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.
Industry leaders don’t achieve or keep their positions merely through clever strategies or financial engineering; they do so through superior execution of exceptional processes.
Industry leaders use business process management (BPM) to deliver rapid and sustainable business value to their operations. BPM is the understanding, visibility and continuous performance improvement of an organization’s business processes, which define at an operational level, how work gets done.
BPM can help organizations efficiently and effectively improve business processes in four key areas.
Four Key Areas of Business Process Management (BPM)
Direction Setting – Stakeholders must identify strategic business goals that will set tactical direction. BPM can help build the burning platform for change by defining and giving visibility to a strategically linked, tactile direction that is compelling to all levels of the company.
Roadmaps – An end-to-end view of current state operational areas is critical to identifying process gaps and non-value added work. BPM can provide visual process maps that clearly define those areas that need to change. The process maps should be intuitive, comprehensive, and understandable at all levels within the company.
Analysis – The design goal is to achieve breakthrough performance improvement through process innovation – the invention and deployment of new ways of performing work, driving out non-value adding work and with it errors, cost, and time. BPM can help develop a future state that incorporates best business practices and fits into the overall business strategy.
Execution – Execution must be planned in terms of what the organization is willing and able to digest. All too often, the scope of implementation projects is based upon the problem to be solved with little regard for the organization’s readiness and ability to change. BPM can help you plan and pace your project around your organization’s ability to a absorb change.
Strong companies not only know business process management, they practice it and use it to drive success that is both achievable and sustainable. Panorama understands the true value of strong BPM and ensures BPM is a strong influence within organizational change management projects.
Change is at the core of every ERP project. ERP software requires organizations to change from an old way of doing things to a new way, and employees will have to adapt to this new way of completing day-to-day tasks. With this as common knowledge to most organizations, it’s amazing how many organizations continue to dismiss the need for change management or opt for only a portion of the available tools that will make them successful. In some cases, organizations think that project managers should execute change tactics, but they often do not have the formal training or the dedicated time to oversee a full change management plan.
An integrated and comprehensive change management plan must be included in your ERP implementation. It is a proven fact that projects that include effective change management are more successful, as they mitigate end-user resistance and build a culture of positive change. According to a recent survey by Prosci, “Participants with the highest level of change management effectiveness were 6X more likely to meet or exceed project objectives.”
An effective change management plan requires a full understanding of organizational readiness and a proactive approach from leadership and project teams to overcome resistance. It’s much easier to work from a position of knowledge instead of reacting after productivity starts to plummet. Upon go-live, your organization must be prepared for the initial decline in productivity and the increase in end-user resistance to the new ERP system and processes. While change management can mitigate the severity of this resistance, it does not promise to eliminate it.
The ERP software that you purchase will sit and wait for your end-users to begin using it if you don’t have a sound change management plan and comprehensive training strategy.
Some would argue that change management strategies and tactics are synonymous across the public and private sector. While the overreaching principles are the same, each organization must take into account things like culture, unions, employee mindset and the abilities of leadership to drive changes. With ERP implementations we often find that resistance to change is often driven by fear of the unknown. This translates to the need for clear and understandable communications around goals, impacts, timetables and overall implementation details.
In the public sector, these shared issues with the private sector can be exacerbated by budget constraints, rules and regulations, employee morale, accountabilities and, in some cases, lack of motivation. Leaders must take the extra steps to include a comprehensive change management plan in their ERP implementation. In many cases, this starts with comprehensive training of the leadership team. Following are five key steps to address potential challenges:
Clearly Define Implementation Goals and Objectives. Spend the time explaining how the ERP implementation fits with mission of the public sector entity. At Panorama, we start with the concept of return on citizenship (ROC). Similar to what the private sector calls return on investment, ROC is the bedrock of the any public sector entity that spends taxpayer dollars to provide a service to their constituents. An ERP implementation is a way to enhance and improve that service. While it sounds obvious, ROC is often overlooked.
Provide Comprehensive Training for Leadership. Comprehensive ERP implementations are not common in the private sector, much less in the public sector. Therefore it is important to take the time to train and inform leadership and project team about the purpose of the ERP implementation, their roles and responsibilities and what to expect throughout the implementation.
Include Organizational Change Management. We know from our own research that companies with effective change management and communications plans are 3.5 times more likely to outperform industry peers. In the public sector, this number is even higher. A change management plan includes taking the time to establish organizational readiness, conduct business process mapping, prepare workforce transition and training strategy documents, conduct change agent training, and prepare a change impact analysis. In addition, a communications plan needs to be prepared that includes strategies, tactics, target audiences, key messages, timing and activities.
Acknowledge the “Elephant in the Room.” An ERP implementation will change the way employees perform their jobs. There will be resistance not only from the expected areas but also from unexpected and maybe even unknown areas. Be honest about this fact and address the naysayers by having a plan in place. There will plenty of unexpected bumps along the way so be wary of passive aggressive personalities, especially among key influencers within work groups.
Embrace and Address Unions. Make unions a partner in the process and engage them from the onset of the ERP implementation to ensure they have a clear understanding of goals and impacts. If there will be staffing implications, resolve them before you go-live. Partnering with unions will pay huge dividends in the success of your ERP implementation. Ignore them at your own peril.
There are many more considerations regarding change management in the public sector but these five are the critical first steps to ensure success. At Panorama Government Solutions, we have a comprehensive and proven change management methodology that can be tailored to the unique needs of each engagement. We pride ourselves on helping our partners in government navigate the ERP selection and implementation process with our PERFECT Change™ methodology.
I recently took a trip home to visit my cat and my family, but mainly my cat. My cat, Ketzel, demonstrates all of the stereotypical cat behaviors: the ability to sleep 27 hours a day, a strange obsession with toilet paper rolls and the uncanny talent to completely disregard your existence. Although cats are not ERP consulting wizards, we can learn a lot from these intelligent and furry friends. The following are four tips to ensure a successful ERP implementation that I’ve learned from my cat:
1. Adapting to change won’t happen overnight. Ketzel recently developed some Arthritis in her elbows, no longer allowing her to make the eight-foot leap off the balcony. Knowing how much she loved making that jump, I built her a ramp allowing her to “cat walk” down a plank and into the back yard. It took some time to train her to use it because she needed to adapt to the new process and needed support throughout the transition for her to fully utilize the new benefits. Sound familiar? Cats are just like humans; we are creatures of habit, and a change in our routine can become more stressful than we would initially believe. Don’t be under the impression that by simply announcing the undertaking of a new ERP implementation the entire organization will be onboard for whatever comes next. It is vital to take advantage of a comprehensive organizational change management (OCM) plan that spans the lifetime of the project, from system selection to post go-live. Without using OCM, your organization could have a hard time adapting to the new software and will not be able to fully realize the business benefits.
2. If you want to ensure success, listen early and listen often. The first few days after the installation of Ketzel’s ramp, I noticed that she wasn’t using it. I watched her in order to understand her pain points. Similarly, an ERP project manager’s job is to understand an organization’s business requirements from the end-user level. They use these processes every day, so they understand the pain points and know how to improve the process. Instead of assuming that you understand each department’s requirements, ask and listen to your end-users so you can fully comprehend what they need to be successful. Focus groups, requirements gathering sessions and one-on-one conversations are all key to a successful implementation.
3. Don’t move too fast and set realistic expectations. No matter how much Ketzel is used to my presence, it is still very easy to scare her. If she’s sitting on my lap and I flinch or move too fast, she’ll freak out and either bite me or run away. How does this relate to an ERP implementation? Just like interacting with cats, organizations should take their time. Don’t make sudden movements, and always set realistic deadlines. Your project doesn’t have to go-live on January 1st. It is much more important to take your time and make sure everyone is prepared. If you rush through the project, end-users are bound to freak out. While they probably won’t bite you, they can certainly lose momentum and excitement for the project, which is even worse.
4. Take the time to clean out the litter box. Every organization has old processes and lingering culture issues that need to be “cleaned out” to pave way for new ERP software. An ERP implementation isn’t an IT initiative; it is an organizational initiative. You can either keep spraying air freshener and using more cat litter to mask the smell, or you can identify the root cause of the issue. Implementing a new ERP system is a great time to address cultural and process issues that are holding the organization back from reaching its next revenue or performance benchmark. Maybe two employees don’t get along, or maybe your entire organization doesn’t trust executive leadership. My advice to executive and project teams is to not run from the truth and consider everything an opportunity to improve. You can have the perfect project communication plan, but if your employees have a lack of trust in leadership then the organization is going to encounter countless issues during implementation. It’s key to get to the root cause and address cultural and process issues to ensure your ERP project is successful and not a catastrophic failure.
Manufacturers are critical to economic growth – even while commodity-based manufacturing is outsourced to other countries in exchange for the higher-value manufacturing currently experiencing a renaissance.
Despite their importance, manufacturing companies aren’t created equally. Some are more profitable than others, some are more established while others are more innovative with higher growth prospects. In most cases, these differing results aren’t due to luck or circumstance. Instead they are due to unique leadership traits of their executive teams.
During business transformations, which many manufacturers experience fairly regularly, leadership is critical and can make or break an initiative. For example, ERP implementations and business process reengineering initiatives require effective leadership traits that not all of them are cut out for.
Below are five leadership traits that we have found differentiate successful manufacturers from their more average-performing peers:
Business transformations are most successful when they focus on enhancing competitive advantages. Some executive teams put too much emphasis on the details and not enough focus on how they plan to optimize competitive advantages such as ERP implementations. Successful manufacturing leaders, focus their time, energy and employee messaging to enable transformation. More specifically, they focus on preserving and expanding their unique competitive advantages in hopes to lead to more growth and success in the future. This mindset differs to the less successful companies, which tend to focus more on the technical constraints they want to address with their new transformation initiatives.
Effective business transformation requires just as much organizational change management as it does technical focus. Too often, executives at our manufacturing clients state that organizational change management isn’t necessary for their companies. Sometimes it’s because their people are unlike other organization’s employees because they are “ready for the change” because the current state is so painful. Other times it’s because they view their command and control management style as surrogates for more finesse-based organizational change management. As we’ve learned with our more successful clients, effective organizational change management is key to any business transformation – regardless of what you might think about your company’s ability to change.
There is no such thing as over-communication. I have yet to meet a manufacturing executive or project team who went too far with their communication to employees regarding their particular business transformation. More of often than not, executives feel as if they’re communicating enough simply because they’ve said what they need to say once or twice to employees throughout the cycle of the transformation. However, most ERP implementations or business process reengineering initiatives are too complex for the average employee to understand and embrace with a conversation or two. It takes the average person hearing a message seven times before it sticks; therefore, it is important to develop an organizational change management and communication strategy that reflects that commitment to their employees.
The most successful manufacturers don’t overlook business process reengineering. Whether you are implementing a new ERP system, adopting new CRM software or embarking on some other type of business transformation, it will most likely entail significant changes to your business processes. Despite knowing the possible effects of this, not all manufacturers pay enough attention to the details of their business process reengineering. Rather than simply assuming that the to-be business processes will simply work themselves out with the adoption of a new system, successful manufacturing leaders recognize the need to proactively define and engineer how their business processes should and will look in the future. Building a well-oiled and world-class manufacturing organization requires this sort of discipline and focus on business processes – well beyond what most ERP vendors or system integrators will provide.
The best manufacturing leaders walk the walk. In order for any of the above four critical success factors to occur, manufacturing executives need to provide the visible buy-in and support that will help rally the troops and get the organization aligned with the transformation. From proactively communicating the vision for the change initiative to allocating adequate resources and focus to the transformation, executives need to flex their leadership muscles throughout the entire change and beyond. Also important: expecting their entire executive team to be actively involved in the project via project governance and oversight, decision-making and redirecting the course of the change initiative where necessary. This is arguably the most important leadership trait that manufacturing executives can and should demonstrate to make their business transformations successful.
While there is no one-size-fits-all leadership style or silver bullet to managing change, these are some of the most common traits we see in more successful manufacturing organizations. By focusing on these five characteristics, you are more likely to successfully navigate the business transformations that you may be leading for your organization.
Contrary to the beliefs of many, an ERP implementation is far more than a large IT project. It affects stakeholders in every functional area, and if it fails, it has dramatic consequences throughout an organization. With that said, an ERP failure is not unlike a car crash. Both are disasters that leave trauma and retrospection in their wake.
Despite this, there are notable differences between a car crash and an ERP failure that provide important lessons on mitigating risk in your ERP implementation. Heed these lessons and you will avoid the mistakes that lead to ERP crashes.
1. A car crash happens suddenly. In most cases, car accidents occur in an instant and have little or no warning. Not so with an ERP failure. In virtually all cases, ERP failures are preceded by numerous red flags over the course of months or even years. Warnings such as a lack of executive or employee buy-in, inadequate change management and unrealistic deadlines are often present leading up to an ERP failure. Identifying and addressing these warning signs are integral parts of a successful ERP implementation.
2.In most car crashes, one or two individuals are culpable. In an ERP implementation, there are many parties involved that all bear part of the responsibility for project success. Examples of parties with responsibility in an ERP implementation include ERP vendors, system integrators, third party consultancies, and of course, teams from the organization itself. While the ultimate responsibility for ERP failure may lie more with one of these stakeholders than others, being vigilant of risk arising from one party is a duty shared by many. ERP failure is often attributable to failures in communication between many individuals. To avoid this, always ensure that roles and responsibilities among project stakeholders are defined and clear, and channels of communication are established and open.
3. Car crashes are sometimes the result of mechanical or system failure. A faulty computer in a vehicle may lead to a crash (or a recall), but this is rarely the case in ERP failures. In virtually all failed ERP projects, the technology is not to blame. Mismanagement of ERP implementations is a far more likely culprit than a problem with the system itself.
4. In most car crashes, emergency response is imminent. In many car crashes, help is on the way to preserve life and limb as well as to clear the street to allow the regular flow of traffic. No such guarantees exist in ERP failures. Coordination of recovery from an ERP failure is rarely as efficient as emergency response to a car crash, as there is no precedent for these situations within a given organization. This fact makes early identification of project risk all the more critical.
5. If another driver is at fault, they foot the bill. Assuming the driver at fault has insurance, the financial consequences for a car crash are generally born by the culpable party. This is not a sure bet in an ERP implementation. Even if the third parties involved are contractually liable for certain points of failure, significant financial damage is always suffered by the organization itself. When ERP failures do lead to litigation from organizations seeking recompense from partners who failed to deliver, damages awarded often do not approach the true financial cost of ERP failure.
While a failed ERP implementation may have a lot in common with a car crash, ERP failure is much more preventable. If you take away one lesson it should be this: prevention is always less costly than recovery.
Public sector technology has brought us to a unique time in history. Government organizations now have the opportunity to take advantage of cost-effective innovation that delivers a high return on citizenship (ROC). Due to the ongoing financial crisis and budget cuts, government CIO’s, IT managers and civil servants are looking for ways to save money while implementing the best possible technology in their agencies and organizations.
If public sector leaders want to implement innovative technology, they need to think outside-of-the-cubicle. Innovation has underappreciated strategic value that extends beyond cost savings and streamlined procurement. In the public sector, innovation can enable government cooperation, interagency collaboration, shared services, flexible working environments and common compliance standards in the federal government.
In order to reap all of the benefits of innovative technology, public sector leaders must work together to define an ideal future-state and a clear strategic roadmap. A vision of the final network, infrastructure and capability is easy to put down on paper but very difficult to achieve. While this takes cooperation and patience, it is the necessary foundation for success.
How far should CIOs and IT managers go to ensure that cost effective innovation reaches its potential? Very far – innovation is a journey that most certainly will require new thinking. Changing processes and altering “business as usual” is a necessary component of innovation and should be viewed as a way to enhance cooperation and collaboration rather than simply to save money.
On the surface, these are simple concepts, but in practice, they are very difficult to implement. An organizational change management strategy will absolutely be necessary. Technology is the easy part of collaboration; the people-side always proves more difficult and requires significant change management.
The key to IT success is learning to repurpose existing technologies and processes to yield more efficiency. By reaching out to other successful public sector IT project managers and government portfolio leaders, you can learn from their success.
Written by Rich Farrell, Senior Account Executive at Panorama Consulting Solutions.
While many firms claim to be “ERP consultants,” claiming is not the same as actually being acompetent and seasoned ERP consultant, particularly in the public sector. What is a government CIO or G6 to do when an ERP system is required? How do they find a consultant who will streamline their processes, provide sage advice and deliver a successful go-live? Well, my friends, you are in luck. We have a handy five-step method to help guide your choice:
1. Recent experience. Ensure your prospective consulting team has significant and recent experience implementing ERP software, particularly in the public sector. If you are nonprofit, look for firms with a great deal of experience with nonprofits. If you are in the federal government, ask for the consultants to provide references with other federal government organizations of similar size and mission. Ask for references, check the references and ask the hard questions: How will they handle scope, changes, requirement creep, schedule and budget? A key indicator of experience is having multiple industry studies, white papers and case studies published by the consulting team.
2.Independence. Are the consultants truly independent or tied to a specific ERP system? While many competent consulting firms have ties to specific ERP vendors, consider selecting an independent consulting team that will help you select the right software for your organization. It is better to use the correct tool rather than using a hammer for every issue even if it requires a screw or a molly bolt.
3.Are they up to the challenge? Ask the consulting team to provide industry specific certifications and accreditations. Ensure those credentials belong to the consultants that will actually be doing the work. The consulting team should be PMP- and Six Sigma certified and actively involved in local or national chapters. Membership in ERP, PMI and Six Sigma organizations is a key indicator that the consulting team is continuously growing their skill set. The gold standard is SAP, Microsoft, Oracle and other vendor specific certifications. Make sure their certifications are up-to-date and that everyone on the consulting team has credentials.
4. Do a background search. If the team will be working with classified departments of government organizations, be sure to ask if it has the necessary clearances. If not, it is a time-consuming process to get an un-cleared individual the necessary clearances to complete a project and make it successful. Additionally, look at the history of the team – bankruptcies, misdemeanor convictions and other red flags must be checked prior to giving them access to your sensitive materials and information.
5.Project team. Nail down who specifically will be on the team and hold the consulting firm accountable to this. Are you investing in a single person or a team? “Bait and switch” is a common complaint with consulting firms. They bring in the high value and extremely experienced consultants to make the sale and attend the kick-off meetings; then two weeks later, the team is wholly composed of recent MBA graduates with less-than-robust ERP experience in your vertical. Prior government projects are a key predictor of success. ERP consultants who are experienced in your public sector vertical understand the difference between public sector pressures and regulations and the bottom-line driven private sector.
Panorama’s independent ERP consultants provide a full spectrum of support in software selection, change management and implementation for government agencies, departments and organizations. Our experienced ERP consultants are an insurance policy against project cost overruns, misaligned software, diminished return on investment and diminished return on citizenship (ROC). Our team has public sector experience in overseas, remote and difficult environments and will work with you to transform and innovate your organization and its processes.
In less than three weeks, we are hosting our next ERP Boot Camp. This time, participants will travel to our headquarters in Denver, CO where they will push themselves to their ERP limits in Panorama’s intensive, in-depth training. Last year, there were only two survivors by the end of Day Three.
OK, in reality, ERP Boot Camp is completely safe. Now that we’ve cleared that up, you have no reason not to attend. If you don’t believe me, just ask some of our ERP Boot Camp survivors:
“It is a great opportunity to take a step back from our current project to get a greater understanding of the big picture, including what you have not even considered yet.”
Rather than focusing on one aspect of ERP implementation, our ERP experts will focus on the entire lifecycle of your ERP project. The experts will meet with you one-on-one to answer your toughest questions on selection, implementation, organizational change management and business process reengineering.
“Very beneficial. Great overview of what to expectwith upcoming challenges.”
Business process management experts will provide advice on how to transition from current state to future state business processes. When beginning an ERP project, many organizations do not realize that business process management does not simply mean taking a process and building a workflow in an ERP system. It means changing and improving your business – in which case you will need organizational change management experts . . .
“They come at you with a really big breadth of knowledge that you can’t find anywhere else in one central location. To have this all crammed into three days was really helpful.”
Organizational change management experts will be at ERP Boot Camp as well. ERP implementations are disruptive to organizations and their employees. Resistance to change is one of the most frequent failure points we see when organizations do not invest in training and communicating with end-users. Our organizational change experts will help your team understand the challenges ahead and how to successfully navigate them.
“Best value for the money seminar I have ever attended. Every manager involved in an ERP implementation should take this course.”
I remember my first boot camp. At the end of it I could knock out 100 pushups in two minutes and turn my shoes into black mirrors, but there is not much need for that in corporate America. Panorama’s ERP Boot Camp, on the other hand, is exactly what you need in the corporate world, and you don’t even have to cut your hair.
ERP Boot Camp, December 9-11 in Anaheim, CA, shows you how to make tough decisions about your organization’s future: Do we need to implement a new ERP system? What ERP system should we implement? Below is a handy guide outlining what you will learn at Panorama’s ERP Boot Camp:
1. Business process reengineering. Be exposed to all the successes and failures of past ERP implementations, and understand how business process reengineering played a role in the outcome. Panorama will provide several case studies from a variety of industry verticals of projects that went exceedingly well and projects that were train wrecks.
2.Only the facts. We pride ourselves on our independence, and we are not beholden to any ERP system or firm. We give both sides to every story and provide an impartial and critical review of the different aspects of selection, implementation, project management and other key issues.
3. We omit nothing. We discuss the technical, organizational and human-side of ERP projects, including selection, implementation, organizational change management and business process reengineering.
4. Organizational change management. We will tell you why it is important, who should do it, how to do it and where all the friction will come from. It may surprise you.
5. Ask questions, challenge the experts and throw donuts at the speakers. No question is a bad question and nothing is off limits except a human sacrifice, at least in Denver and parts of El Paso County.
6. Meet industry experts and vendors for personalized counseling and advice. Ask them the hard questions during their presentations or one-on-one. They will give you insightful and candid advice that is hard won from hundreds of implementations.
Panorama will put on a good spread so that you will be well nourished mentally, physically and maybe emotionally during the sessions. I always cry during the technical fit analysis.
So there it is; why you need to go to ERP Boot Camp, cut your hair and stop listening to rock music . . . oh wait wrong boot camp. Panorama’s ERP Boot Camp will give you the skills without the ills of an off-track ERP implementation. So come to Boot Camp, get your questions answered, learn the correct questions to ask and meet the experts. Register by November 18th for an Early Bird Discount.
Ever since I started Panorama Consulting in 2005, I have heard more than a few ERP vendors sell the notion that business process reengineering is irrelevant to modern ERP implementations. Their ERP software, they say, can do away with the need for too much focus on business processes since the “off-the-shelf” best practices will dictate how those new business processes will look.
It sounds good in theory, right? After all, it’s what we all want to hear: a sort of business transformation utopia that doesn’t require too much thinking or effort on our part.
The bad news is that rarely do these perfect case scenarios play out. ERP implementation project team members more commonly find that modern ERP software is too flexible to simply start using “out-of-the-box.” Even the simplest business processes and workflows have multitudes of variations and options to choose from. While this is mostly a good thing, it runs counter to the “forget about process reengineering” mentality so often touted by ERP vendors.
But that’s what’s happening in the market now. What will the year 2020 look like as it relates to business process management? Unlike the constantly evolving nature of ERP systems in general, business process management won’t change much between now and then. Here are a few things to expect over the next several years:
Business requirements will still need to drive ERP software. It’s easy to get caught up in the astonishing technological advances of new ERP software. Each year, ERP vendors spend hundreds of millions of dollars on making their systems more robust and user-friendly, but a successful ERP implementation is about the needs of the business – not the software. As such, implementing organizations should determine their business process reengineering needs first, before selecting and implementing the system that best fits those needs. This approach results in many secondary (but important) benefits, including the fact that it helps ensure selection of the best-fit software, and the technical implementation of the software is done faster and cheaper than if those activities were saved for the implementation phase of the project.
Implementing organizations will need to ensure that they budget adequate time and resources for business process reengineering. Business transformation takes time. In fact, it takes materially more time than the technical configuration, testing and deployment of ERP software. When developing ERP implementation project plans, the more successful organizations recognize this reality and budget time and resources accordingly. Rather than ensuring that new business processes can be defined in a matter of weeks, a more realistic approach is to ensure sufficient time for defining, documenting and implementing new business processes. Think of it this way: it probably took your organization several years or decades to adopt your current processes, so it is highly likely that it will take some time to change those well-established processes.
Business processes need to tightly integrate with organizational change management activities. Organizational resistance is one of the key reasons why process changes typically take longer than most people expect. Convincing employees to understand and accept process changes takes time – more than the “they’ll do it because we said so” philosophy we often see in our clients’ boardrooms. Employees typically don’t actively resist change. Instead, they more commonly struggle to grasp the details and purpose of changes to their jobs, which can be challenging to overcome. An effective organizational change management plan ensures that this doesn’t cause business process reengineering issues and ERP implementation failure.
Integrate analytics into business processes. Robust analytics, business intelligence, data warehouses and reporting are some of the more significant innovations of ERP systems in recent years. Instead of simply storing massive amounts of data in their ERP software, organizations can now glean real-time insights into their operations and financial results. However, none of this matters if these analytics aren’t built into the standard business processes of your organization. Therefore, successful companies now and in the future will more effectively integrate data and analytics into their day-to-day business processes and ERP software initiatives.
While none of this is much of a change from best practices of today, we expect that more organizations will embrace these proven critical success factors in 2020. We already see a distinct difference in the ERP implementation success rates of organizations that adopt these philosophies and frameworks versus those that don’t.
Roughly half of the organizations experience some sort of operational disruption at the time of go-live. The good news is that most of these disruptions are self-inflicted and can be mitigated with the right risk management strategies.
As your ERP go-live date draws near, there are five telltale signs that your organization is probably ready for go-live, many of which can be effectively evaluated as part of an ERP readiness assessment and go/no-go decision:
Users have accepted all of the new processes and functionalities of the new ERP system. If your key end users and stakeholders have not yet fully tested and signed off on the new ERP system, then they are probably not ready for the changes that are about to affect them. Just as importantly, business processes and system setups that have not yet been accepted by key end-users are more likely to meet the technical requirements of the software rather than the business needs of your organization, so it is important to obtain these key sign-offs before expecting a successful cutover.
Employees understand their new business processes. It is one thing for employees to understand how to perform transactions in a system, but a much different thing to fully understand how their business processes will look in the new system. Further, employees also need to clearly understand their roles and responsibilities once the new system goes live. Without these key components in place, your organization is not ready for go live. Make certain that your organizational change management plan goes beyond basic end-user training to ensure that this is addressed.
Employees understand how to use the new system. It’s clear to most that even the best-designed ERP system is not going to be of much value if employees don’t understand how to use it. Employees must be trained on the nuances of using the system. However, the basic boilerplate training that most ERP vendors and system integrators provide is woefully inadequate. Instead, training should be customized to show how the system works in the context of your organization’s business processes and workflows, as configured and customized in the new system. Make sure your organizational change management plan addresses this critical need to ensure go-live success.
You have a solid contingency plan in place. Hopefully you and your team have done everything humanly possible to ensure that your implementation is a success. No matter how well prepared you think you are, however, you are not prepared nearly enough if you don’t have a Plan B in place. Regardless of how unlikely you think it is, make sure you have a plan in place for if the system doesn’t work on day one, if you can’t ship product and/or if you can’t close the books in the new system. In other words, make sure you’ve mitigated this all-too-common risk by building a sort of “insurance policy” for your organization in the event that things don’t go as planned.
You have adequate support in place. No matter how simple your organization is or how well you think you’ve prepared everyone, your organization and employees will rarely adapt to the new system as easily as you think they will. They will stumble along during those first few days and weeks after go-live – some more than others. Therefore, it is important to ensure that you have enough on-site support to help employees through the post-go-live challenges that they will inevitably face. Make sure that your key change agents, end users and stakeholders are available to address questions and concerns as they come up.
If you’ve addressed these five things, then you have done quite a bit to minimize the risk of your ERP software go-live. You can never be 100% certain that there won’t be hiccups along the way, but your odds of disrupting your business operations will be much lower.
You can learn more about preparing for go-live by registering for one of our upcoming webinars.
An ERP implementation can drastically improve the well-being of citizens by providing a positive return on citizenship (ROC). An ERP failure, on the other hand, can be detrimental to citizens. Government ERP failure is far too common, and projects have historically gone over budget by millions of dollars. A few years ago, the State of Pennsylvania went over budget by $40 million. This is pocket change compared to the New York “CityTime” project, which went over budget by an estimated $697 million – approximately 3000 new Lamborghini Huracans or enough food to feed every homeless child in New York three meals a day for six years.
While the idea of managing a billion-dollar public sector ERP Implementation is daunting, it could happen to you, and when it does, you’ll want to understand the keys to success.
Organizational change management is critical to the success of your ERP implementation. Imagine arriving at work one morning and suddenly being required to use a new ERP system without any prior knowledge to this change – you’d be confused to say the least. Now picture that on a broader scale: if an entire department is clueless about a new ERP system, your organization will encounter serious problems. Successful change management initiatives involve the entire staff, with the intention of creating excitement and enthusiasm around the ERP project. If employees feel included in the process, then they are more likely to voice concerns and recommendations, making the project manager’s job easier.
I have seen countless projects where organizations decided to overlook organizational change management and are now suffering the consequences. An ERP implementation isn’t a technical initiative but a complete organizational, cultural and operational transformation that will fail if it is not properly managed.
Training is another vital aspect of organizational change management. During many implementations, training is swept to the side because so much effort has been expended on the technical aspects of implementation. Unless your employees can magically learn the new ERP system through osmosis, training is essential.
Take a step back, and make sure that you have proper change management and training plans in order. Ensure that your project manager is qualified and not just the first person to volunteer. Finally, set a realistic project schedule – you can’t squeeze organizational change management into a six-month window. You’ll have better luck training a cat to bring in the morning newspaper.
To prevent ERP failure and increase return on citizenship (ROC), you must focus on organizational change management.
This webinar clip will explore the ways companies can evaluate and find the right ERP software for their organizations. Hosted by January Paulk, Director of Client Services at Panorama, this is a must-see for any organization looking to select new ERP software. This is the last part of a five part series.
Rapidly evolving technology trends and their associated organizational and operational impacts can be overwhelming. It is nearly impossible to constantly keep up to date with this ever-changing landscape–making the job of today’s CIO so difficult. Proving why leveraging outside expertise can be so beneficial.
With that in mind, here are four challenges in particular that you won’t want to face alone.
Creating an IT strategy and roadmap that fits your business. The proliferation of enterprise software and other business technology options is mostly positive for organizations – especially those in the small and mid-markets that historically couldn’t afford many enterprise solutions. But the number of these options can be dizzying to navigate. For this reason, it’s critical to work with an outside expert who can help in developing a technology-agnostic ERP strategy and roadmap to define the best path forward based on your organization’s overall direction. Your roadmap should include a three to five year plan along with more immediate low-hanging fruit that you can begin implementing right away.
Organizational adoption of new systems. Whatever you decide to execute within your IT strategy and roadmap is sure to lead to relatively significant organizational changes. Even seemingly simple technological implementations typically result in direct and indirect changes to employee’s jobs, roles, responsibilities and the communication between departments. Because of this, it is important to never underestimate the need for organizational change management. Many IT-types focus on the more techie aspects of IT initiatives. This explains why so many struggle in this area. The good news is that there are organizational change consultants that can help you navigate this vital pain point of any IT initiative.
Alignment between new technology and your current business processes. Technology itself doesn’t mean much if it isn’t aligned with your business processes. Even before selecting which technology to implement within your organization, it is important to define how you envision your business processes looking into the future. Beware of simply documenting how things are done today instead focusing on pain points, opportunities for improvement and “to be” business processes that will best support your organization going forward. Look for ERP consultants who are also experts in Six Sigma and manufacturing (or your specific industry vertical) to help facilitate this process for you and your team.
Realizing the ROI of enterprise technology investments. One of the biggest shortcomings of enterprise IT initiatives is failing to deliver a solid return on investment (ROI). In fact, according to our 2015 ERP Report, most ERP systems and IT initiatives fail to deliver expected business benefits. New technology may sound good in theory, but if it doesn’t deliver tangible business benefits, then it isn’t helping your organization. Go beyond developing a business case for your initiative and instead develop a more robust benefits realization plan if you expect to truly realize meaningful benefits.
Regardless of how technology evolves in coming years, these commonalities will be relevant to your job. It doesn’t matter if you are struggling with the implementation of a new ERP system, rolling out technology to automate your shop floor, applying a new CRM system and mobile devices to your sales team or pursuing any other enterprise software initiative –mastering these challenges will help you succeed well into the future.
If you’re in the market for new ERP software, be sure to register for our ERP Vendor Showdown webinar series.
Recently, I was fortunate enough to participate in an ERP implementation for a publicly-owned oil and gas organization. Based on my observations during this project I identified four keys to ERP success in the oil and gas space that are applicable across various industries.
1. Relationships. A successful client-consultant relationship begins with organizational change management. Communication is the milk in the cereal bowl that holds these relationships together. Change management cannot occur without horizontal and vertical communication among people who are committed to the project’s success.
Similarly, the relationship between an organization and its chosen ERP vendor is important when it comes to industry-specific experience. In the oil and gas industry for example, a background in discrete manufacturing is not enough – find out if your ERP vendor has oil and gas experience specifically. The ERP vendor must have past experience with an oil and gas ERP implementation and a deep understanding of the relationships with related third parties and industry service providers. Even if the organization does not immediately recognize the need, the ERP software must provide tried-and-true modules for oil and gas project management, material management, asset management, maintenance, work order management, service order management, resource allocation, regulatory compliance, document management, human resource management and financial and performance measurement.
2. Resources. In most ERP implementations, organizations add new partners or blend corporate cultures that were formerly separated. It goes without saying that ERP selection should focus on the best fit for your organization, but few organizations consider their own employees and the ERP software’s impact on them. Employees need nurturing, change management and the time to properly implement the new solution. One of the biggest ERP implementation killers is not giving the project team adequate time and backfill resources. Expecting the project team to do two full-time jobs will lead to project fatigue among team members.
3. Risks. The oil and gas industry is known for its wild supply, demand and regulatory fluctuations. With the growing calls for alternative energy, infrastructure concerns and increased exploration and production costs, organizations must use carefully selected ERP systems to understand and plan for project risks in advance using powerful cost and schedule analysis tools. Organizations can obtain solid information on the relative success levels of a proposed project and quickly develop effective risk response and contingency plans.
With that said, there is still a need to be shrewd about risk management. If an implementation is proceeding slower than projected, forcing an unmovable go-live date on the project team must be carefully considered. It is better to push back go-live a couple of weeks instead of spending six months after go-live fixing a troubled implementation.
4. Revenues. Current ERP systems focusing on the oil and gas sector provide powerful tools to manage project portfolios. Several ERP systems enable organizations to manage schedules, project costs and resources to help ensure an on-budget and on-schedule project. ERP systems can increase an organization’s efficiency and mitigate risks associated with balancing multiple projects. Oil and gas organizations looking to remain competitive in the coming years will have no option but to implement integrate ERP systems to support all of their operations.
You do not have to walk in the deep waters alone. Panorama can walk with you and help your organization improve its business processes, execute successful change management, select the right ERP system and help you with all of phases of implementation.
“Out with the old, in with the new.” We all know the phrase and ERP is no exception. When clients approach us to help them select and implement new ERP systems, improving business processes is one of the main drivers for wanting to replace their legacy systems. Most of our clients have systems ranging from 12 to 15 years old. During that time, many of these organizations have grown, gone through massive organizational changes and developed a number of bad habits along the way – paving the way for improved business processes.
Many organizations tend to run their enterprise software implementation projects in ways that undermine their process improvement efforts. This may help explain why, according to our newly released 2015 ERP Report, only 58% of organizations consider their ERP implementations successful and only 45% are satisfied with their ERP vendor post implementation.
If you don’t manage your business process reengineering initiatives appropriately, here are three ways your organization’s bottom line will suffer:
Not spending enough time on business process reengineering during your ERP implementation. The most fundamental shortcoming for many organizations is the failure to recognize the need for business process reengineering. Not allotting for the appropriate focus, time and resources can make your processes worse than prior to your implementation. Half-baked business processes lead to confused and frustrated employees, which leads to lower bottom-line results. Our experience and research shows that the most successful ERP implementations are the ones that develop project plans with a business process focus rather than a myopic “software only” implementation.
Deferring to your chosen ERP software to tell you how to reengineer your business processes. ERP vendors sell their software stating that the software will tell you how to run your business more effectively. While this may sound good in theory—don’t fall for it. Even with all of the capabilities of today’s ERP systems, you still need to roll up your sleeves and define how you want your business processes to look and work if you want the system to be a success. If you simply allow the software to make the decisions, it will force your organization to go over both time and budget and could completely fail to deliver any meaningful business benefits.
Underinvesting in organizational change management to help make the processes stick. Even if you do take the time to articulate your future business processes, it will be worthless if your employees aren’t well-versed in the new processes. For example, let’s say you have 200 employees affected by the new system. Each of those employees has an average of 10 tasks they need to adapt to in the new system (a very conservative number since most implementations involve many more). This translates to 2,000 changes that the people in your organization will need to adjust to.
2,000 potential points of confusion
2,000 potential process breakdowns
and 2,000 ways to undermine your bottom line if organizational change management isn’t adequately addressed.
Basic end-user training won’t cut it, either. You need a comprehensive organizational change management plan ensuring your employees are comfortable with changes well before go-live. (Learn more about Panorama’s organizational change management methodology here).
There is good news! There are easy fixes to these common pitfalls:
Devote. Make sure that you devote the time and resources in your project plan to account for these important business process activities.
Develop. Verify that a comprehensive organizational change management plan is developed and implemented to help institute the changes within your organization.
It may be easier said than done, but these two things will have a more material impact on your bottom line to certify that your implementation can be a success.
Learn more about business process reengineering by downloading our 2015 ERP Report.
For the ninth consecutive year, we have published our annual report outlining results from the last year’s ERP implementations. The 2015 ERP Report, which quantifies results from 562 implementations across the globe, provides compelling data helpful to those beginning an enterprise software initiative.
For this year’s survey, Panorama partnered with Mint Jutras, an independent research-based consulting firm specializing in the business impact of enterprise applications. Survey participants varied in size, industry and geography. Half of the organizations in this year’s results generate under $300M in annual revenue while the other half of organizations are bringing in over $300M annually. The survey data for this year’s report was gathered between February 2014 and March 2015.
Here are some of the key findings in this year’s report:
ERP implementation costs are higher than in past years. Over the last year, we saw an increase in ERP implementation costs. The average total cost of ownership increased from $2.8M last year to $4.5M this year. When expressed as a percentage of revenue, the average company spends an average of 5.9% of annual revenue on their implementation. These numbers include software licenses, consulting fees, technical integration, hardware upgrades, internal resource backfill costs and other costs required to fully deploy a new enterprise system. Our study also reveals that companies that get their implementations right the first time by investing in key critical success factors such as organizational change management and business process reengineering are spending less on their implementations in the long term.
ERP failure rates increased from last year. Although every organization has differing definitions of “success” and “failure,” we found that more companies are defining their projects as failures when compared to previous years (21% this year compared to 16% last year). Also, less companies are saying they would have chosen the same ERP software vendor again if they could do it all over again (69% this year versus 76% last year). This suggests that companies are struggling to select and implement ERP systems in a way that they would consider a success.
ERP software customization is on the rise. Despite the increasing number of options among ERP vendors in the market, more companies are customizing their chosen ERP systems than previously. This year, an overwhelming majority of organizations (93%) customized their software to some degree. Although most organizations begin their ERP initiatives with the expectation that they use the “vanilla” software, organizations are clearly still making changes to the way the software was intended to be used. This may also partially explain the increasing failure rate among ERP implementations.
SaaS may finally be reaching the tipping point of adoption. Despite industry buzz, over the last several years Software as a Service (SaaS) adoption has hovered at a relatively low level. However, this year we saw an exponential increase in SaaS and cloud adoption. This year 33% of organizations implemented a SaaS solution, compared to just 4% last year. Non-SaaS solutions that are hosted in the cloud remained at 11% adoption this year–the exact same number as last year. These numbers suggest that although a majority of companies are still implementing on-premise ERP solutions, SaaS and cloud deployment offerings may be just a year or two away from matching or exceeding the adoption rate of on-premise. However, only 56% of these organizations experienced costs savings as a result of their SaaS solutions.
Post-implementation benefits and operational disruptions still leave much to be desired. Unfortunately, benefits realization and simple operational stability after go-live are arguably the biggest challenges companies are facing when implementing their new ERP systems. This year, 52% of companies faced some sort of material operational disruption at the time of go-live – a number that is surprisingly consistent over the last several years. Further, 60% of organizations failed to realize the business benefits they expected from their ERP implementations, which is an increase of approximately 10% over last year.
There are certainly lessons to be learned from this year’s data. In addition, hiring the best qualified, focused and unbiased ERP consultants can make your organization’s implementation more successful.
While many ERP system initiatives are intended to help replace outdated legacy systems, our clients typically leverage new systems to help them promote and prepare for growth. Whether their plans are to grow through organic growth, mergers, acquisitions or all of the above, our focus is on how to help our clients scale for future growth.
We are often called upon to leverage our innovative and effective organizational change management strategies as a way to fuel our clients’ future success. In other words, our clients are looking for much more than technological guidance – they are looking for ways to reengineer their entire organization in a way to fuel growth and bottom-line results.
Looking at our collective experience with successful ERP implementations, five organizational change management strategies have been particularly effective among our high-growth clients:
Consider business process reengineering and organizational change management as critical path implementation activities. Let’s call a spade a spade: software configuration and testing will be relatively easy compared to the people and process aspects of your implementation. In fact, our 2014 ERP Report found that organizational change management issues were the most difficult aspects of implementing companies’ projects, while technology was the easiest. With that in mind, you will want to prepare accordingly by ensuring you devote plenty of time and resources to your project’s organizational change management and business process reengineering activities.
Where applicable, take a “cookie cutter approach” to your business. While many have negative connotations of the term “cookie cutter,” companies that most effectively manage growth standardize their operations wherever they can as part of their ERP implementations. Back office functions such as HR, IT, finance, procurement and accounting are prime candidates for standardization, but even more customer-facing processes such as customer service, ecommerce and product lifecycle management can be more standardized than they are now. This standardization is critical to future growth, especially if you expect to seamlessly roll future acquisitions into your current operations. All of this suggests that you will want to devote plenty of your project’s time and resources to business process reengineering and organizational change management.
Be as diligent rolling out organizational changes as you are with the technology. One of the key issues with ERP vendors, ERP consultants and other industry incumbents is that they are too focused on the technological aspects of implementation. If more organizations spent as much effort on organizational change management as they did on the technology, failure rates would be much less. Our 2014 ERP Report proves that just over 50% of organizations experience operational disruptions at the time of go-live, most of which could have been avoided by investing more in organizational change management. Avoid the temptation to try to save money by cutting organizational change management because it will ultimately cost you much more than you save.
Develop a solid business case and benefits realization plan. You will not save money or make your operations more efficient unless you develop a business case that can be translated into a benefits realization plan used to manage 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. The business benefits achieved by implementing new software, processes and organizational structures will multiply exponentially as you scale the company – but only if you diligently measure and manage those business benefits along the way.
Leverage a comprehensive, proven and effective organizational change management strategy. The tired, outdated means of merely considering end-user training and some basic employee communications as part of an organizational change management plan have proven to cause failure. Most ERP consultants and system integrators don’t understand organizational change management – because it’s not what they do – it’s up to the implementing organization to find the right resources to help them through their entire organizational and business transformation. Focus on the key aspects of organizational change management if you want to truly prepare your organization for success and growth.
At the end of the day it’s vital to remember that technology installation, configuration and testing won’t determine your level of success. Organizational change management will ultimately determine how effective and successful your project is – and how well-prepared you are for future growth.