It is a well-documented fact that organizational change management is one of the most important success factors for any ERP implementation. In fact, our 2014 ERP Report reveals that organizational change management and training are two implementation activities that have the most impact on timeline, cost and overall project success, as cited by organizations that had recently completed ERP implementations. Most organizations and project teams don’t understand what exactly organizational change entails – let alone how to effectively implement those tactics – which is a key reason why so many organizations suffer from ERP failures.
There is plenty of material available on organizational change management tools and methodologies, which every organization and project team should be well-versed in prior to an ERP implementation (click here for an overview of Panorama’s PERFECT™ Change organizational change methodology). Alternatively, specific examples of organizational change challenges and solutions can provide a good starting point for organizations wanting to learn from and avoid the mistakes of others.
Below are three recent examples that we have seen at some of our clients here at Panorama:
1. Organizational readiness assessment at a $450M medical device manufacturer. Organizations tend to underestimate the impact an ERP implementation will have on end-users. Too often, executives approach change with the mindset that people will either use the new system or they will be fired. That is definitely one way to approach it, but an unintended consequence of that approach is low user adoption and fewer benefits realized from the new ERP system.
We had a client who had not bought into change management at the beginning of their project. An organizational assessment was used to gain an understanding and awareness of organizational challenges that could undermined the success of the project. After we conducted our organizational readiness assessment survey and focus groups, the client quickly realized the importance of end-user buy-in and its effect on the success or failure of the project. Panorama outlined the opportunities for success at a cultural-, communications-, training- and process-level and developed a comprehensive organizational change management plan that resulted in a successful ERP implementation.
2. Training evaluations at a $60M tool manufacturer. Performing a training evaluation after every training session can help identify opportunities for improvement for the next group of end users. We experienced a situation where the client felt one web-based training session would be enough to train end-users on each aspect of the ERP system. After the first training session, we conducted a training evaluation and found the results to be alarming. The training approach was not working and the pass rate of end-users was very low. As a result, we persuaded the client to change their approach. We facilitated two in-classroom training sessions and a follow-up web session to better educate their employees prior to go-live. This delayed the go-live date by two months beyond what the client originally had in mind, but all of the end-users were well-trained and ready to use all aspects of the system for their specific duties. The project was a success and the client realized their benefits five months earlier than expected.
3. Communications plan for a city government. An effective communications plan is a significant contributor to ERP success. Stakeholders want to be communicated with consistently, frequently and through multiple channels.
Panorama was once called into a project in the middle of implementation, as the client was concerned about the project’s success. We performed an analysis and found the executive steering committee council was the biggest issue. People in lower levels of the organization didn’t have confidence in the executives to make decisions about the project and felt they didn’t care about its success. The executives were unaware they were being asked to make decisions. The misunderstanding of roles and responsibilities caused morale and distrust issues across the entire organization.
Developing a comprehensive communication plan segmented by work group can help identify which departments are required to communicate specific information, what they should communicate and when they should communicate it. This information can help provide clarity to cloudy situations, avoid misunderstandings and keep the momentum moving on a project.
While these examples just scratch the surface of the types of organizational change management issues and challenges we help our clients navigate on a daily basis, they hopefully provide a few tangible examples of how organizational change management can make or break an ERP implementation. Whether you are implementing SAP, Oracle, Microsoft Dynamics or any other Tier II or Tier III ERP software, organizational change issues are inevitable and should be addressed accordingly.
Written by Eric Kimberling, Managing Partner of Panorama and January Paulk, Senior Manager of Organizational Change Management and Business Process Management Services.