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Why is ERP change management so difficult?
We all know that change management is essential to creating successful ERP projects. Why is it so hard to get this right?
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9 Answers
Michael,
I love this topic. Change management is critical to the success of an ERP implementation. Understanding the impact on business processes is key to knowing how large a change it is going to be. The fact that change management isn't properly attended would seem to be the key symptom of project failure, but not the root cause. That title belongs to Fit.
The ERP does not fit the business. Not because of a poor selection. No ERP fits any business. Period. You either adapt the ways of the ERP (huge change management)or you modify the ERP to fit your business (less human change management and now mountains of technical change management). If 18+ months isn't long enough to effectively manage change, perhaps the amount of change is just too great.
As Barry said, initial change is one thing. On-going change is constant. Now a poor fitting ERP solution becomes a boat anchor around the neck of the customer.
So, do you keep handing out more tissues for a running nose or do you address the allergy that causes the symptom? If you have an ERP, even an old one, identify which processes need to improve and improve just those processes. Don't modify the code you have or replace it with something new. Don't introduce change in any area except the process that you want to improve. Properly scoped, the true stakeholders are at the design table as they value-stream map, TOC, BPM, BPR, Process Flow Diagrams or generally innovate how the process needs to be. These design sessions should be Agile and iterative. Results of the methodology du juor then need to be implemented and measured immediately. In one week or less you should be able to determine if the new process is better than the old process. Is it more accurate, more efficient, more visible or support a strategic initiative or innovate new customer value? If it does, roll it out to your full operation that is involved in that process. Rinse and repeat.
This approach limits the negative effects of change management by limiting the scope of change upfront. Who can eat an entire elephant at once anyway. Technological change is eliminated as the existing systems will still have full, real time knowledge of every data element and process they currently manage. Innovation in processes will occur outside of these systems on a continuous basis as the distance between idea and execution has been collapsed to a matter of hours.
Full Disclosure Statement: BabbleWare's solution supports every element described above with a methodology-agnostic ability to create or receive a design and have a prototype built and running within a couple of hours.
Michael,
How long have you got?!
Maybe one question is how many times does change management make the agenda of ERP implementations? Its hard not to generalise but many organisations and senior execs believe that its the ERP system that will fix all their problems and either forget or simply don't understand that the work carried out in the business is done via processes that will be:
- looking to be improved by the new ERP system;
- or in someways impacted by the new ERP system.
If organisations don't give themseleves sufficient time to deal with the impact of change on people and processes then ultimately they are doomed to failure.
The pressure of implementing a new ERP system within a set time often doesn't allow for any effective change management to be done. How many times have we heard "got 6 months to get the new system in"? All of the project teams focus goes in simply getting the system up and running.
The best advice I can give if you want to achieve good change management is to begin with fully understanding how your business processes work. Identify those processes that need to be improved and make that part of your ERP "blueprint". The more work that can be done upfront preparing for the change brought about by new ERP the greater the chance of getting the "change management" part right
Michael,
Managing change in relationship to an ERP initiative, or any enterprise-level initiative requires proficiency in several areas that many organizations lack prior to the intiative: Effective employee communications, training management, process optimization and an ROI framework.
When an ERP team is assembled, many times no one is assigned activities that will facilitate Organizational Change Management. Often, the implementing partner may not even identify the need for an OCM Agent. Too often, this role is relegated to the Project Manager.
A primary goal of OCM in this regard is to overcome the FUD (Fear, Uncertainty, Doubt) that exists within many of us and communicate the purpose of the initiative - the "Why" as well as the "Why Now?" questions. Addressing the WIIFM, or "What's In It For Me?" question also helps gain acceptance and adoption.
In addition to managing the message to ALL stakeholders, training management is a top area to nail for maximum acceptance and adoption. In 2010 I surveyed more than 100 mid-market ERP users about their recent projects and a perfect 100% indicated the "One thing they would improve" about their project would be the learning cycle. We have to realize that individuals learn in different ways and at different rates. This requires developing training curriculum that allows individuals to use different mediums and different venues to learn in ways that are most beneficial for them. The vendor can often provide Instructor-led onsite training, recorded web-based training that can be accessed from anywhere (office, conference room, cubicle, coffee shop or home), training manuals, work instruction flash cards, etc.
Of course, this is just the tip of the iceberg, but the take-away should be that OCM must be addressed as a discipline within the project much like project management.
I'm always amazed that even experienced people do not pay sufficient attention to change management at the start of a project. I think there is often a king of hopeful euphoria when many projects start.
This euphoria can eventually become denial of even the potential that something could go wrong. Perhaps it's not unlike parents and their children: "MY son would never use drugs", and so on.
Regardless of the reason, in my analysis of failed IT projects, lack of attention to the real business practicalities of business transformation is high among reasons projects fail. If the people working in the trenches don't understand the new system, then it will affect your business negatively.
It is difficult because it is "ERP" change management and not true organizational change management. Teccho-centric folks focus on technology. As a result they struggle with business transformation. To do business transformation well requires knowing business, not in a technology vacuum.
So, the only projects I have ever seen change management done well on (whether from an internal or external perspective) are the projects where the consultants AND the company core team had a business background before technology. Unfortunately with the "faster / cheaper" delivery model most of this requirement is completely ignored.
I've been working on a series around IT organization transformation. The real issue is that change management needs to start WITHIN the IT organization itself. Although written in the context of SAP (because that's what I do) the source and reference material is system agnostic and can be generalized to any ERP or large IT undertaking:
Sustained Business Value from SAP Business Software
http://www.r3now.com/sustained-business-value-from-sap-business-software/
Achieving Business Value from SAP Investment
http://www.r3now.com/achieving-business-value-from-sap-investment/
SAP Enabled Business Transformation for IT Leadership
http://www.r3now.com/sap-enabled-business-transformation-for-it-leadership/
How To Steps in the SAP Business Transformation Journey
http://www.r3now.com/how-to-steps-in-the-sap-business-transformation-journey/
While change management during ERP implementations is critical, going live with ERP is "the first day of the rest of your life", which in the ERP world, is often 15 - 20 years. As such, it is critical to also consider change management after go live. Key events include M&A activity, new product lines, new business processes, new regulations, etc. The changes that are required can be daunting, and companies should set up an ERP center of excellence, one of whose basic responsibilities is change management after go-live.
Michael,
When I read the title/question I was not sure which change management you were referring to. Two came to mind and the best and good practices that accounts for their establishment for an ERP implementation or other large scale enterprise project or program.
- Organizational Change Management
- Change Management with Configuration Control included for product or system development
Each must be accounted for, sometimes overlooked, but are essential activities that must be initiated and continued throughout an ERP Implementation project or program for success. .
Recently I presented an article on significant issues and challenges for ERP implementations that lead to trouble or failure. I am identifying several in response to the question, “Why is ERP change management so difficult? It does not have to be and as stated, “Change management is critical to the success of an ERP implementation ….” There is also mention of business process reengineering and risks management which I feel is an essential activity for project initiation and planning. Risks, communication, and security planning must be addressed by all projects and programs.
Successful large Scale ERP Projects and programs overcome the challenges of most project failures. Best practices are essential to ensure success for large scale projects and programs. The following are several proven best and good practices that contributes to an Enterprise Resource Planning (ERP) Project’s success.
- First understand the business problem(s) and what an ERP implementation is going to improve. Is an ERP solution required? Create a business case and charter that are thorough and detailed with realistic estimates for costs. Ensure that senior management is involved and committed (without that commitment the project is sure to become troubled and may fail).
- Establish a Change and Configuration Control Process in the beginning of the project or program. Include a process to expedite critical changes.
- Provides the process to address project and program changes
- Provides the method to address scope; in-scope and out-of-scope changes
- Provides formal control for the product/system throughout the product lifecycle
This is one of the main reasons that Configuration Management is not only an
essential discipline and process to set up early but it also is key to begin the
control for product/system life cycle development. (see
http://bit.ly/configurationmgt )
- Before implementing an ERP project/ program, ensure all necessary reengineering is completed. You want to be sure that obsolete applications or business processes, inaccurate and incorrect information and data are not included in the final implementation. You also want to ensure that other business processes, applications, and data are cleaned to insure inaccurate or incorrect information and data does not move into the conversion process. Remember that garbage in = garbage out.
- Educate and train the organization’s management and employees about the implementation and change for the environment. This must be a consistent and continuous communication. Also have a plan to train the “Trainer” to allow these employee-trainers to do internal training to supplement the training of the users and management. Training is required for not only using the system but for support.
- Perform risk identification and management. Create a risk management plan (see this short risk management presentation: http://bit.ly/riskmgtvid ). Use a system perspective that accounts for impact to technology, the organization, processes, and people. The implementation could be the first ERP implementation. This is a significant change to the organization, impacting other processes and applications, etc. Risk identification and management must continue from the beginning and throughout the project or program.
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I agree with Bill - there is no ERP change management. It just happens at the same time with the ERP implementation, most of the time because companies don't really have a choice (as Steve said, they adapt to the ERP, not the other way around).
But the fact that companies have to adapt to the ERP solution they decide to buy can be a good thing because it forces them to use certain processes and industry best practices which were either ignored or not applied correctly.
As for change management (with or without ERP), it's all about the mentality and the vision of the decision makers in the company. If they see how it impacts on their business and are ready to work on it, change management will be part of everything they do. If not, they will buy a software solution and hope that it will solve all of their problems.
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