A recent webinar conducted here at Ultra focused on organizational change management for ERP projects. The webinar featured our approach to organizational change management for ERP within the preparation phases and transition to a new ERP system. In addition, we were joined by ArcherPoint, a Microsoft Dynamics Partner, to deliver their philosophy and practical methods on putting change management into practice during an ERP implementation.
Here we will review the topics delivered during that webinar.
Three Vital Aspects of Organizational Change Management for ERP
We first presented the three vital aspects of organizational change management for ERP, specifically the three areas that change during an ERP project: technology, processes and people. Ultra has gone through hundreds of ERP selection and implementation projects, and we see it is common for companies to account for and plan around the changes needed in technology and business processes. This is reasonable since most ERP project preparation time and resources are spent on changing and adapting to new technology and, in turn, preparing for how processes are affected.
However, effective organizational change management for ERP, as we define and practice at Ultra, is a structured approach to transitioning individuals, teams, and organizations from a current state to a desired future state. Because of this approach, it is with intent that ‘People’ are placed at the bottom of the pyramid. In organizational change management for ERP, people do not come last. On the contrary, it is the people that are needed to bring life to technology and processes, and those will succeed only by way of how you manage the transition of your people.
Three Elements to Overcome Resistance: An Equation for Change Management
With a simple analogy, managing change is like juggling three balls; we see that maintaining momentum and thereby the entire effort depends on keeping each ball moving. An ERP system will touch multiple functions across offices, departments, jobs, and even geographic locations. Invariably, you will run into resistance during your project. Like juggling, it’s not just starting a change management effort, but being able to sustain it and keep your momentum that is the key to the entire effort.
The ability to sustain change management can be represented by this equation:
C > R | C=a*b*d
The momentum for change (C) must be greater than the inherent resistance (R) to get traction for the change effort. Momentum (C) is a product of three things:
- a = a shared need; a clear reason why the status quo is no longer viable. “Why we’re doing this.”
- b = a shared view of the desired future state; clear sense of direction. “Where we’re going and what’s it going to look like when we get there.”
- d = 2 – 3 accepted practical steps from here; clear about the next actions and ownership. “What’s going to happen next.”
If a, b, or d ceases to exist (approaches zero), then the momentum for change (product) will lessen (approach zero) and resistance will stop the change effort. Initiating and sustaining your change management effort requires continuous communication about why you are changing, where you are headed, and what are and who owns your next steps.
Three Core Areas for Planning Organizational Change Management for ERP
Our pragmatic approach to organizational change management for ERP is made up of eight steps divided into three core areas. The eight steps we have adapted from John Kotter’s “Eight Stage Process of Creating Major Change”, whereas the three core areas – current state, education, future state – align with the phases of our Business Process Improvement (BPI) services. Our deep experience with guiding manufacturing and distribution companies through a project shows that organizational change management for ERP must be planned and conducted in unison with business process improvement.
|Current State||Education||Future State|
|1. Establish a sense of urgency|
2. Form a powerful guiding coalition
3. Create a vision
|4. Communicate the vision|
5. Empower others to act on the vision
6. Plan for and create short term wins
|7. Consolidate improvements and produce more change|
8. Institutionalize new approaches
Each of these eight steps – how they are defined and what is expected – are discussed within the webinar.
ArcherPoint: Practical Steps to In-Project Change Management
Our co-presenters from ArcherPoint began with the principle that implementing a new ERP system is done to improve business results. Yet the perception within an organization is often that there will be a loss or change of job roles. This can bring about the fear of “How will this affect me?”
One of the important things to do first as an organization is to relay the honest message of what is bringing on this change and what the result will be for the individual. Ask:
- Will people be reassigned to different job areas?
- Will they be given an opportunity to explore new roles within the company?
- Are we helping them work more efficiently so we can focus on other exciting business areas?
Process is at the heart of Organizational Change Management for ERP
Keeping stakeholders engaged in the project requires a formal process where stakeholders communicate and document requirements as they see them, and know the acceptance criteria. Those who are directly impacted should be directly involved in testing and sign-off, so they can see how the process change affects their day-to-day work.
- Communicate and document the requirement.
- Get sign off and approval from the appropriate stakeholders (in some organizations where previous projects have resulted in a ‘skewed view’ of success, this may mean going down to a deeper level to get sign off on the requirement).
- Involve the most directly impacted level possible in testing and sign off – these are the people who will be using the tool and they deserve to have a say in how it’s used. If you don’t feel they deserve that, they won’t own the process going forward.
- When it comes time for end-to-end testing, make the users the owners of collecting data, testing and reporting back. Remember ERP is a corporate project, not an IT project.
- Being negative just for the sake of being negative can be toxic, but being negative because there is a genuine project concern can be beneficial to the project. It’s a difficult balancing act to acknowledge the negativity while being sure that everything is valid.
Collaboration Tools Are Essential
Technology can help make your change more palatable to your project team and gives visibility to everyone what is going on, and what is coming. Project management teams, working with proven collaborative project management tools, work best when they all have access to the same information in real time. Working off of Excel spreadsheets, for example, will invariably lead to your project team losing sight of the overall goal for the project and start working on things with a lower priority.
Summary: Webinar and White Paper Resources
Successful ERP transformations must focus on all three vital aspects – people, processes, technology – to achieve business performance results. Be concerned about how the work force will react to a new ERP system. For a transformation to be successful, the people component is the most critical piece for project success.
You can request and access this webinar, “Organizational Change Management: The Keystone to ERP Project Success” through Ultra’s On-Demand Webinars page, along with a variety of other webinar topics.
Our related white paper, “A Change Management Strategy for Your ERP Project” is available through our ERP White Papers page.