In this article we will discuss one of the reasons most commonly cited for the failure of an Enterprise Resource Planning (ERP) project – lack of adequate Change Management. Whether you're implementing Netsuite, SAP, Infor or Sage, change management is essential to ensure a successful project.
This article will provide an overview of what Change Management is, why it is important in an Enterprise Resource Planning (ERP) program and share some experiences of Change Management to allow you to prepare for an ERP implementation.
Change Management should be considered an integral component of any project which affects people, process, or technology in an organisation. Whilst the activities that sit within Change Management can vary dependent on the type of project, Change Management in a program typically has one goal – to ensure that you successfully move from your current state to your target state of working. Change Management provides a structured approach to this transition, focusing the organization on the journey which needs to be taken. At the heart of this journey is the common denominator of every project’s success – people.
The individual elements of Change Management typically focus on; preparing your business and people for change; providing them with the rationale for change; equipping them with the knowledge of how to operate in the new world, and; monitoring and responding to feedback. Sounds simple, right?
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Whilst Change Management may sound simple, it is often overlooked or seen as a ‘tick box’ exercise. In fact, research shows that 70% of change programs fail to achieve their goals, largely due to employee resistance and/or lack of management support. When we consider this failure rate in the context of an Enterprise Resource Planning (ERP) implementation, it becomes clear how investment in Change Management from the outset, will have a significant impact on the long term success of your program.
When undertaking an Enterprise Resource Planning (ERP) program, the focus of the organization is often on the technology – what will it do, how much will it cost, how will it benefit the business, when and how quickly can it be implemented? However, these questions fail to acknowledge that technology will only benefit the business if it is set up and used by those who are responsible for, or undertake the processes it affects. All too often employees are not invested in the change and fail to adopt the new technology, or find ways around the new processes. Where this happens, the Enterprise Resource Planning (ERP) implementation will fail to drive adoption, and ultimately fail to deliver the expected benefits and objectives.
Change Management should be considered from the outset of any program, particularly one which involves technology. All too often, Change Management is considered when the program is showing signs of failure, or has failed to deliver. At this point there can be a considerable time and cost investment to get the program back on track and the trust of the people in the organization is hard to regain.
One of the first steps in ensuring that a successful Change Management approach is at the centre of an Enterprise Resource Planning (ERP) program, is the development of a clear ‘Vision for Change’. This is arguably one of the most important elements of the Change Management approach. Without this clear messaging, the narrative for the program and the many other aspects of Change Management which are formed from this ‘Vision’, will be difficult to establish.
The Vision for Change should provide the context for the program, why is it needed, what will it provide, where will it take us? The Vision should be agreed by, and unite, the key stakeholders for the program and provide the foundations of the narrative for the ERP implementation. These elements will provide the basis of understanding for those at every layer of the organisation, from leadership to team member. It will enable communications, training and other changes to be developed from one version of the truth.
Just as Change Management should be incorporated from the outset, it should also be seen as the golden thread which holds together each of the components of the program throughout its deployment. Whilst Change Management often focuses on the ‘people’ and the ‘process’, it should not be viewed as wholly distinct from the technical components of the program. Change Management activities will be built around milestones and deliverables from each of the other technical workstreams in the programme.
Change Management should have the same level of importance and scrutiny as other workstreams. The Change Management workstream should be involved in all the typical governance aspects of the program – steering committees or governance forums, change requests, risk and issue reporting etc. This ensures that the outputs expected from the workstream are fulfilled, and/or that action can be taken where needed to ensure the objectives are achieved.
One of the most popular ways to establish Change Management as a priority within an Enterprise Resource Planning (ERP) program, is to identify a senior stakeholder who is willing to act as sponsor. This will ensure the workstream is given the gravitas which is required, and provide a clear route for resolution should Change Management activities not achieve the progress expected.
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A common misconception is that of a ‘one size fits all’ when deploying Change Management in an ERP program. Whilst Change Management approaches across programs will have similar characteristics and activities, they must be tailored in order to be successful. Some of the most common considerations when defining the activities and deliverables for this workstream are likely to be; the size of the organization, the scope of the Enterprise Resource Planning (ERP) modules purchased, the range and number of colleagues within the organisation impacted by the new ERP and even the appetite for change and level of success of previous change programmes.
For example, an organisation which is used to implementing successful technology change will require less engagement, training, communications and overall support than one which has run few change programmes and has little experience of implementing change.
We have touched on how many activities within Change Management are likely to be similar, although tailored, in organizations that are implementing a new ERP. Change Management activities are often planned from the outset to meet the needs of the people within the organization. However, whilst having planned tasks and deliverables is a positive and necessary step, it should not detract from the need to step back and review the impact that Change Management activities have had as the program progresses. Change Management must be responsive to the program. This may mean increasing the number of Change Management activities that take place (for example the number of familiarisation or training sessions which are taking place on the new ERP) or increasing the scope of the activities to include additional teams or individuals who may be impacted by the new technology.
Change Management should be considered from the outset of a program, and will continue well past the implementation and go-live of the new Enterprise Resource Planning (ERP) software. The objective of successful Change Management is to ensure that the new technology is utilised, and this outcome cannot be tracked until post-implementation. Change Management activities should continue post-implementation in order to both identify and resolve any issues with user adoption.
We have previously discussed how establishing a senior stakeholder who is willing to act as a Sponsor for the Change Management workstream is key, however, a much larger pool of individuals will actually be involved in the workstream. Many organizations when approaching Change Management will seek the expertise of external consultants. For those who do not have the internal capability or experience of Change Management, or who have had challenges in successfully implementing technology programs previously, this is often a wise investment.
Despite this, a common misconception is that Change Management can be handed over in its entirety to an external organisation. The receiving organisation must be heavily involved in change management activities, and support the development of the approach to change. Any tasks and deliverables must be tailored to the organisation, and accepted by the organisation, and both of these elements are difficult to establish without heavy involvement from people who know how the organization functions and what will be accepted. Representation from individuals within the business who have influence (not necessarily those who are in ‘management’) is also a key tactic to ensure that Change Management activities are successful.
Change Management is a broad subject, and in this article we have touched on just some of the key elements. Ultimately, research and experience has shown that if you want your employees to understand, commit to, accept, and embrace changes in your organization – whether that be an Enterprise Resource Planning (ERP) implementation or other form of change, Change Management is an essential requirement.
To find out more about Enterprise Resource Planning (ERP), check out our in depth explainer.