Organizational Change Management For Global ERP Implementations | How To Manage International Change
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To be sure of success, implementation parties need to overcome technical, organizational and cultural challenges. It is of the utmost importance that adequate effort is spent on building the template. In most cases a global template is built and then deployed in one country, to be then followed by several parallel deployments. This ensures that the template is of good quality and is usable in practice before the rollout on a large scale in multiple countries. This is because poor design decisions in defining the template and insufficient testing can result in a lot of additional effort and costs as the deployment takes place. Therefore, the technical solution requires a well thought-out target operating model, effective master data management across the organization and planning for the dependencies with regard to interfaces.
In terms of organizational change, strong governance, decision-making and change management activities make the difference between a successful ERP program and a failure. Commitment at all levels of the organization can ensure that the defined project milestones are met, and the much feared delays we are rather accustomed to hear about in most ERP implementation projects are avoided.
When it comes to global ERP deployment, organizations have a choice between two main approaches that differ with regard to the degree of flexibility offered, the associated risks and costs. The first approach, using a predefined template containing target operation (TOM) and application models as well as project management and change management toolkits, is a common practice as it is regarded that this reduces implementation costs and standardizes business processes across business units. The second approach offers more flexibility to account for diversified business processes across geographies and autonomous local entities, where rolling out a rigid template can be highly risky. In this case, companies might opt for more flexible template rollout approaches, in which the template can be adjusted based on the additional requirements. The two approaches are introduced below.
In some cases, organizations aim at achieving a transformation towards a harmonized set of processes by implementing an ERP system. However, an ERP implementation often has to go in parallel with a transformation of the organization. In this respect, a serious and committed approach to change management is essential.
A clear vision and strong governance from the outset of the global program is necessary to ensure that all stakeholders know exactly what is expected of them and are committed to play their part. The leadership of the project as well as the organization itself also need to be aware that changes will need to be dealt with as they arise. Decisions need to be made at the right level and with the right stakeholder involvement, to make sure they are propagated through the organization.
Our observation is that companies where the local sites act as independent entities experience problems in governing the original template. In cases where the governance on controlling the need of change requests is weak, local member firms/business units might submit redundant amount of cases for change (demand), with central providing the role of a pure supplier. Typically a greater balance is expected with more central push of the Global Template as part of an agreed global business case.
ERP implementations, especially those on a global scale, bring about transformational changes affecting all aspects of an organization and its way of working. Therefore, change management cannot be left as an afterthought of the ERP implementation, but needs to work alongside project management in a leading role during the project. When doing a template rollout, the experiences gained and tools and materials developed in one rollout can be used and improved upon in the following ones. The KPMG Global Behavioural Change Management Methodology shown in Figure 2, provides a basis which can be expanded and customized to the needs of a specific client. The main aspects of change management are Analysis, Engagement and Delivery.
In order to achieve the benefits of a Global ERP system, Sustainable Change Management needs to be set in motion during the preparation phase and be a driving force during the entire ERP programme. This is achieved in close collaboration between the organization and the (external) change management party, where each is responsible for specific aspects of the change management process. Throughout the ERP programme, change management needs to ensure that organizations, leadership and employees are:
A key element in the KPMG Global Behavioural change management framework is communication: at all levels of the organization and at all stages of the project. Transparent and structured communication lines need to be established within the regular and project organization. This is achieved by defining a communication plan to provide timely and consistent information to the right levels within the organization.
The above named factors are crucial for on-premise implementations as well as cloud ERP implementations. When it comes to cloud implementations however, there are other factors that require special consideration including the design of the target operating model, the deployment method and change management approach.
The nature of cloud implementations requires a fine-tuned approach in terms of program management of the rollout. To be more specific, cloud technologies are relatively new and typically, the ERP vendors adopt an approach to release new features incrementally over time instead of a big-bang development approach. This will have consequences for any cloud implementation project, meaning that the project plan should incorporate the periodical upgrades of the cloud system. Ideally, organizations will want to avoid a go-live during the upgrade for a stable environment. The suggestion by the ERP vendors for the initial implementation is to typically plan a go-live date after a few weeks of a periodical upgrade so that latest fixes and new features have been applied to the updated release.
Medium to large size corporations have usually settled IT organizations where they manage their own network, data-center, development of customizations to serve the local business requirements and maintenance activities. Switching to ERP cloud systems means bringing the costs of operations down but this at the expense of independent infrastructure management, non-standard ERP functionalities and onsite maintenance. This change in the IT organization is likely to create disruption and thus resistance within the IT organization as well as among the users.
This requires a proactive change management approach, meaning the local entities should be informed from the onset of the project addressing the global and local benefits of moving to the cloud. The communication should also inform the local organization how the governance structure within the global organization will look like including the outsourcing model of maintaining the application and the infrastructure.
As discussed above, the training strategy has an important role in preparing the users for the implementation based on the role-based needs. As well as traditional ERP implementations, this is also a crucial aspect of the change management. What differentiates cloud ERP implementations from the on-premise implementations, however, is the concurrent upgrade nature of the cloud implementation. In other words, cloud vendors often follow an agile approach releasing the new features, meaning there will be incremental improvements over time. This also requires special attention and effort, not only during the go-live but also in the post implementation period. The ideal training approach in this case is to train the users on a rolling basis as the new features are released instead of training every new functionality at once. This will also make the change and user adoption process smoother.
Communication is just one part of organizational change management (OCM). As a whole, change management encompasses a variety of activities that focus on the people side of change, which is especially important in a global ERP implementation.
The people at the helm of the project should have an influential leadership role within your organization. Not only does this ensure that you can secure funding and C-suite support for the effort, but it also builds trust within your departments. This can help facilitate change management and make the transition easier for everyone.
If you're just beginning to implement change management on a project, it's important to remember that for many people participating, change management is a foreign concept. The effective application of change management principles and tools is itself a change for them. Here's how the ADKAR Model can help.
Maybe you're working with a newly promoted senior leader who has participated in changes but never fulfilled the role of a sponsor. Perhaps some of your project team members are well versed in project management methodologies and tools but have not been exposed to change management. Or maybe the functional managers brought onto the change management team to share insights and expertise from their particular areas have no understanding of change management concepts or tools.
Any change takes place one individual at a time. Change also takes place sequentially as each individual moves through the phases of the ADKAR Model. The questions, talking points and actions below highlight how you can address the need to apply effective change management in your organization at each stage of the ADKAR Model.
Asking your teams to apply change management first requires making the need for change management concrete. When someone is asked to change the way they do things (i.e., apply change management on your next project), the first response is usually, "Why?"
Desire is typically one of the most difficult phases because it requires individuals to make their own decision. You want to make a compelling case for adopting change management and build on the Awareness created earlier. 781b155fdc