Monday, October 8, 2012

ERP Change Management - Advancing the Discussion

The Light Is Better Over Here!
The more things change the more they remain the same.

A decade ago I was a partner with Deloitte with major responsibility in the region for ERP Change Management.  When I left Deloitte I shifted my change focus to areas such as: employee engagement, customer loyalty, and innovation.

Because of my Deloitte experience I was recently called in to give my insights on an ERP implementation.  The question was: “what risks are on the horizon that we’re not prepared for?”  Wow, what a surprise! 

Basically I found that nothing has changed in the world of ERP Change Management.  We’ve polished the discussion but we haven’t advanced it.  Let me explain.

ERP Change Management is aimed at two functions: Communications and Training.  The underlying assumptions are logical and rational: “all we need to do is inform and prepare People for the new technology.”  This is exactly the way we saw the world 10 years ago.

The problem 10 years ago is that ERP implementations were generally perceived to fail.  The failure rate was often touted to be around 70% based on metrics such as: ROI, timeline, cost, and disruption to the business.

As I reviewed recent literature on ERP’s I found three things:
  1. The failure rate is still perceived to be high
  2. The systems integrators claim the failure rate to be much lower
  3. “People” are still cited as the main reason for ERP implementation failure. 

Ok, so other than the rationalization of failure by systems integrators, nothing has changed in 10 years.  What’s going on here?

Firstly, let’s be kind to systems integrators.  In a sense they are right.  You could argue that 100% of ERP implementations are successful.  Even when we accept the rule of 2X (ERP’s take twice as long and twice as much budget as planned) - ultimately we’re talking about the technological merging of software and business processes.  Ultimately there are sufficient time and resources allocated to “tic and tie” things together so that most software functions work well enough to claim benefits for the business.

So even though technology and process improvement overspend to gain limited business benefits, why is it that PEOPLE RESISTANCE takes the rap?  Why don’t those damn people just do what needs to be done?  Why doesn’t Change Management do its job?

Well there are some answers to these questions.  Basically I think that the systems integrators need to see Change Management as an ally in implementation rather than a convenient scapegoat.  They need to respect the dynamics of changing People in addition to the mechanics of informing them.

Systems integrators typically view Change Management as a subordinate task rather than a value added activity.  The typical implementation process puts the systems integrator under constant resource pressure to overcome the limitations of their software and ability of their consultants.  Relief is always found in the same place: Change Management – where resources are cut back and the work focuses on mechanical issues to explain to People:
  1. the new business process, and 
  2. how to do their job using the technology 

I’m not downplaying the need for this work.  I am saying that we’ve been looking under this lamppost for years; yet ERP failures are still blamed on People.  How long do we need to keep looking here while expecting a different result?  Isn’t it time to look under a different lamppost?

I went back into the literature to see if others have had new ideas over the past 10 years.  The answer is “kind of.”  Three to five years ago there was some incredibly insightful research done – generally in Canadian universities.  For reasons I don't understand the research ended so we really haven’t benefited from the work.  I like the research because it fits in with my global experience in engaging employees in organizational transformation.

Basically this research tells us what we intuitively understand:

ERP implementations dramatically alter “infopolitics” and “infoculture” in the organization.

In other words, information (data) has political power and cultural value.  This power and value has deep implications for People at work.

On the power side let’s be boldly clear: ERP’s are usually implemented as a power grab by management.  The huge expenditures on ERP’s are justified because of the huge benefits that will flow to the company by centralizing data.  The power of information is drawn from the catacombs of the organization into the hands of management.

The benefit to People in this grab for power is always explained as “it’ll make your job easier” - easier yes; but not necessarily more valuable to them.  In fact "easier" is often interpreted as “gone!” 

For People the ERP represents a lose of control.  Their As Is state changes in the To Be.  It goes from 3R’s to CAT:

Rites, Rituals, Relations -> Consistency, Accountability, Transparency

People use the power of information to built value into their jobs.  In the As Is state they use the dysfunction of data and information as a cultural bargaining chip.  Information lets them be heroic and lean forward to serve their customers.  The chaos around unclean, distributed data let’s People detach from the accountability sought by the business.  ERP’s take the value of drudgery out of the As Is work – they make work visible and efficient.  That's why People say:
  • the system doesn’t understand 
  • my clients aren’t being served 
  • the old world was better
  • I thought management knew what it was doing – apparently not.
ERP Change Management won’t be successful until it addresses the power and value of information in the transition from AS Is-to-To Be.  How do we do this?
  1. Recognize the issue: 
    • Study it, document it, map it, communicate it
  2. Equip managers to handle the issue: 
    • Show them how to discuss the issue with their teams
  3. Replace the issue: 
    • Identify and implement higher order work with higher order value
Systems integrators tend to see People like they see systems: logical, rational, literal, and sequential.  Unfortunately the human condition has not reached this level of perfection.  Humans are still driven by: emotions, impressions, beliefs, and desires. 

Treating People like systems doesn’t make them act like systems.  People have an indomitable spirit that makes them act like People.  Until Change Management treats employees like People their resistance will continue to be cited as the #1 source of ERP implementation failure.

Will we move the ERP Change Management needle in the next decade or just continue to look harder under the same lamppost?

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