ERP Organizational Change: Challenges and Disruption

Naturally inherent in ERP organizational change (and nearly by definition) exist challenges, disruption, risks, and the unexpected ((Learn more about the post go-live productivity dip here).However, the absence of significant challenges is certainly not a precursor to ERP organizational change success. That is, while crucial, success is not only about deploying mechanisms and best practices in which to proactively prevent and counter risk and challenges to begin with. Success is also about how organizations respond to risks and challenges when they do occur. Success is not just about prevention, success is also about response.

Research and anecdotal evidence suggest that even successful ERP organizational change efforts can be quite challenging “along the way”. Clearly, there are successful projects, there are projects that struggle but endure, there are projects that struggle significantly but endure, and there are cases of complete failure. However, even successful ERP organizational change projects often take on significant challenges and risks. As ERP organizational change practitioners, ERP vendors, and ERP VARs (value-added resellers), it is known unequivocally that ERP organizational change can present significant and often  “unexpected” challenges.

The evidence clearly suggests that often significant challenges are inherent in ERP organizational change. And the key is to be honest about the true realities and expectations from the onset of such an endeavor. It is not only about the precise and effective ability to prevent problems in the first place, it is also about how organizations are prepared and then respond to challenges when they do occur. (And, organizational culture has a great deal to do with how organizations respond.)

ERP Organizational Change Can Be Highly Disruptive

• “The integrated nature of ERP applications causes dramatic changes on workflow, organizational structure and on the way people do their jobs…ERP systems are not built but adopted, this involves a mix of business process re-engineering (BPR) and package customization…ERP implementation is not just a technical exercise but it is a socio-technical challenge as it poses a new set of management procedures.” (Sawah, Tharwat & Rasmy, 2013).
• Stratman and Roth (2018) note that “anecdotal accounts indicate that the realization of ERP’s potential benefits is rare.”
• “If case studies are any indication of the outcomes in ERP investment, insights already suggest that many attempts have not delivered the expected benefits, have failed completely, or will have a high probability of failure.” (Shao, Feng, & Hu, 2017)
• “The implementation of such systems is a complex process..” (El-Sobky & Hadi, 2015)
• “Installation takes between one and three years (21 months on average), with benefits starting to accrue in an average of 31 months [30, 36]. Part of this difficulty is due to the pervasiveness of the changes associated with ERP, the need for simultaneous process redesign of multiple functional areas within the firm, and the need to adapt processes to the capabilities of the software. There is also a high degree of managerial complexity of these projects” (Hitt, Wu, & Zhou, 2014)
• “However, despite the promise of a high operational and strategic impact (if a sound business process analysis is performed), it remains challenging to easily familiarize with the use of ERPs (in order to manage computerized data exchanges) and to integrate software packages within them”. (Wamba, Kamdjoug, Akter, & Carillo, 2018)

The Moral of the Story

ERP organizational change is a significant endeavor for even “successful” companies. But the complete elimination and/or absence of significant and substantial challenges are certainly not a precursor to success. This is perhaps because preventing significant and substantial challenges is often nearly impossible.  There is something else that may explain why organizations are successful despite the significant challenges. Sound, objective, and vendor-neutral research and evidence-based inquiry are telling us that organizations that realize great progress and success are not successful because they can prevent any/all significant and substantial challenges. Clearly, striving to proactively minimize or prevent challenges and mitigating risks is critical and also crucial to success.

Organizations are successful due to other factors and influences that determine how they approach, address, and respond to those potentially significant issues. Many other factors could also explain why ERP organizational change success occurs. ERP organizational change success certainly does not occur due to the prevention of substantial and significant issues alone. ERP organizational change success occurs in-part based on how the organization decides to maneuver through those challenges when they do occur.

The ERP organizational change project plan needs to include mechanisms in which to teach the honest realities and expectations inherent in ERP organization change, promote teamwork, advocate for effective risk management, endorse healthy conflict, champion proper transformational corporate culture, and support evidence-based inquiry as a tool in which to address challenges. Effective and efficient implementation methodologies and tactical project plans benefit from advocating for the prevention of challenges and mitigation of risks. Additionally, implementation methodologies and project plans also benefit from tactical mechanisms in which to advocate for how organizations may respond to challenges when they do/will occur. And this is in large part driven by organizational culture and the “people” component of the ERP organizational change triad of people, processes, and technology.

Success is not just about prevention, success is also about the response.