We all know that ERP implementations can be very challenging and are likely to cost more than expected, take longer than expected, or fail to deliver expected business benefits. In addition, we know that business process and organizational change management are some of the more difficult aspects of an ERP implementation. We’ve heard the anecdotal stories and examples through our experience, but data supporting these hypotheses is few and far between.
In the latest installment of our 2013 ERP Report released today, we reveal some interesting data as it relates to the business process and organizational change management components of ERP implementations. For example, of the nearly 200 organizations that participated in the study, 65% said that the business process and organizational change components of their implementations were either difficult or very difficult, while only 45% said the same of the technical aspects of their implementations. Given this delta, we now have a quantitative understanding of just how difficult these “softer” parts of an implementation can be, especially when compared to the relatively “easy” aspects of technical configuration and implementation of ERP software.
In addition to measuring the magnitude of difficulty that most organizations face, our new ERP business process and organizational change management report highlights a number of additional interesting points. For example:
A majority of organizations let processes drive the software rather than letting ERP “best practices” drive the business processes. We’ve preached this for quite some time, but it is interesting to see data that supports our view that a company needs to define and reengineer their business processes first, rather than prescribing to the ERP vendors’ view that their software best practices will dictate how you run your business. Although it’s a fairly even mix, slightly more companies take a more process-driven approach to their ERP implementations rather than letting the software drive their business. In addition, our experience and research suggests that not only are slightly more companies taking this approach, but the companies that do are more likely to succeed in their implementations.
Go-live can be a painful time for many organizations. Although we focus much of our consulting and thought leadership on the concept of implementing on time and on budget while optimizing business benefits, one important pitfall to optimizing business benefits is the immediate go-live date. Our study shows that 41% of organizations experience some sort of material operational disruption at the time of go-live, such as not being able to ship product or close the books. In addition, and as outlined in the chart below, 53% of organizations that experienced such a disruption experienced this difficulty for over a month – with a full 10% feeling the pain for over six months. To add insult to injury, most of these disruptions could have been avoided by – you guessed it – dedicating more attention to business process reengineering and organizational change management.
Neglecting business processes and organizational change management will actually increase the cost and duration of your ERP implementation. The problem with organizational change management is that you can’t see it, feel it or touch it. ERP software, on the other hand, can be configured, tested, demonstrated and “seen” by everyone in the organization. So when times get tough, budgets get tight and something needs to get cut from scope, the business process and organizational change components of the project are often the casualties. However, the technical components that most project teams tend to focus on are least likely to correlate to success or failure. For example, participants in our study cited “resistance to change” as the number one difficulty related to their implementations. In addition, organizational issues were cited as the number one cause for project delays. Clearly, companies that invest more in the organizational change management and business process management components of their ERP implementations are actually saving time and money.
These are just a few of the findings from the extensive survey we analyzed on the topic. The bottom line is that business process reengineering and organizational change management are critical components of an effective ERP project, but companies spend too little time and money on these important activities. Understanding the significance of these activities will help ensure that your organization develops and executes an ERP implementation plan that is designed to succeed.
Learn more by downloading our 2013 ERP Report: Organizational Change and Business Process Management and attending our free webinar tomorrow reviewing the report.