How to have Enterprise Resource Planning (ERP) Success: Change Management without a Techno Centric Attitude!
Question…… If you had to obtain open heart surgery, would you hire the best surgeon you could afford or the cheapest one you could find? If you are like most people, when it comes to your heart, you are going to hire the best surgeon you can afford. This same principle should apply to your Enterprise Resource Planning (ERP) solution, because it is the heart of your organization. Now if you don’t think this is true, have your ERP system go down for a day or two and watch your business come to a grinding halt, even with business continuance policies and procedures defined. Why? Because your business partners are also expecting to receive computer generated information from your organization via electronic computer interfaces.
Now, once you’ve hired this top surgeon based upon his expertise and references, would you then presume to tell him how to perform the operation? Of course not, yet so many of my clients do. Let me make you successful by allowing me to do, what you are paying me to do. I’ve used these two analogies affectively and with great success for many years at most of my executive briefings.
I’ve been involved in change management both domestically and internationally since 1984. In fact, while working for JD Edwards early in my career, I worked on the first international implementation of the solution for the city of Zwolle Netherlands. That was many years ago, but the basic premise has not really changed with time, but it has been greatly refined. Having a Program / Project Manager with excellent change management skills is essential to a successful project.
Quick Story……… I was parachuted into Lagos Nigeria to rescue a stalled JD Edwards (JDE) implementation for Mobil Oil. After performing a 30-day Solution Assessment, I met with the C-Level executives. The CFO pointedly asked me why Mobil was having difficulty implementing the JDE solution. He stated that JDE was used in thousands of customers around the world and outside of a few systems that were intrinsic to oil production, they performed the same tasks as all the other companies. (A/R, A/P, GL, etc.) I advised him that he was 100% correct. The issues was not with JDE or the business process, but with his people. I further went on to explain that because a Change Management methodology was not in place, scope creep and modification requests were rampant. Once change management was implemented, along with a business case requirement for all modifications, the implementation went smoothly. Specifically, the business process owner requesting a modification needed to justify how the enhancement would benefit Mobil Oil by enabling them to make more money. The enhancement request matrix went from 300 action items to a final of 27. I’ve used this approach affectively with all of my clients to minimize the time and cost associated system enhancements and you should use it too.
The efficiency of ERP has been questioned due to its failure to deliver the expected results as recorded over the years. The main reason behind this failure is considered to be the technology itself, but one fails to realize that the major challenge in this matter lies in people and the processes.
Change management is a strategic, holistic approach incorporating project cost and time, technical specifications, hardware and software configuration and their desired outputs on the one hand, and desired human performance and behavior on the other, including measurements of system adoption and process efficiencies.
What I do as a change management consultant is convince financially-driven organizations to focus on the human aspect of their investment first. I explain that history and experience urge that leading the change initiative as a technological exercise alone is a strategic error. I says that technology should be viewed as an enabler of a people owned business solution, not a driver.
Many top level executives forget to consider the end users mind set. For them, there is no direct benefit to implementing a new ERP solution. A lot of them are resistant to change because it means more work, or being made redundant. Upper management wants to make informed decisions quickly. For this, they need real-time integrated solutions with more data. Many end users have told me, “Whether I work on the old system for 8-hours per day or the new one, I still make the same amount of money.” Therefore, people are the key and you must incentivize them accordingly. Over the years, I come up with a number of incentive packages for my customer’s end users and you would be surprised that it doesn’t take much more than recognition and a small token of appreciation.
Without change management, ERP systems are often under-utilized, stuck at an administrative level, failing to effectively convert the legacy systems into an integrated and useful business tool. As change management begins to bear fruit, utilization of IT becomes more useful to the whole business entity.
Most ERP projects change a significant chunk of a company’s backbone. It's not unusual that a project replaces the systems that have been used for half of a company's back-office transactions - and it may affect as much as 90% of them. What occurs as a consequence of this change is not just a major technical shift but also discernible change in business processes, culture, learning and operational environment.
While ERP requires a carefully considered understanding of the concept of integration and an ability to think in process rather than functional terms, middle management, often the driver of the ERP implementation tends to be traditionally functional in its approach. In recent years there is an increasing trend to get change management involved in pre-sales at the sponsorship level mostly to assure solid commitment to the human component of the implementation.
Executives responsible for ever-tightening IT budgets are increasingly sitting up and noticing that if the people employing the ERP application don't fully understand what it is or how it works, and if you don't have someone who can change attitudes so that the organization understands and supports the consolidation of people, processes and technology, then your project will ultimately fail.
I’ve also notices that fundamentally, people prepare for and engage themselves to change by being involved in the process itself. From the outset of the initiative during the planning of the implementation, providing for real opportunities to voice their ideas and feelings about the issues at hand. I never tell a client or end user what to do, I make suggestions or ask questions to get them involved and to guide them. For example, I might say, “have you ever thought about doing it this way?” While at the same time I provide them with an example. They become engaged, get involved in the solution and ultimately think it was their idea in the first place. (Win/Win) If this process is not provided for, there will be a disproportionate amount of post-implementation work to review the project philosophies and process design, and a reactive attempt to convince an entrenched and defensive workforce that the new way of working is actually better. Being taught a new [business] 'language' after the fact will invariably make the user feel like a foreigner in his own land.
The proof of this can be witnessed in real examples; a technical implementation of a full SAP suite, without change management, projected to cost $20 million and take a year to implement, actually ended up costing $60 million. After four years, it is still regarded as unsuccessful.
Yet in another situation, another company using some change management from the initial stages of the project was found to deliver under budget, on time and with more functionality implemented than originally planned.
Clearly there are scope differences, but the results speak about what is possible without change management. It is imperative that the process follows a people-based cause and effect logic of engaging people first, agreeing the new process second, and applying the technology as the final step. Business executives and IT change managers should ask themselves whether users can grasp and manipulate the new way of working, and the technology that supports it. They need to empower people throughout their organization to become informed and competent facilitators of integrated business processes.
Dwight Mitchell, PMP, OCP, OCS is the President and Founder of Mitchell & Associates, a leading service provider of J.D. Edwards Cloud, On-Premise, Infrastructure and Management Consulting solutions. The company is also a Platinum Level Partner in the Oracle Partner Network.