations are in a hurry to select and implement a solution within a relatively short time frame. Unfortunately, this can end up sacrificing benefits and cause stress to the employees and the organization. When you rush through these projects and make decisions without the proper due diligence, there can be a negative effect on the employees. Often times, employees are kept in the background and are not aware of the changes. Rumors start and improvements aren’t made or adopted. Measuring business benefits is critical in determining whether or not your process improvements and newly implemented solution is coming to fruition. Some companies will claim that they have seen improvements with increased integration, productivity and minimizing manual and duplicate entries, but not have not measured the benefits. It is important to set goals, define your vision and implement a business benefits realization plan to define the overall return on investment and benefits that you will achieve.
Finally, it is important to stress the proper way to approach an organization’s employees or team players before making major changes throughout the organization or team. Having proper communication plans and buy-in from employees will ultimately create a positive outlook for the project which will help improve the organization’s overall success. It is significant to note that these projects aren’t just an IT initiative, but also contains human components such as organizational readiness assessments, communication plans, change impact assessments and other discussions that will be vital to the overall business benefits that will be obtained. In the end, happy team players and employees will help the overall atmosphere when these projects are in motion, creating a successful and completed game plan.
“One size fits all.” Have you ever wondered about that phrase? How is it possible that one article (of clothing most of the time) is able to fit any body type? Everyone is different and we are meant to have options that can cater to every body type. So why is it different when it comes to ERP systems? Every company has its niche, its specialty, so how is it possible that one system could fit every type of company? The answer is, it can’t. ERP vendors work hard to nail the “silver bullet” selling point that can resonate with every buyer in the market. It can be anything from mobility, SaaS, analytics, cloud and even software best practices. While these can be great trends, they are not going to fit every company.
The truth is, no one feature, tool or function is going to determine success for your project. Think about your project as a puzzle. You may see one puzzle’s pieces fit together perfectly and you think you could take their pieces and they will be the perfect fit into your implementation. However, you will soon find out that your project needs very different pieces and it was a waste of time trying to make those pieces fit. There are simply too many variables to an ERP implementation to suggest that just one component would create a full on success.
With all of that said, there is one piece of the puzzle that every company needs that can legitimately make or break your entire project, and that is organizational change management. Honestly, you could have a mediocre software solution, but if you have great change management, your project could be a great success.According to our 2016 ERP Report, 28-percent of companies put very little to no focus on change management and 52-percent only put moderate focus on it. That leaves a mere 20-percent that put a real emphasis on their change management program and guess who will end up having a successful project? You guessed it, those 20-percent. You can have as great of a software package there is, you could have the Mona Lisa of software packages, but if your employees don’t know how to work it, what good is it?
We have been brought into many ERP expert witness testimonies over the years and every single one of them has suffered from poor organizational change management. In the last eleven years as a company, the organizations who have heavily invested into organizational change management have been the ones whose implementations have gone off without a hitch. Change is hard, and oftentimes, executives underestimate the impact that these projects make on their employees. Their day-to-day duties may change significantly, and people need to be trained on these new systems.
Organizational readiness is often seen as a nice-to-have or the easiest thing to cut when the price tag starts getting too high. But, in reality, this is single-handedly the most important part of the entire project. “They’ll change because we will tell them to” is not going to work. Everything is done better if it is done together. That should be the philosophy going into these projects. There is no one size fits all when it comes to these changes. But organizational change management could be the missing piece to your puzzle and you can’t afford to ignore it.