In our 2014 Clash of the Titans Report, we outline a quantifiable comparison of SAP, Oracle and Microsoft Dynamics – the leading ERP vendors in the industry. While this report has helped numerous organizations evaluate and select among these leading ERP systems, it does not necessarily address the role of organizational change management and it’s effect on successful ERP implementations.
To help address this burning topic, our Organizational Change Management Report outlines the various people- and organizational-related activities that organizations typically leverage throughout their ERP software initiatives. It also highlights organizational change recommendations based on our research and experience.
Here are three important questions to ask if you are a CIO, IT manager or project manager trying to decide how much to invest in an effective organizational change management strategy:
1. How big of a role will organizational change management play in your ERP implementation success?
Those who haven’t been through ERP implementations before may assume that organizational change management is a luxury rather than a necessity. However, data shows that the opposite is true. For example, the 2014 Organizational Change Management Report shows that 100% of organizations experience some sort of material operational disruption at the time of go-live, such as not being able to ship products or close the books. Nearly half of those organizations experienced disruptions that lasted more than four weeks.
The reasons for these operational disruptions typically have very little to do with the ERP software itself. Instead, it has more to do with people and processes. More specifically, 63% of the organizations in our study found the adjustments to process and organizational change to be difficult or very difficult. Given these statistics, it is clear that organizational change management is very important to project success.
2. Are you more focused on short-term or long-term implementation costs?
Because so many ERP implementation projects go over budget, many project managers are tempted to cut organizational change management activities to finish their initiatives as close to on time and on budget as possible. After all, you can touch and see the ERP software and the technical components that go along with it, but it is harder to visualize the people side of the equation.
However, those that cut critical change management activities typically find that it actually takes them more time and money to implement than if they hadn’t cut those areas of focus in the first place. Simply put, companies that experience broken business processes and confused employees at the time of go-live are going to spend exponentially more on their ERP implementations than if they had invested in organizational change management in the first place.
3. Which exact organizational change management components are important to your project?
It can be tempting to myopically view organizational change management as an exercise in end-user training that happens shortly before go-live. However, the people issues associated with ERP projects are much more complex than that. A complete organizational change management strategy is important for project managers wanting to make their projects more successful. According to the data in our report, regular status updates, focus groups and emails to employees are the top three organizational change management activities leveraged by companies during their implementations. The most effective and successful project teams also leverage change impact assessments, process training and communications, and organizational risk assessments to make their projects successful.
At the end of the day, the key question to ask yourself is: how successful do I want my ERP implementation to be? Organizational change management is the most likely determinant of success or failure, so the most effective project managers choose to invest in organizational change.
Learn more by downloading our 2014 ERP Report: Organizational Change Management.