Driving Change Management After Go Live v0.5

ACMP Africa Regional Conference

Johannesburg

November 2010

Shane Hodgson

Organisational Change Management Principal

Business Transformation Services

SAP Emerging Markets

"They think it's all over..."

Managing organisational

change after an ERP

implementation

What is an Enterprise System?

Some Key Issues in Implementing an Enterprise System

Change Challenges of ERP Implementations

Major Organisational Challenges after Go-live

So What Can We Do?

Summary

Agenda

What Is an ERP system?

An ERP system can be defined as:

―A packaged business software system that lets an organisation automate and integrate the

majority of its business processes, share common data and practices across the enterprise

and produce and access information in a real-time environment. The ultimate goal of an

ERP system is that information must only be entered once‖ (in Marnewick and

Labuschagne, 2005)

This means that an ERP system is a high-end solution featuring integration of information

technology and business applications. ERP seeks to streamline and integrate operational

processes and information flows in the organization to integrate the resources. The whole is

greater than the sum of its parts and each implementation is unique and is designed to

correspond to the implementer's various business processes.

© SAP 2010 / Page 3

© 2010 SAP AG. All rights reserved. / Page 4

Some Key Issues in Implementing an

Enterprise System

1. Determine Your Primary ERP Implementation Focus - there are two primary ways in

which an ERP system can be installed in your company; you make your company fit

the software or you make the software fit your existing processes. These two

methods provide the end-point markers or goal posts and all implementations fall

somewhere between them. They present the classic options you have available, either

you do a business process re-engineering project or you do a software re-engineering

project

2. Because an ERP system has a single database or a single instance of data, a full

process chain of dependencies is developed. Every organizational function becomes

dependent on the process steps before and after it no matter what department or area is

responsible (Kallinikos, 2004).

3. Because of these dependencies, a data error is no longer contained in a single isolated

system as in times past. Each data error, or each problem that occurs has both

upstream and downstream consequences and the corrections cannot be made in

isolation. Improper configuration or system design can have huge impacts on the

amount of effort to correct the data and to maintain the system in an ongoing fashion

(Sia and Soh, 2002).

Change Challenges of ERP Implementations

© SAP 2010 / Page 5

To successfully land and embed massive projects like ERP implementations we need to be

thinking about transformational change; about engaging employees in both solution design

and execution and about instilling a belief in the rightness of adopting continuous

improvement. There are key things we can and should do in designing our change

management programmes that will greatly increase our chance of success, and this

presentation provides a framework for planning these activities.


Change challenges of ERP Implementations

(2)

Most companies implementing ERP systems do not fully execute plans for the period after ―go

live‖, and only a small fraction of companies plan for ongoing training, change management and

knowledge management. Despite spending tens to hundreds of millions of rand on enterprise

system projects, companies usually insist on planning for the wedding but not for married life. As

a result they often end up with low user adoption of the new systems, low business value

achieved and low satisfaction in general.

To achieve a true return on an investment in an enterprise system, companies need to change

the way they think about change. Moving data onto an integrated system; reinforcing a culture

of measurement and analysis; and thinking in end to end processes instead of in departmental

silos all create new and unusual demands on our employees, structures and resources.


Change challenges of ERP Implementations

(3)

According to Fister Gale (2002), ERP is more than just a new software system, it is a culture

change.

ERP systems break down all functional barriers within an organisation and users are required to

be multi-skilled and multi-managed. This means that it is often difficult to implement an ERP

system in an organisation with strict hierarchical structures and line reporting. The culture of the

organisation must first be changed for the ERP system to be successful.

Most importantly, implementing an ERP system is NOT an IT project; it is a business

transformation. That’s because many companies, especially those that have expanded via

mergers and acquisitions, are organized along lines of business, each operating as a separate

entity with its own people, technologies and ways of working.

It is critical for executives in these situations to identify and create a core group of activities that

can be shared across all divisions—things like recruiting, human resources, customer service

and procurement—to eliminate wasteful duplication of effort (Segars and Chatterjee, 2010). An

ERP system can enable the transformation of these core activities.


Surely if we manage change during the

implementation it will be OK after Go-Live?

Example - How is Change Managed During an

SAP Implementation?

© SAP 2010 / Page 9

Final

Preparation

4

Realisation3

Blueprint2

Go Live

& Support

5

Project Preparation1

Co-ordination of Go

Live Support Plan

Handover to Training and Authorisation

Conduct Post

Implementation

Review

Sponsorship Support and Involvement in Project activities

Go Live Support Strategy & Plan

Role Mapping Process Execution

Action Plan & Communication of Impact to impacted stakeholders

Change Readiness Assessments, Reporting and

Recommendations

Integration Testing Sign-Off Milestone CelebrationOC

M S

TR

AT

EG

Y, P

LA

N A

ND

EX

EC

UT

ION

Rollout Communication Plan

A. OCM Strategy

and Plan Execute, Manage, Report Progress & Review where applicable

Management of Stakeholder ExpectationsB. Stakeholder

Management

C. Leadership &

Sponsorship

Alignment

D. Change

Agents

Mobilisation

E. Stream

Communication

F. Stream

Impact Analysis

G. User Role

Mapping

H. Change

Readiness

Assessments

I. Go Live

Support

J. Milestone

Celebration

Change Agents Support in OCM activities

Analysis of Go Live Support requirements

Impact Analysis

Approach

Identify Change Agents

Identify requirements

and review previous

results

Blueprint Kick-off/ Sign-off Milestone Celebration

Identify Communication

RequirementsCommunication Strategy

& Plan

Change Agents

Mobilisation

Detailed Organisational

Impact Analysis

Identify Change Requirements & develop OCM

Strategy and Plan

Change Readiness

Assessment Strategy

Role Mapping Approach

and Plan

Identify Stakeholder

Groups and NeedsDevelop Stakeholder Plan

Identify Sponsors and

Sponsorship Roles

Analyse current

structure and user base

Go Live Celebration


Major Organisational Challenges after Go-live

“When sorrows come, they come not single spies

But in battalions” (Shakespeare’s Hamlet, 1602)

50-60% of application functionality is not used

30% of performance problems are caused by user behavior

75% of system and application errors are never reported

25% of reported performance problems are not real

45% of refresher training is not needed. (KNOA Customer Research)

We also have:

People still using parallel systems

Loss of ERP knowledge and implementation project management skills

Unclear ownership of processes and data

Unstructured and disconnected training

Misaligned expectations about benefits


It’s About the People.

― As respondents make clear, the biggest challenge before and after implementation is not the

technology – only 19 percent of respondents cite technology as a prime challenge in the post-

implementation period. Rather, as 51 percent of the respondents said, the biggest issues are

people-related‖ (Deloitte, 1998)

ERP implementation success is found in modifying the organisational culture. Achieving

business benefit requires the organisation to experiment with new process models, and this

requires an orientation towards risk taking, rather than risk avoidance. Each of these aspects

requires effective leadership in the management structure, and appropriate involvement and

empowerment of the system users (Stewart et al, 2000)

Image: jscreationzs /

FreeDigitalPhotos.net


So What Can We Do?

Economist John Keynes once noted in The General Theory of Employment, Interest and Money,

“Worldly wisdom teaches that it is better for reputation to fail conventionally than to

succeed unconventionally.”

Nevertheless – here are my ―Secret Seven‖ tips for managing change after an implementation.

Review the Implementation

Capture and Embed Knowledge From the Implementation

Reinforce Cultural Changes

Track and Manage User Experience and Adoption

Manage and Develop User Competence

Upgrade, Expand and Grow the Solution

Revisit the Strategy


Review the Implementation

Post-Implementation Review

1. Most Change Management methodologies include a ―Post-Implementation

Review‖(PIR) step.

2. Five major components should be in a PIR

1. Review of the original business case and assumptions to see how these matched up to

reality

2. Measure performance pre- and post- go-live to establish changes and benchmarks

3. Identify Training Gaps

4. Identify Business Process Improvement Opportunities

5. Estimate the degree of adherence to project methodology

And...


Capture and Embed Knowledge from the

Implementation

1) Make Use of Narratives and Learning Histories

―Instead of trying to measure the impossible... we propose the use of narratives as the means of

disseminating knowledge, which ought to lead to improvements and enhanced action during the

implementation and usage of enterprise systems ―(Hedman and Borrell, 2004)

Narration is increasingly seen as the privileged mechanism for constructing and expressing

one’s own personal stories and organizations are viewed as narrative artefacts (Cortese, 2005;

Klein, 2005). Therefore, the use of stories for helping organizations learn and transfer tacit

knowledge is gaining widespread favour among both practitioners and academics (Cortese,

2005; Royrvik and Bygdas, 2002; Sole and Wilson, 2002).

Learning histories can be appropriate in many different contexts. Stories are particularly well

suited to capturing the dynamic and complex nature of Organisational Learning and knowledge

transfer (Kleiner and Roth, 1997a). Moreover, since any change project can be seen as a

learning opportunity, the learning history approach might be employed to help reflect upon,

assess and evaluate any type of organizational change initiative.


Capture and Embed Knowledge from the

Implementation (2)

2) Establish an ERP Centre of Excellence

The ERP ―Centre of Excellence‖ seeks to integrate application support staff and support

technology into the business for competitive advantage. ERP Centres of Excellence are

proactive and try to find ways to apply technology and resources to value propositions and

competitive pressures in an ongoing manner. Centres of Excellence actively look for value

opportunities (White, 2006) by:

1. Aligning business owners with IT

2. Identifying value-added and non-value-added processes

3. Benchmarking results against initial ROI projections

4. Simplifying ERP instances

5. Developing infrastructure and enhancement standards and procedures

6. Committing to ongoing training and knowledge transfer

7. Institutionalizing change management and project management


Reinforce Cultural Changes

―The institution will revert to its pre-change operating structure if cultural issues are inadequately

addressed‖ (Schein, 1992)

Establish a Continuous Improvement Culture

The key to a successful continuous improvement culture is the management infrastructure that

effectively translates strategic agendas into continuous improvement initiatives aimed at

maximizing value and results whilst directly linked to profits and loss through effective

management and tracking of results (Aruleswaran s.d.)

Embedding the concept of continuous improvement into the organisation’s culture requires

developing ―...strategies to cope with organizational change and pass along the strategies to

new members, settings, corporate values, artifacts and technology‖ (Leidner and Kayworth,

2006)

Establish a Process Ownership Culture

A ―process owner‖ is responsible for ensuring all the processes which affect performance are

responsibly developed and designed , using methods which aid collective involvement and

disciplined thinking. These are the major, cross-functional processes that deliver value to

customers and instilling the concept of ―ownership‖ of these as part of the real management

structure is critically important for gaining true value from ERP implementations.


Track and Manage User Experience and

Adoption

“If users do not, or cannot, effectively utilize applications, then projects fail, so end-user

performance and satisfaction are critical. This requires monitoring and measuring the

end-user experience using this insight to target continuous improvement

projects.“(Gartner, 2008)

We need to understand the degree to which users have adopted the software and are using it.

We can do this by measuring the live performance of the system and the real errors and delays,

whether they are application errors, user errors or performance issues (using tracking software

from companies such as KNOA www.knoa.com ).

Identify the technology barriers to end-user performance, such as slow response times, quality problems and cumbersome user interfaces

Identify which employees are not using the right transactions and reports to optimize their performance

Target training program for maximum effectiveness

Identify and Resolve end-user issues more rapidly

We can also survey the users to capture those errors not related to either system performance

or user training (e.g. those related to acceptance of the solution or to lack of proper change

management). Repeated surveying of the same population is the most accurate and reliable

and we can do this using software such as Mirrorwave http://www.mirrorwave.com/#seq1

http://www.knoa.com/

http://www.mirrorwave.com/


Manage and Develop User Competence

―At the user level then, there are two distinct forms of learning that appear to be taking place

– learning how to use the system and learning how to improve the system ... Both of these

learning modes have to be in place before users can exploit the full benefits of the system

and identify how to improve operational and financial performance‖ (Kennerley and Neeley,

2001).

If training does not cover why each task is important and how every transaction is part of a

larger process, then the users are less likely to use the system correctly or consistently

(Fister Gale, 2002).

So we need to ensure that users:

•Learn how to use the system – by experimenting with system capabilities.

•Learn how to improve the system – by requesting new reports and data.


Upgrade, Expand and Grow the Solution – or,

“As Soon As you’re Done, Start Another One”

Specific findings indicate that ERP-adopting firms, which initiate early enhancements in the form

of either add-ons or upgrades, may enjoy superior differential financial performance in

comparison to other ERP-adopting firms’ differential performance (Nicolau and Battacharya,

2006)

Early changes, irrespective of their form, represent firms’ ability to respond rapidly to

organizational needs for ERP transformation

Most of the value adding occurs in ongoing activities that closely follow developments in the

construction, implementation and use of information systems. These results also provide

empirical support for Nicolaou’s (2004b) qualitative findings that post-implementation factors are

very significant for ERP-adopting firms’ ability to realize positive performance outcomes.


Review the Strategy (1)

Although choosing and implementing an ERP system can be seen as an articulation of strategy,

the dialectic between the system and the strategy does not stop at Go-Live.

Instead, the process of alignment between the enterprise system and the organisational

elements will continue to unfold and take shape through successive post-implementation

phases of the system’s life-cycle (Markus et al. 2000).

We also know that ―Successful ERP implementation develops new cross-functional knowledge,

capabilities and competence for the organization‖ (Wan, Shan and Huang, 2001).

And we also know that turbulent markets are better served by emergent strategies than by

deliberate ones – however, implementing centralised control systems like ERP can tend to

predispose companies to thinking in terms of deliberate strategy. ERP implementation in

organizations tend to increase standardization, specialization and formalization (Sharma,

Sharma and Krishna, 2008)



So – implementing an ERP system opens up a new world of strategic possibilities.

Sharma and Sarkar (2007) found that managers were getting freed from mundane activities with

CRM implementation in an organization; and this freed time was used in doing more analysis

and engaging the organization in participative management.

Labovitz and Rosansky (1997) suggest that traditional, hierarchical organizational structures are

designed to break up managerial tasks into pieces: departments and divisions. This

segmentation makes it difficult to integrate the organisation's strategy, business processes and

systems into a cohesive working whole. The organisational structure actually becomes a barrier

to change and improved performance.

So – finally – how do we use an ERP system to increase flexibility? And how do we realign our

strategy towards that?



Emergent strategies are those strategies that have developed as part of a "pattern in a stream

of actions" and are divorced from any preconceived plan (Mintzberg, 1987; Hamel & Prahalad,

2005). This strategy is the ability of the organisation to be responsive to the environment in

order to maintain its competitive position. Bonnet and Yip (2009) refer to strategic agility, it is the

ability an organisation has to constantly, "sense, assess and react to market conditions". They

suggest that in today's turbulent markets strategic agility is necessary rather than the idea of

sustainable competitive advantage.

An Emergent strategy should focus on ―...broad corporate intent, rather than fixed goals‖ and

should both inform and be informed by ―...the application of well defined and broadly understood

business models‖ (Gardner and Ash, 2003)

SAP’s view is that advantage will be achieved through flexibly enabling the business process

lifecycle by leveraging components and subsystems such as Business Rules, Business Activity

Monitoring and Business Process Management. These are all technologies whose express

purpose is to support emergent behaviour.


In Summary

Go-live is not the end of the change process, but only the

beginning.

As users grow in experience and confidence, and as the

organisation becomes more comfortable with real-time data and

cross-functional knowledge, we have the chance to grow our

original project-based efforts into a profound business

transformation.

© 2010 SAP AG. All rights reserved. / Page 24© SAP 2007 / Page 24

Questions ? Please contact:

Dr. Shane Hodgson

Organisational Change Management Principal

SAP Emerging Markets

SAP Business Park

1 Woodmead Drive

Woodmead 2148

South Africa

Phone : +27 11 235 6075

Mobile: +27 7947 84082

Email: [email protected]

mailto:[email protected]

Driving Change Management After Go Live v0.5

Documents

change readiness

manage user

user performance

change challenges

embed knowledge

business processes

functional

fister gale