It seems that today’s society has in many ways moved far from the top-down, command-and-control approaches that were more common in years past. When you consider consumer technologies, media and other channels that have created a more democratic approach to many aspects of our day-to-day lives, it can be hard to identify current times or places where top-down and less inclusive approaches are relevant.
This poses an interesting challenge with ERP implementations. When it comes to organizational change management, a successful ERP implementation needs to involve front-line employees to provide input, decision-making, buy-in to the changes resulting from new ERP software, and – at the very least – the propensity not to sabotage the initiative. At the same time, however, true organizational change simply does not and cannot happen from the ground up. In other words, top-down organizational change management is just as important (if not more important) as change of the grassroots, bottom-up variety.
Here are five examples of how top-down, executive-driven change is important to organizations implementing ERP software:
1. Standardization and scalability requires top-down change. If left to their own devices, disparate employees and workgroups in most organizations would prefer to do things their own way. Even in cases where employees embrace potential changes and improvement, employees will always have different ways of performing functions that could be standardized in the company. As anyone that has ever started or grown a business knows, it is extremely difficult to scale and standardize a company when employees are acting incongruently. This is a key reason why change and direction set from the top is critical to a successful ERP implementation and a key component of our PERFECT Change organizational change management methodology.
2. Customization is a symptom of bottom-up organizational change management. While most people in the industry don’t associate organizational change management with ERP software customization, the two are inversely correlated. In other words, the less organizational change management you invest in, the more customization of the software you are likely to experience since customization requests are often a form of resistance to change. This fact is underscored by the fact that – according to our 2013 ERP Report – most ERP implementations struggle with both customization and managing organizational changes. The opposite is true as well: the less you customize ERP software during implementation, the more organizational change management will be required to effectively manage the transition. When determining whether or not to customize or whether or not to invest in organizational change management, it is important that these decisions not be made in isolation of each other.
3. Strategic decision-making starts at the top. No matter how talented, loyal or open-to-change your employee base is, it is not reasonable to expect that they are going to have the best strategic answers for the company as a whole. For example, entering new markets, acquiring other firms or moving to a shared service model are typically decisions made among the executive ranks rather than among the front-lines. Similarly, key strategic decisions that will ultimately affect your ERP implementation need to be driven by the executive team. Common examples we see among our global client base include the decision to standardize business processes across locations, redefining organizational roles and responsibilities as a result of new ERP software and facilitating business process reengineering across the organization. These decisions should be defined and implemented as part of an effective ERP organizational change management methodology, such as Panorama’s PERFECT Change approach.
4. ERP implementation resource constraints can only be fixed by executives. It’s no secret that most ERP implementations take more time, money and resources than expected, which is also validated in our 2013 ERP Report. This is largely because expectations are unrealistic from the start so it is important that the executive team set the tone for the entire project by ensuring appropriate timelines, milestones, budgets and resource plans are set from day one of the initiative. In addition, it is the executive team’s responsibility to ensure that the company is investing in the right things that will ensure success, such as organizational change management, business process reengineering and other project activities that can cause disaster if not addressed appropriately.
5. The big picture typically suffers when using a bottom-up approach to organizational change. One of the reasons I gravitated to the word “panorama” when I founded Panorama Consulting in 2005 was because it denotes a focus on the big picture, which is exactly what is missing with most ERP implementations. Most consultants and implementing organizations I had worked with up until that point in my career had focused myopically on the technical issues of implementation rather than the more important, bigger picture items. For example, organizational change management, business process reengineering, implementation planning and execution, and project management are just some of the more important items that will ultimately determine ERP success or failure – much more than the more technical activities of a project will. For this reason, executives need to provide the vision and attention on these activities to keep the ERP implementation project team focused the right things.
None of this is to say that ERP implementations can be done with an executive team and no one else. In fact, the opposite is true: successful ERP implementations need the effort and results of the entire organization, from the board room all the way down to the shop floor supervisor and warehouse clerk. However, the latter won’t ever be committed and able to support the project without the support and direction from the executive team.
Learn more by downloading our 2013 Organizational Change Management Report.