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ERP Organizational Change Success: Address The Real Issues

by Dr. Jack G. Nestell and Dr. Justin Goldston

The Objective

Organizational Change Address the Real IssuesEffective gap analysis is crucial to successful ERP organizational change. ERP organizational change is often impacted by inherent influences that may directly and significantly determine the outcome of the organizational change endeavor. Moreover, there may exist influences that are misunderstood, unacknowledged, or perceived incorrectly. Throughout the entire ERP organizational change endeavor, sound research suggests that it is critical to address the real and root of issues and not to be misguided by inaccurately perceived influences that may prohibit or prevent success. To do that, sometimes you must scratch below the surface. ERP organizational change success requires that an organization addresses the real influences that may have a significant impact on success versus the potential inaccurate interpretation of influences. Therefore, an organizational objective should be to 1) be cognizant and reflective of perceived influences and 2) have an approach founded in principle that helps guide gap analysis and is able to root out the real influences that may be prohibiting successful transformation.

Real Influences versus Perceived Influences

Often in ERP organizational change endeavors those issues, or influences, that you can easily observe and track often get the most attention when things go wrong, and sometimes rightfully so. For example, no one would argue just how essential the actual project plan tasks or ERP system functionality is. These are two critical aspects of any ERP organizational change project. These example influences are more concrete, tangible, easily measurable, and highly visible.  Project task execution and actual ERP functionality are no doubts critical components of success. However, properly identifying root influences requires a fair, objective, and accurate assessment. At times, the perceived influences (or one’s interpretation and understanding of influences) can be misleading, a sacrificial lamb, or scapegoat influences while the real influences go unidentified and unaddressed.  For example, the actual question would be what are the real influences that have been prohibiting project management tasks from being completed on time or properly executed? There are many reasons that go beyond project management techniques and tactics that could be prohibiting progress. And, for example, why is it exactly that the ERP functionality appears to be falling short (assuming a thorough and proper selection process). Are you sure the functionality is falling short? How do you know and prove that? The fact is, there are many possible success factors, or influences, required for a successful ERP organizational change effort. During an ERP organizational change effort, many of these influences may often remain hidden below the surface. And often, these success factors, or lack thereof, are either rooted in knowledge, motivation, and/or organizational influences.

A Proper Gap Analysis Framework is Key

Research suggests that often the reason for significant ERP organizational change challenges is that the proper influences are not understood and the approach to identify real influences is not rooted in sound principle but rather opinion and anecdotal experience only. Note that opinion and anecdotal experience may not apply well across varying organizational contexts. This helps to explain in part why each ERP organizational change project has challenges and lessons learned; each organizational context and experience is different. In practice, you do not often hear organizations consider and identify influences utilizing a model founded in sound principles and research. An example of one such model is that of the Clark and Estes (2008) Gap Analytic Conceptual Framework. This is a helpful model easily applicable to practice. Much more to come on this topic in upcoming articles in which we will elaborate further.  But as a matter of introduction, let us take a closer look at the premise behind the model. Again, the Clark and Estes framework is an example of a highly relevant and useful gap analytic approach that offers additional insight into the field, and practice, of ERP organizational change.

The Clark and Estes Gap Analysis Conceptual Framework

The goal of the Clark and Estes (2008) gap analysis conceptual framework is to utilize and apply sound performance research within an organization to create cost-beneficial performance results. Clark and Estes (2008) provide a methodological approach to appraising stakeholder performance goals and identifying gaps. Once a goal is identified, the framework forms the basis for recommendation by examining knowledge, motivation, and organizational influences that may be impacting these performance gaps (Clark & Estes, 2008).  Let us take a closer look at knowledge, motivation, and organizational influences.

Stakeholder Knowledge Influences

During ERP organizational change, it is important to examine knowledge influences to determine if the stakeholders know how to achieve a performance objective. Thoroughly understanding stakeholder knowledge is pertinent to improving the effectiveness of ERP organizational change. Knowledge is a critical influence because the fact is that different forms of knowledge facilitate organizational performance and improvement. Stakeholders can often be unaware of their own lack of knowledge and skills deficits, and they must become aware of knowledge factors such that they may fully analyze and assess problems in order to accomplish performance goals (Clark & Estes, 2008). Four types of knowledge influences exist (Krathwohl, 2002): A) factual, B) conceptual, C) procedural, and D) metacognitive (Krathwohl, 2002). Declarative factual knowledge is knowledge about the “what” such as facts and meaning of terms (Aguinis & Kraiger, 2009).  Factual knowledge refers to the basic elements that need to be understood within a discipline such as knowledge of terminology and it is discrete, isolated content elements (Krathwohl, 2002).  Conceptual knowledge is a more complex knowledge requiring organized forms of knowledge (Krathwohl, 2002).  For example, conceptual knowledge would include the understanding of interrelationships between the wide array of influences within the larger organizational structure that enable them to function together as well as the knowledge of principles, generalizations, and theories that help explain and address those influences (Krathwohl,2002). Conceptual knowledge would include an understanding of the existence and interplay of the vast array of success factor influences. Procedural knowledge is knowing how to do something such as methods of inquiry, and criteria for using skills, algorithms, techniques, required steps, and methods (Krathwohl, 2002). Moreover, procedural knowledge describes how to do something such as the needed methods, techniques, and knowing when to use certain procedures (Krathwohl, 2002). Lastly, metacognitive knowledge is the awareness of one’s own cognition and would include strategic knowledge, contextual and conditional knowledge, and self-knowledge (Krathwohl, 2002).

Knowledge related influences facilitate organizational performance and improvement and thus play a significant role in improving the effectiveness of ERP organizational change.

Stakeholder Motivational Influences

This is often underestimated and not a well-considered ERP organizational change influence. Linder (2019) described and forwarded the notion that motivation has been defined in many ways (Kreitner, 1995; Buford, Bedeian, & Lindner, 1995; Higgins, 1994; Bedeian, 1993). Motivation can be defined as that inner desire that steers and propels people to accomplish personal and organizational goals (Linder, 2019). An individual’s choice to reflect on goal achievement, the desire to accomplish the goal, and the mental effort to accomplish the goal are examples of motivational influences (Clark & Estes, 2008). Rueda (2011) describes motivational concepts such as self-efficacy, attributions, values, and goals that can be considered when analyzing the performance gap. Organizations would benefit from the examination of influences that could enhance learning and performance using research-based principles and strategies relating to motivation theory specifically. Clark and Estes (2008) describe knowledge as what one knows and how one does things while motivation initiates and keeps one engaged. Clark and Estes (2008) describe motivation as consisting of three indexes: active choice, persistence, and mental effort. The active choice is where the intention is replaced by action, persistence is where one continues amongst distractions, and mental effort is where one works smarter and develops novel ideas and solutions (Clark & Estes, 2008). Motivation is needed because it energizes and guides behavior towards successful performance outcomes (Sansone & Harackiewicz, 2000).

Understanding stakeholder motivation can be a tool to improve stakeholder learning, development, and performance as it relates to ERP organizational change. 

Stakeholder Organizational Influences

Work processes, resources, and workplace culture are examples of organizational influences that may impact stakeholder performance (Clark & Estes, 2008). Denison (1984) states that the primary and fundamental identity of an organization is based on its organizational culture: the set of values, beliefs, and behavior patterns. Gallimore and Goldenberg (2001) state that an organization’s culture can be examined based on the notion of cultural settings and cultural models. Tangible factors such as employees, tasks, and social context are examples of cultural settings. Cultural practices and shared mental schema within an organization are considered cultural models (Gallimore & Goldenberg, 2001). Ke and Wei (2008) explain the general way in which people think and therefore behave defines the organizational culture. Krumbholz and Maiden (2000) describe how corporate culture can be divided into three layers. The outer layer is organizational (setting) values such as documented strategies, missions, and objectives (Krumbholz & Maiden, 2000). The problems and challenges that the employees verbally discuss make up the middle layer (Krumbholz & Maiden, 2000). Lastly, the implicit assumptions of the organizational life in which employees find it difficult to explain comprise the inner level of cultural models (Krumbholz & Maiden, 2000).  Corporate culture is an elaborate system of norms and values that evolve over time and is the collective binding that governs the values, ideals, and beliefs shared within the organization (Ke & Wei, 2008). Organizational culture and organizational related influences are necessary to understand because as described by Denison, Haaland, and Goelzer (2003), organizational culture characteristics, which can be measured and monitored, may have a predictable impact on the effectiveness of organizational change. Ke and Wei (2008) described that when within organizations there exist varying and mixed cultures of leadership, employees will have different ideals, perceptions, and understandings of organizational change efforts, which has a direct impact on change acceptance from the employees. Annamalai and Ramayah (2013) established that the organizational culture regulates the relationship between CSFs and assimilation success of the ERP projects. Annamalai and Ramayah (2013) further state that organizational culture must highlight the value of common goals. The phenomenon at individual, group, organization, and society levels determine the use of ERP systems (Howcroft, Newell, & Wagner, 2004). Howcroft, Newell, and Wagner (2004) further mention that being aware of and utilizing a context-aware perspective has to begin with the awareness and notion that an ERP is not just a physical but also a social, and organizational culture artifact.

Organizational culture can influence perceptions and behaviors and it is a key concept to note in terms of how organizational culture can impact change and success.

The Organization Should Constantly be Asking Three Important Questions
  1. What is the stakeholder knowledge related to the organizational goal of achieving successful ERP implementation and assimilation? ERP organizational change is a unique business event. Just as in life in general, all ERP organizational change efforts share a truism: 1) stakeholders know what they know, 2) stakeholders know what they don’t know, or 3) stakeholders don’t know what they don’t know when it comes to ERP organizational change. Assessing, understanding, and reflecting on current organizational knowledge is critical. Then, developing an effective and efficient plan for proper training, evaluation, and applying the knowledge is just as critical.
  2. What is the stakeholder motivation related to the organizational goal of achieving successful ERP implementation and assimilation? The consequences of negative motivational influences could be significant in terms of not meeting objectives but also in the loss of time, profit, and effort.
  3. What are the organizational influences related to the organizational goal of achieving successful ERP implementation and assimilation? That is, the greater the understanding of what is required for significant ERP organizational change efforts, the greater the likelihood that the organizational culture will be groomed in terms of readiness and long term establishment to support significant ERP organizational change.

Organizational cultures consist of multiple stakeholder groups all with disparate degrees and a wide array of ERP organizational change knowledge and motivation. These stakeholder groups also have varying degrees of impact upon, and from, organizational influences. It is not uncommon that each stakeholder group has different ideas, expectations, and definitions of success and understanding of what is required for a successful ERP organizational change. And then, when you combine that with all of the individual personalities and characters with significant degrees of ERP conceptual and functional understanding, motivational interest, ownership and commitment levels, learning styles, and varying organizational change tolerance…requires an objective approach to be able to sort out perceived from real influences most impacting your ERP organizational change success.

A deliberate approach utilizing a framework founded in principle will help ensure the accuracy of these key influences that best advocate for, or prohibit, ERP organizational change success.

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