A CHANGE MANAGEMENT STRATEGY FOR YOUR ERP PROJECT

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ContentsExecutive Summary

Introduction: Change is Easy, Transition is Hard

Effectively Managing Change: An Equation

Initiating/Sustaining Change

Core Project Areas and Kotters Eight-Stage Process

Plan Do Study Act

Integrating Kotters Steps into Your Project

Conclusion

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Executive SummarySuccessful ERP transformation projects must take many facets into consideration, in particular people, processes and technology. Most projects address the process and technology portions, but have little or no focus on the people portion. For a transformation to be successful, it is the people component that is the most critical piece in order for the transformation to be successful.In this paper are practical ways to apply current change management strategy models to thoroughly prepare for an ERP transition so that you can implement it successfully at the individual, team, and organizational levels.

Introduction: Change is Easy, Transition is HardIt isnt the changes that do you in, its the transitions. Change is not the same as transition. Change is situational: the new site, the new boss, the new team roles, and the new policy. Transition is the psychological process people go through to come to terms with the new situation. Change is external, transition is internal. William Bridges, Managing Transition Making the Most of ChangeChange management is a structured approach to transitioning individuals, teams, and organizations from a current state to a desired future state.Much has been written about change management, yet it still seems difficult to define and implement successfully. Ask ten people what it means and youll probably get ten different answers. Most of us understand that managing change is critical for successful projects, yet most project time and resources are spent on changing the technology and the processes. Plus, most change efforts fail to recognize that it is the people that are needed to bring the other two components to life. This is why change management is critical in making genuine, value-added business transformations.Addressing the people side is often an afterthought to a project, or just hoped that such changes will work out by themselves. Successful transformations must focus on all three vital aspects people, processes, technology to achieve business performance results.

SUCCESSFUL TRANSFORMATIONS MUST FOCUS ON ALL THREE VITAL ASPECTS PEOPLE, PROCESSES, TECHNOLOGY TO ACHIEVE BUSINESS PERFORMANCE RESULTS.

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Effectively Managing Change: An EquationHere is a simple analogy: managing change is like juggling three balls you start the momentum by tossing one ball into the air, followed by the second, then the third. In order to maintain the effort you have to keep each ball moving. Lose track of one ball and it drops to the floor.The ability to effectively manage change may very well be the most important skill that executives, managers and employees need to master. We continue to face accelerated, unprecedented and dynamic transformations in our personal and professional lives. Our organizations are forced by fierce competition to lead, follow, or go out of business. Global markets and technology seem to change daily, yet at the same time, and organizations are required to reduce costs, increase customer service and excel at performance.These requirements are at the heart of the necessity for and justification of ERP. An ERP system potentially touches multiple functions across offices, departments, geographic locations and job levels. Therefore, as organizations must accomplish their goals associated with such requirements, an ERP system must do its part in the same. And as it is critically important to proactively plan for changes and effectively manage change across all levels of the organization, it is equally important to proactively manage change across all organizational areas during an ERP project.Business transformations through ERP will not take place without effectively managing changes across the three key organizational areas; people, process, and technology. In many situations, the technology and process changes are relatively easy to manage. However, because people may often resist change, it is this area that must be a significant focus of your management effort.The ability to initiate or sustain change and keep the three balls in the air can be represented by the following equation: The momentum for change (C) must be greater than the momentum for the status quo (R) to get traction for the change effort.

Initiating/Sustaining Change

C>R | C=a*b*dC = Momentum for changeR = Inherent resistance to changea = Shared need felt; clear reason why status quo is no longer viableb = Shared image of desired future state; clear sense of directiond = 2 - 3 accepted practical steps from here; clear about the next actions and ownershipIf a, b, or d ceases to exist (approaches zero), then the momentum for change (product) will lessen (approach zero) and resistance will stop the change effort.Initiating and sustaining change requires continuous conversations to explore and clarify why we are changing, where we are headed, and what next steps are planned. Now, lets take a deeper look at the actions required to achieve sustainable change.

THE MOMENTUM FOR CHANGE ( C ) MUST BE GREATER THAN THE MOMENTUM FOR THE STATUS QUO ( R ) TO GET TRACTION FOR THE CHANGE EFFORT.

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Core Project Areas and Kotters Eight-Stage ProcessA pragmatic approach to ERP change management can be outlined by looking at three core areas: (A) the current state business environment; (B) the your education on industry best practices; and (C) the definition of the future state of the business environment and development of a detailed plan on how to achieve it. These core areas form the basis for effective business performance improvement. Additionally, we look at an adaptation of John Kotters Eight Stage Process of Creating Major Change, which integrates very well with these three core areas.Kotters process provides a real-world view of the numerous steps that can and should be followed when changing and transforming any organization.

A Current State. Creating a climate for change. Analysis of the current state clarifies reality and creates the necessity for change. This covers the first three steps in Kotters change model:1. Establishing a sense of urgency2. Forming a powerful guiding coalition3. Creating a vision

B Educate. Engaging and enabling the whole organization. Education develops a communications and a results-oriented strategy to get all stakeholders involved by establishing leadership. This covers steps four through six of Kotters change model:4. Communicating the vision5. Empowering others to act on the vision6. Planning for and creating short term wins

C Future State. Implementing and sustaining the change. During the future state, changes are implemented into the way the company does business. This covers the final two steps of Kotters change model:7. Consolidating improvements and producing yet more change8. Institutionalizing new approaches

KOTTERS PROCESS PROVIDES A REAL-WORLD VIEW OF THE NUMEROUS STEPS THAT CAN AND SHOULD BE FOLLOWED WHEN CHANGING AND TRANSFORMING ANY ORGANIZATION.

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While the process may look linear, the execution of these eight steps is rarely straightforward. Rather, the process is dynamic and may move in a non-sequential pattern. That is acceptable as long as all steps are included in the overall plan. Any of the steps may also be revisited during the course of a transformation. To assist in the completion of this potentially chaotic process, measurements and course adjustments are usually required throughout.

Plan Do Study ActA method to measure the success of each step or entire effort is the Plan Do Study - Act cycle. This is a systematic series of steps for learning and gaining valuable knowledge for the continual improvement of the change process. Also known as the Deming Wheel, or Deming Cycle, the concept and application was first introduced to Dr. Deming by his mentor, Walter Shewhart, of the famous Bell Laboratories in New York.1. The Plan Step: This involves identifying a goal

or purpose, formulating a theory, defining success metrics and putting a plan into action.

2. The Do Step: In this step the components of the plan are implemented.

3. The Study Step: Here, outcomes are monitored to test the validity of the plan for signs of progress and success, or problems and areas for improvement.

4. The Act Step: This step closes the cycle and integrates the learning generated by the entire process, which can be used to adjust the goal and/or change methods.

These four steps are repeated over and over as part of a never-ending cycle of continual improvement. This provides a feedback loop to assess the effectiveness of the change activities and overall progress throughout Kotters Eight Stage Process.

THIS IS A SYSTEMATIC SERIES OF STEPS FOR LEARNING AND GAINING VALUABLE KNOWLEDGE FOR THE CONTINUAL IMPROVEMENT OF THE