private equity portfoliosUnderstanding ERP Organizational Change

As 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. Sure, there are perpetual challenges in ERP implementations.  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 (ERP Critical Success Factors).

Mitigating Risks through “ERP Success Factors”

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.

The Impact of Soft Skills and Organizational Characteristics

Mitigating ERP implementation risks certainly includes understating some of the more invisible and abstract influences that are well embedded within ERP organizational change. 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.

Unveiling the Path to Success

Knowledge of ERP organizational  change research provides a path to 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.

Holistic Approach to Mitigating ERP Implementation Risks

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