Private Equity Portfolios: Mitigating ERP Organizational Change Risks

Private Equity Portfolios: Mitigating ERP Organizational Change Risks

private equity portfoliosAs noted in yesterday’s post, ERP organizational change can be extremely challenging, risky, and even result in failure. But, the good news is that it doesn’t have to be this way.

ERP implementation challenges and risks will never be fully eliminated. And, there will never be such a thing as a perfect ERP implementation. Stanciu and Tinca (2013) define a successful ERP project as one in which accomplishes stated and desired functionality, able to utilize as planned, and operational within the planned time and budget. In addition, success can be in the form of business value realized such as reduced inventory cost, improved supply chain visibility, reduced operational costs, etc. However, ERP implementation challenges and risks can be better managed and/or eliminated if an organization knows what to focus on and look for during an ERP organizational change effort.

With insight and awareness of “success factors” ERP failure risk can be mitigated. In fact, much study has been done among practitioners and in academia research looking for ERP “success models” and “critical success factors”.  Organizations need to consider evaluative learning in order to improve their ERP success and to mitigate risks. Evaluative learning is the act of considering, reflecting, and learning from the experience of others. Experienced ERP practitioner professionals and ERP researchers have identified a vast array of critical success factors in an effort to shed light on and provide mechanisms for, addressing and mitigating organizational ERP failure, risks, and challenges.

Complex factors and influences impacting ERP success allow underlying conditions to exist that create gaps and thus prevent the vision of ERP success in many organizations that are not the obvious, visible, and tangible factors. Corporate diversity, corporate culture, corporate communication, and corporate leadership are more of the soft-skills and characteristics of an organization. This as opposed to functional, systems, technical project tasks that tend to be more tangible, testable, and task-oriented. These more tangible factors tend to be easier to quantify and measure and notice.  But is often the less tangible factor that has the greatest impact on ERP success. Scholars and practitioners continue the search to find common denominators in considering all possible influences upon ERP organizational change success.

ERP research presents a common notion in suggesting that organizations that become aware of, implement, and put the appropriate emphasis on the vast array of critical success factors will be better prepared and positioned with the organizational skills needed to increase the likelihood of ERP assimilation and meeting the desired organizational goals.

The key for organizations is to dot I’s and cross t’s in terms of project management, but also be cognizant of some of these critical success factors. So, if your organization is considering implementing a new ERP solution, keep in mind some of these key factors. ERP organizational change projects is not just an IT or project management office endeavor. Success requires the entire organization to be prepared, engaged, and committed. Some examples follow. Proper vendor selection from a professional vendor neutral partner is critical; there is only one best ERP fit for each and every organization. The executive team needs to be visible and active supporters. ERP organizational change can be significant and requires a tolerance for conflicts (conflicts of interest among different functional departments are common in ERP implementations which lead to time delays, budget overages, miscommunications, and hence project failure).  Transformational leadership in which leaders are able to create a corporate culture of acceptance, willingness, and transformational mindset among the stakeholders. Strategy alignment and communication in which the organization needs to allow time and resources of the stakeholders in order to have time to strategize, plan, motivate, and manage appropriate key success factors. This is a small example of the many success factors. For more, please visit https://nestellassociates.com.

PE Portfolio ERP Organizational Change Success Factor: Mitigating Risk

PE Portfolio ERP Organizational Change Success Factor: Mitigating Risk

By Matthew V. Brown, Ph.D. and Jack G Nestell

We approach risk mitigation from the perspective of an ERP organizational change agent and stakeholder. That means that we examine an Enterprise Resource Planning (ERP) system implementation effort as an ERP project as well as organizational change project.

In order to properly mitigate risks, the organization needs to fully understand all of the real, not just perceived, risk factors that may contribute to the failure of an ERP organizational change effort. And then, there needs to exist stop-gap mechanisms that proactively identify, react to, and properly address these potential risks. This stopgap mechanism needs to be deliberately, intentionally, and purposefully designed into the ERP organizational change plan.

Every ERP organizational change project will have its own unique set of risks. ERP organizational change efforts need to be good at playing the “What if” game. From initiation to close out, the organization needs to ask themselves what if this or that goes wrong. The general idea is to try and anticipate the events and conditions that will produce negative consequences. This general idea requires that an organization know what these potential risks actually are and then they can proactively address.

At N&A, we have developed an extensive array of critical questions that we ask ourselves to uncover potential project-based risk. The way we reveal potential risks is to follow a project’s critical path keeping in mind both the [what ifs] and the [what might] questions.  We follow the critical path to discover potential breaking points, but also to measure progress in the project life cycle, partition the potentially problematic areas of focus, and adaptively assess the project implementation controls and evaluation.

Large and small ERP implementations are subject to many opportunities for failure. As ERP organizational change agents, we keep focused on anticipating and revealing risks that can impact the success of the organization. We keep one eye on our target-state and deliverables, the gap between the initial project scope (its assumptions) and the implementation progress.

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PE Portfolio ERP Success: Does Leader-Culture Fit Matter?

PE Portfolio ERP Success: Does Leader-Culture Fit Matter?

By Matthew V. Brown, Ph.D. & Jack G. Nestell

leadership cultureDoes leader-culture fit matter? The answer is yes. Transformational leadership begets transformational culture. And, transformational leadership and culture change are significant contributors to ERP organizational change success.

Many people still think that enterprise resource planning (ERP) should be executed when organizational leadership makes the decision to initiate an ERP organizational change effort and that the endeavor is primarily an Information Technology and Project Management Office activity. This is simply not the case. Organizations today may not fully understand or appreciate the challenges, risks, and high-potential for failure of large-scale ERP organizational change.  If we want to solve the problem of ERP implementation challenges and failures, which we don’t believe anyone in the practitioner field or academic field can totally avoid or deny, we first need to think differently about this complex problem. And, one of the ways we can reframe the problem is to think not only the about organizational leadership and culture distinctly, but consider the relationship between the two.

Burns, Kotrba, and Denison (2013) examine the idea of a leader-culture fit and forward the notion that organizational culture, as well as a leader’s behaviors, are the two most significant critical factors of organization’s effectiveness (Berson et al., 2008; Denison, 1984; Schein, 2010). Moreover, leadership is the critical factor and has a significant influence on shaping organizational culture (Schein, 1983). So, why might we consider that leader-culture fit influences ERP organizational change?

Nestell & Associates places a high value on learning from evaluated experience (from our experience and from the work and experience of others). And, we know one thing for sure, leadership and culture can have a significant impact on organizational change success.  Burns, Kotrba, and Denison (2013) describe that transformational leaders have predicted organizational cultural characteristics such as strategic vision, celebrating success, emphasized employee support, innovation, goal setting, and organizational culture orientations and identification that exceeds beyond some of the cultural orientations of transactional leadership (Georgada & Xenikou, 2007). (Stay tuned for future post elaborating on Transformational versus Transactional Leadership (Burns, 1978). For now, take note that very different leadership styles do exist.)

ERP organizational change is a significant transformational endeavor. Burns, Kotrba, and Denison (2013) further forward a study in which transformational culture was best predicted by transformational leadership styles (Sarros et al., 2002). In other words, transformational leadership facilitates transformational culture.

The relationship between leadership and the culture has been thoroughly supported empirically by numerous studies. An example is that to better handle times of crisis and organizational challenge, there is a need for transformational leaders who can develop an adaptive organizational culture (Uhl-Bien et al., 2007).

Nestell & Associates can assess organizational culture in an effort to effectively de-risk your ERP organizational change effort. We can essentially predict if you have the right leader-culture fit needed for achieving a successful ERP organizational change effort.

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PE Portfolio ERP Organizational Change: A Culture Roadmap

PE Portfolio ERP Organizational Change: A Culture Roadmap

By Matthew V. Brown, Ph.D. & Jack G. Nestell

erp roadmapAt Nestell & Associates, as highly experienced ERP practitioners, ERP researchers, and organizational change researchers, the significant value and impact of organizational culture on the success, or failure, of ERP organizational change projects is well understood. This is why we not only place emphasis on organizational culture within our implementation methodology, we also measure culture.

There is some great work that presents, suggests, and demonstrates the value of organizational culture specifically in the context of ERP organizational change success which would include:  Al-Mashari, 2018; Yongyi & Ying, 2005; Shao, Feng, & Hu, 2017; Ifinedo, 2016; Altamony, Tarhini, Al-Salti, Gharaibeh,& Elyas, 2016; and Stanciu & Tinca, 2013.

In a previous post, we provided a brief typology of corporate culture because not being able to distinguish the influences and perceptions associated with ACTUAL culture could lead to project errors and possible failure.

So, what can we do to better ensure ERP project success? Just like we do for assessing and evaluating legacy and new ERP systems, we can also assess the legacy culture [ACTUAL] and the new culture [VISION] culture. When assessing any firm’s culture, the assessment begins just prior to high-level project planning. The reason for this priority is that several “alignment” issues can be addressed BEFORE a project plan is conceived.

  • Alignment Pulse Issue 1.     Actual level of project urgency [priority]:
  • Alignment Pulse Issue 2.     History of change projects [learning]
  • Alignment Pulse Issue 3.     Executive level of authenticity [leading]
  • Alignment Pulse Issue 4.     Vision Culture Translations [navigating]
  • Alignment Pulse Issue 5.     Behavioral-based Roadmap [charting]

5) Behavior-oriented Roadmaps

A culture roadmap is the master plan document that helps steer a large-scale enterprise-level effort. At a minimum, this document should include:

  1. a clear explanation of the behavioral activities where change readiness will be fully articulated and demonstrated-modeled;
  2. a clear exposition of objectives (with milestones) that are observable and measurable [change readiness language use and metric composition should be fully explained];
  3. a clear delineation of role responsibilities for each objective and milestone measures.

Such a roadmap needs to be a co-created document that has employee involvement in its composition at its heart. At N&A, we insist that our clients invest in the use of this simple tool.

There will be those uncomfortable with drafting measures that have cultural metrics which means non-numerical…it is a serious challenge (and for some a matter of faith) to accept the measuring of social and culture-based outcomes. We work to convince our clients that there are robust and consistent ways to measure, interpret, and facilitate culture change.

What we do is first help the leadership team for a project plan that requires first and foremost the identification, prioritization, and definition of their most important culture outcomes. Then we co-create a problem-solving method that will clearly measure demonstrable progress and realistic success. This is where N&A differs from all of the rest, we simply know how to reshape your culture as you employ your new technology system. This is a key capability of N&A.

One of the hidden assets that is created through this process is the meta-capability of how organizational change works around here…what I like to call culture-intelligence. A well-conceived and fully utilized roadmap will outline this new capability with reference to adaptive structural changes, leadership practices, human capital development, and new forms of compensation and reward. It can also reveal potential new capabilities and asset creation.

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PE Portfolio ERP Organizational Change: Translating the Vision

PE Portfolio ERP Organizational Change: Translating the Vision

By Matthew V. Brown, Ph.D. & Jack G. Nestell

At Nestell & Associates, as highly experienced ERP practitioners, ERP researchers, and organizational change researchers, the significant value and impact of organizational culture on the success, or failure, of ERP organizational change projects is well understood. This is why we not only place emphasis on organizational culture within our implementation methodology, we also measure culture.

There is some great work that presents, suggests, and demonstrates the value of organizational culture specifically in the context of ERP organizational change success which would include:  Al-Mashari, 2018; Yongyi & Ying, 2005; Shao, Feng, & Hu, 2017; Ifinedo, 2016; Altamony, Tarhini, Al-Salti, Gharaibeh,& Elyas, 2016; and Stanciu & Tinca, 2013.

In a previous post, that kicked off this series, we provided a brief typology of corporate culture because not being able to distinguish the influences and perceptions associated with ACTUAL culture could lead to project errors and possible failure.

So, what can we do to better ensure ERP project success? Just like we do for assessing and evaluating legacy and new ERP systems, we can also assess the legacy culture [ACTUAL] and the new culture [VISION] culture. When assessing any firm’s culture, the assessment begins just prior to high-level project planning. The reason for this priority is that several “alignment” issues can be addressed before a project plan is conceived.

  • Alignment Pulse Issue 1.     Actual level of project urgency [priority]:
  • Alignment Pulse Issue 2.     History of change projects [learning]
  • Alignment Pulse Issue 3.     Executive level of authenticity [leading]
  • Alignment Pulse Issue 4.    Vision Culture Translations [navigating]
  • Alignment Pulse Issue 5.     Behavioral-based Roadmap [charting]

4. Translating the VISION Culture

Inhabiting that space between ACTUAL (what the organization is) and VISION (what the organization wants) cultures often consists of the perceived IDEAL culture idea of what an organization wishes to be and the REQUIRED culture of what is needed in order to absolutely provide the minimum acceptable value our stakeholders.

Leaders need to be aware of communicating using messages constructed within these different culture perspectives. Vision culture (and its communication) is about two things; realistic movement and commitment toward an improved culture. Vision culture is about what we have committed ourselves to become, knowing and accepting the challenges, and providing proper transformational space and support. Culture VISION realization requires deliberate and intentional tactical consideration.

We at N&A are committed to helping organizations realize their culture development objectives required for, and beyond, implementing an ERP technology. We will focus our efforts on how to realize the ROI that new ERP technology can deliver IF we properly address the positive cultural disruptions and work benefits these systems promise.

We do this by working closely with our clients’ stakeholder groups to help them translate the Vision culture into the firm’s actual culture. Some of this work can take place openly and will be facilitated by both company personnel and N&A professionals. Stay tuned to our future posts as we will be demonstrating our process in future publications.

More to come on the other alignment issues…….

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PE Portfolio ERP Organizational Change: Leader Authenticity

PE Portfolio ERP Organizational Change: Leader Authenticity

By Matthew V. Brown, Ph.D. & Jack G. Nestell

At Nestell & Associates, as highly experienced ERP practitioners, ERP researchers, and organizational change researchers, the significant value and impact of organizational culture on the success, or failure, of ERP organizational change projects is well understood. This is why we not only place emphasis on organizational culture within our implementation methodology, we also measure culture.

There is some great work that presents, suggests, and demonstrates the value of organizational culture specifically in the context of ERP organizational change success which would include:  Al-Mashari, 2018; Yongyi & Ying, 2005; Shao, Feng, & Hu, 2017; Ifinedo, 2016; Altamony, Tarhini, Al-Salti, Gharaibeh,& Elyas, 2016; and Stanciu & Tinca, 2013.

In a previous post, that kicked off this series, we provided a brief typology of corporate culture because not being able to distinguish the influences and perceptions associated with ACTUAL culture could lead to project errors and possible failure.

So, what can we do to better ensure ERP project success? Just like we do for assessing and evaluating legacy and new ERP systems, we can also assess the legacy culture [ACTUAL] and the new culture [VISION] culture. When assessing any firm’s culture, the assessment begins just prior to high-level project planning. The reason for this priority is that several “alignment” issues can be addressed before a project plan is conceived.

  • Alignment Pulse Issue 1.     Actual level of project urgency [priority]:
  • Alignment Pulse Issue 2.     History of change projects [learning]
  • Alignment Pulse Issue 3.    Executive level of authenticity [leading]
  • Alignment Pulse Issue 4.     Behavioral-based Roadmap [charting]
  • Alignment Pulse Issue 5.     Vision Culture Translations [navigating]

Alignment Pulse Issue 3: Executive level of authenticity [leading]

We mentioned earlier about how a sense of urgency is a necessary success factor. It is also a baseline critical change readiness metric.

Another critical metric is executive modeling or what we at N&A call, Leader-authenticity. Leader authenticity is a daily demonstration of the VISION culture which means the top-leaders most know [implicitly and explicitly] how to translate planned change into visible, tangible behaviors. These behaviors need to reflect through word and DEED how the culture that they have committed to developing will indeed manifest.

Whatever the new leadership behaviors ARE…they are the new culture. This is where executives must collaborate and hold each other scrupulously accountable (Dawson). One way to think about how to do this is to make decisions and communications transparent with an emphasis on their connection] to the collective vision culture values and goals. This is no easy task, but we know that if the leadership does not embrace the effort in a strong collective way, or perhaps fails to fully articulate and model the new culture, then failure will come quickly and painfully. Authority devolves swiftly when an organization perceives its leaders are not authentic and act in overtly hypocritical ways.

At N&A, and what sets us apart, is our attention [and skill] devoted to serving the executive cadre in their attempt to model authenticity. We have assembled some of the most experienced culture development professionals in the ERP organizational change arena.

More to come on the other alignment issues.Nestell Funnel img