As we have outlined in our 2013 Organizational Change Management and Business Process Management Report, organizational change management is one of the key contributors to ERP implementation success and failure. In fact, of the top ten reasons for ERP project failure, a majority are either directly or indirectly related to organizational change management.
On the surface, none of this is surprising. Any ERP implementation involves a great deal of change, and most employees struggle with those changes. Even employees that are not users of the new system are greatly affected by changes to business processes, business nomenclature and other variations that may seem innocuous, but can send operations into a tailspin after go-live. This is one reason why, according to our 2014 ERP Report, that just over half of ERP implementations experience some sort of operational disruption at the time of go-live.
To make matters worse, most ERP consultants either don’t understand organizational change management or don’t have the appropriate toolsets to help them through their implementations. Because their focus is typically on technical configuration and setup, they are not usually well-equipped to handle the “people” side of change – despite the fact that it will make or break their ERP implementation.
There are a number of organizational change management philosophies out there. Most of them are ineffective and ill-advised, but it is important to understand them so you are able to see the red flags from a mile away:
1. No organizational change management. Many organizations and ERP consultants simply ignore organizational change management altogether. They have plenty of seemingly good excuses to overlook this need, such as, “Our people hate the current system, so we won’t have any trouble getting them to change.” This is usually true – that is, until the specifics and the magnitude of the changes become more apparent during implementation. While employee resistance to change is usually extreme by this point, it’s typically too late to whip together an effective plan to mitigate the change since it wasn’t on anyone’s radars until this point.
2. Training only. This may be the most common version of organizational change management. Most organizations and their ERP consultants understand that training is important, but they don’t understand that it is just one of many components of an effective organizational change management plan. The dangerous part of this philosophy is that those guilty of this approach think they are doing what’s right, so they don’t know what they don’t know. By the time they realize that training isn’t enough to get the organizational alignment they need, they are just a few short weeks from go-live, which is far too late to make any lasting change to the organization.
3. “They’ll change because we said so.” While point #2 is the most common organizational change management philosophy of projects teams as a whole, this one is the most common in executive boardrooms. Our consulting teams are commonly talking executives and project sponsors off this ledge, even though it can be difficult to persuade most executives that this approach isn’t nearly as easy as it sounds. Employees may put up a front that they are embracing the change, but it’s the more subtle and covert forms of resistance that are more damaging – and undetectable to most executives.
4. Hold hands and sing kumbaya. Speaking of executives, this one drives executives crazy more than other change philosophy. They don’t view this as having anything to do with their new ERP system, so they typically will resist it greatly. Although there is some merit to this approach and plenty of change consultants that can help in this area, it is a very myopic view of change. In addition, this “feel good” approach to change management may have some impact on an organization, but it is not necessarily focused on the cultural and organizational changes required for a successful ERP implementation.
5. Change through trial and error. While this more incremental approach to change can be effective in long-term projects with several phases of deployment, the reality is that most organizations try to implement in as little time as possible, which makes this one unrealistic in many cases. This approach rarely works well as a core strategy, so it’s important to have some structure and deliberate planning behind organizational change management.
So which is the best approach? Unfortunately, none of them. The most effective organizational change strategies combine all of the above approaches (except point #1), rather than focusing on any one of them by itself. Effective ERP implementations take less myopic views than the common approaches and provide more comprehensive and inclusive methods of change.
Learn more by watching our on-demand webinar, An Effective Organizational Change Management Approach.