Overcoming ERP Change Management Challenges – Part 2

ERP implementations continue to cause major headaches for companies worldwide – including, but not limited to, the change management requirements that many organizations gloss over. We continue our conversation about this with two of our experts. Ronan O’Shea, Protiviti’s Global ERP Solutions Leader, has 25 years’ experience in IT risk management, program management and systems strategy, design, build and implementation. Kathie Topel, Associate Director, is a visionary leader with more than 20 years in business transformation, innovative strategy, organizational change management, process design and efficiency and technology solutions. Part 1 of this discussion introduced some of the biggest challenges companies face in ERP implementation. Here, we drill down a little deeper.

In our earlier conversation, you listed design as a top priority for ERP transformation projects. If most ERP systems come pre-configured, isn’t implementation simply a matter of fine-tuning?

Ronan: That is a common misconception, and it gets back to what I said about ERP transformation being about more than technology.

A lot of people believe that if they buy an ERP system pre-designed for a particular industry, the implementation should simply be a matter of training their people to use the new system. Unfortunately, that’s not true. Design choices are not just configuration choices. The most important design choices should be aligned with company business processes and management’s goals for how they want those processes to evolve. It’s a different conversation. How does the business want to serve its customers? What kind of data analysis needs to be performed?

That’s why it is important that the transformation team include a broad cross-section of interests, including people who are primarily concerned with financial performance and competition, people who are actually performing the targeted business processes, communications people, and people who are going to have to train employees on how to use the system. For a successful transformation, the design team needs to be able to hand off a good, clear and future-proof design to the technical procurement and configuration team – ensuring that the technology will be tailored to the need, and not the other way around.

What are some of the hallmarks of good governance and change management?

Ronan: When people think about program governance, too often they’re just thinking about the green, yellow and red PowerPoint status reports that take a lot of time to prepare and often don’t paint a very realistic picture because they are blame-based and have been massaged to avoid embarrassing anyone. Governance should be open, fair and transparent. Good governance, for me, is more solutions-based and starts with questions like: “When I get into the program office in the morning, what are the things I need to worry about today? What are my critical risks? What do I need to resolve? Who’s going to drive that resolution?”

When the project is driven solely by the technical integration team, when anything goes wrong, there is bound to be finger pointing. By spreading accountability across the organization, there is a greater sense of shared responsibility and a feeling of “we’re all in this together.”

What are the critical elements of the change management process?

Kathie: To keep it simple, it may be best to think in terms of five steps. The first is to identify transformation needs and align them with specific organizational goals. Step two is document mapping – figuring out what kind of data the organization has and how that data is used in various business processes. System design and development, which many companies mistakenly consider to be the first step, is actually the third, or middle step, followed by step 4, implementation and operationalization, and step 5, feedback and improvement.

Change management really needs to start with that first step, to set the direction and get the engagement of the entire organization, which is going to be needed to achieve true success of the implementation. To get that engagement, transformation goals are going to have to be pragmatic and realistic. People on the front lines need to see themselves as part of the big picture and understand how any changes are going to affect their day-to-day routine. It really does need to be that granular.

There is no such thing as “over-communication.” Too often companies will design a beautiful vision, announce it once and think everyone is on board. That’s not how people assimilate change. New information is absorbed gradually and progressively over time. Proven theory says that it takes seven points of contact for an idea to stick in a listener’s mind. It can take hundreds of times before that idea is operationalized to the point of proficiency.

The answer to the old parenting question, “How many times do I have to tell you…?” is: “As many times as it takes.” It is impossible to know how many times it will take up front. That’s why it is important to have a strong communication and feedback loop so that the change management team is listening, monitoring change activities against the desired outcomes, celebrating successes, and proving additional communication and training as needed.

What are the primary leadership roles that companies should define on their change management teams?

Ronan: In keeping with Kathie’s admonition to overcommunicate, I’ll reiterate: Design, Governance, Data and Change.

We’ve already addressed the importance of design. The most important governance role in the project is the program manager. That person should really be, if not an employee, then certainly an agent of the company – not a consulting partner. It’s important, as well, that the program manager, while not an expert in everything, is someone who is an expert in procuring the right resources for the right job.

It’s not practical to pull all of these experts away from their operational responsibilities to work on the project full time, so it makes sense to designate, say, one representative from finance, one from operations, and maybe one executive from IT, and make it a priority for them to be available, in a consulting capacity, to the project team over the nine to 12 months the project is likely to require. Those three individuals are critical. Other resources will be required to weigh in on critical aspects, such as change, reporting and testing. There is a lot of work to go around.

Kathie: When it comes to change, there should be more than one person in charge. A change enablement team, selected and operational right out of the gate, is probably the best approach. This team should include people from a variety of roles inside the company, to ensure the detailed elements are taken into consideration, such as organizational readiness, training, communication and the ongoing feedback loop.

There should be a separate team of designated change champions – dynamic individuals, also from inside the company who understand what’s going on in the business – to support the delivery and communication of the change enablement process. These are the face-to-face communicators, and also the listeners, who provide a critical link between project managers and the users who will ultimately determine the project’s success or failure.

How would a company go about selecting a consultant, or consultants, to assist with the process, and what would be an appropriate workflow to assign to an ERP consultant?

Ronan: Choosing the right consultant is an important choice and has even bigger influence on your project that the choice of the system itself. So, thinking back to the four aspects that are critical to the success of the project – design, governance, data and change – companies must ensure that the consulting partner’s people has it in their DNA to take care of those concerns – that the methodology they follow addresses those concerns, that the people they hire are enthusiastic about meeting those concerns, and that they practice good governance. So, I ‘d recommend that companies take time to assess the methodology and the people to ensure that the partner they hire will be watching over every aspect of the project, not just the technical one.

Any parting advice?

Ronan: Design, governance, data and change. That’s foremost. Then I’d say, take ownership. Don’t just hire a system integrator and expect them to design a miracle cure. It is important for companies to do the hard work of planning and design and not try to delegate that to a solution provider. Unless a company has put in the time and effort to pave the road and place the signposts pointing the way ahead of time, the chances of an ERP implementation falling short of expectations are probably around 70%.

Kathie: Don’t underestimate the impact the ERP implementation is going to have on the business and people. Be sure to engage everyone in the transformation early on, and be transparent from the beginning. It is so important to have everyone involved and communicating from the outset.

For more information on ERP transformation, check out Protiviti’s publications on the topic from selecting a system to identifying success factors. They are available at Protiviti.com under Technology Consulting and ERP Solutions.

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