ERP and Organisational Change Management.
ERP and Organisational Change Management
Victoria University
Abstract
Change has turn into an unending event and business process re-engineering has turn out to be a prerequisite for continued existence of organizations as we approach the 21st century. As participants in this ever-changing operational environment, we must be ground-breaking in managing change as it affects both our professional and persona lives. One of the innovative ways to manage change in the implementation of an enterprise resource planning (ERP) system is to adopt a comprehensive change management methodologies. The purpose of this paper is to describe how the change management is crucial to ERP implementation and to illustrate how the methodology can be used to implement successful change.
INTRODUCTION
Although most organizations have come to realize the benefits of using testing procedures and tools during an ERP implementation, many companies recognize the need for change-management support in their projects. IT organizations need solid support for a number of critical procedures that change-management practices provide, including version control to manage the large number of modifications made throughout a project, audit trails to keep well-documented records of those modifications, process and workflow control to define, coordinate, and control the steps within a project and issue tracking to keep all project members informed of changes and problems that develop. Identifying, tracking, assessing the impact of and migrating changes in Enterprise Resource Planning is a significant challenge. Whether organizations are developing Customizations, building extensions or upgrading to a new release, it is time-consuming to manage changes while safeguarding the stability of the systems. Changes also frustrate one of the most valuable business resources. Developers would rather be creating new application features for the business, not re-doing the old ones. The objectives of this paper comes from the brief that the Change management is essential to ERP implementation and describes the strategies that have been adapted by the companies in an attempt to implement successful change.
CHANGE MANAGEMENT
The first and most obvious definition of "change management" is that the term refers to the task of managing change. The first meaning of managing change refers to the making of changes in a planned and managed or systematic fashion (Ricky ,1990) . The aim is to more effectively implement new methods and systems in an ongoing organization. The changes to be managed lie within and are controlled by the organization. However, these internal changes might have been triggered by events originating outside the organization, in what is usually termed "the environment." Hence, the second meaning of managing change, namely, the response to changes over which the organization exercises little or no control (e.g., legislation, social and political upheaval, the actions of competitors, shifting economic tides and currents, and so on).Change is every where, change is inevitable, and that dealing successfully with change is critical (Ricky ,1990) . Communications-technology spectrum, corporate managers are introducing new efficiencies. All people in the organizations are concerned and involved with change irrespective of the small scale or large scale organizations, such as change or strategy with subsequent changes in structure and operations or change of version of software.
Causes of Change
Forces for change within an organization are frequently the result of some external force. It is also certain that organizations that do not respond to triggers such as increasing competition, new legislation or the expectations of customers will soon decline and may cease to exist. However, in addition to bringing about change in the internal environment, organizational personnel can, to some extent, influence factors external to the organization. For instance, to follow on with the example of government policy towards higher education, the setting up of government committee to consider the shape and future of higher education gives an opportunity for managers of universities and other interested organizations to lobby committee members, politicians, the media and others and thus influence the committee's findings on the future and form of their organizations (Barbara,1997). This process is shown in Figure 1.1 it is an example of the use of the control model concept to depict the inputs to and out puts from an organizational process.
INPUTS OUTPUTS
HIGHER Ideas Lobbying MPs POLITICAL
EDUCATION Willingness Proposals to committee ENVIRONMENT
SECTOR to lobby Publicity through media
HE Goals Feedback from outputs to modify inputs
* Increased resources
* Recognition of importance
of the sector
* Expansion of the sector
Figure 1.1:Control model of a process for influencing government policy towards higher education
( Source : Barbara 1997,p.24)
In this case,it illustrates how information on the effects of the outputs is fed back to be compared against the goals of the process owners . The results of this comparison are then used to modify the inputs to the process which in turn change the outputs to bring them more in line with the achievements of ...
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* Increased resources
* Recognition of importance
of the sector
* Expansion of the sector
Figure 1.1:Control model of a process for influencing government policy towards higher education
( Source : Barbara 1997,p.24)
In this case,it illustrates how information on the effects of the outputs is fed back to be compared against the goals of the process owners . The results of this comparison are then used to modify the inputs to the process which in turn change the outputs to bring them more in line with the achievements of the goals.
Literature Analysis
According to the views of Pettigrew and Whipp(1993) change may be constant but it is not always the same. A preliminary point for considering the nature of change experienced by organizations is Grundy's three 'varieties of change' (Grundy, 1993), as shown in Figure1.2. Grundy states that many managers perceive change as a homogeneous concept, while others describe change as being primarily the enemy of stability. The first of the main types of change Grundy defines as 'smooth incremental change'. Smooth incremental change is change which evolves slowly in a systematic and predictable way. The second variety of change Grundy terms 'bumpy incremental change'. This is characterized by periods of relative tranquility punctuated by acceleration in the pace of change. He likens the 'bumps' to 'the movement of continental land masses where the fault enables periodic readjustments to occur without cataclysmic effect'(Grundy, 1993, p.24). He says that the triggers for this type of change are likely to include those from both the external and internal environments and which are perceived as 'overload'. Grundy's third variety of change is 'discontinuous change', which he defines as, 'change which is marked by rapid shifts in either strategy, structure or culture, or in all three'(Grundy, 1993, p.26). The opportunities offered by the development of the Internet are most likely to lead to forms of discontinuous change in many organizations. However, not all instances of discontinuous change are linked to technological innovations.
Humans are thought of as operating in a kind of field of various forces, and human behaviour is seen as the product of those forces.
Equilibrium
Facilitating Restraining
Forces Forces
Figure 1.2: Force Field analysis ( Source: Connor and Lake 1994,p.104.)
Management scholars have since applied this field concept to problem-solving, decision-making, and change-management analysis (Connor and Lake,1994). As fig 1.2 indicates, the concept is that a change situation involves moving from a current state to a desired state. The force-field view of change management assumes that most situations are held in equilibrium by two sets of forces: those that facilitate movement to a new situation and those that restrain such movement. Under this condition the organization will maintain the status. When forces in one direction exceed those in one opposite one, the organization will move in the direction of the greater forces. If the facilitating forces for change exceed the restraining forces those against change, then change will likely occur. The force-field concept is useful because it suggests that identifying and understanding facilitating and restraining forces can help answer the question of how best to go about managing change.
CHANGE MANAGEMENT AND ERP
ERP Applications perform some of the most critical business functions within companies around the globe. Change-management development practices and software help organizations manage the evolution of applications throughout the life cycle. IT departments need support for documenting, managing, and implementing application changes across heterogeneous systems, especially as ERP solutions start maturing. This will be even more important for companies that evolve their ERP systems into platforms for future application development and system integration. Currently, SAP, Oracle, PeopleSoft and many other companies are introducing internal change-management support within their ERP systems.
The importance of change-management goes beyond application development. It also empowers IT personnel to roll back to a previous version if there are problems with upgrades. Change Management services, those dealing with the human and organizational change associated with an ERP implementation, play a key role in the success of a project. Change management practice, which supports ERP solutions in addition to other solution areas, continues to evolve its tools and techniques to address the continuously changing technologies and complexities of ERP solutions(CGEY,2002).Allan(2001)states during the ERP implementation process, companies make significant investments in customizations to adapt the ERP product to their business model. In some cases, the investment in these customizations can be comparable to or exceed the original cost of the ERP software. Implementing Application Changes into these highly complex systems can be both labor-intensive and error-prone. Change can, however, strain the capabilities of any Information Systems Organization. Ability to successfully implement new technologies and business objectives begins with understanding how prepared the organization is to accept change, making the necessary changes, and ability to understanding the total impact of the change on the organization . Currently, many of the large commercial ERP products have been reengineered for web-based architectures. Current ERP clients still using the Client/Server versions are faced with a challenging, upgrade. In these environments, the best way to manage change is to be prepared for change, whether from customizations, patches or upgrades.
Change is a constant in today's competitive business world. Change can often be difficult, especially for employees who might not see the immediate benefit of these changes. By using comprehensive change management strategies and group techniques, the transition to new technology can be made easy by enabling employees to realize immediate benefits from a new system. While change is never easy, companies that have gone live with enterprise systems find themselves focusing more on customer needs and positioned with the information and tools to work more closely with suppliers to improve competitiveness. This often leads companies to quickly add and support more users and software modules, improve handling of enterprise data by deploying business intelligence systems, and to begin Internet collaborations with customers and suppliers (Anonymous,2000a).The ERP application will enable changes in business processes that can reduce cycle times, use resources more efficiently, reduce costs or improve customer responsiveness. However, expected benefits will only be realized when individuals in all affected parts of the organization are willing and able to adapt to the new ways of working. Individuals are typically willing to adapt if they understand the need to change and accept responsibility to produce tangible business benefits. They will be able to adapt if the organization is redesigned to align with new business processes and they are appropriately trained (Anonymous, 2000b).
Version Management and Change Management(VM)
Allan(2001) defines the Version Management and Change Management as follows.Version management is a well-established concept, Change Management is fairly new to the IT landscape. In general, Change Management processes works very closely with Version Management processes. Many commercial software makers either have a Change Management product offering or are in the process of developing a Change Management product. While VM manages the integrity of custom developed software, many environments may develop or customize software. Change Management software captures and documents application changes, originating both from vendor patches and local customizations. In typical ERP environments, Change Management software is used to protect the integrity of the operating environment during software changes, both for commercial and custom developed software. At the same time, Change Management impact analysis features provide better approach to managing and analyzing changes across an applications environment.To Manage The Complexity of Customized ERP Applications many ERP Application Support groups are faced with the extremely complex task of managing application customizations while introducing vendor software patches and new Application Releases. Many commercial ERP software vendors have reengineered their ERP products to make them web-enabled. Many of the companies still struggle with daily support issues and struggle to keep software patches and updates from breaking other functionality, either custom or standard.
STRATEGIES
SAP R/3 stores all objects and files within internal tables in the database. Change-management support, including versioning of the contents of these tables and audit trails, is provided through the Correction and Transport System. Additional management capabilities within the Correction and Transport System are provided via the Transport Management System, which helps transport and manage changed objects from the development system to the production system. SAP R/3 provides change-management support for system upgrades, specifically for visually comparing differences between objects via a split-screen interface. IT organizations have the option of merging the customized code with the new object or maintaining the modified object within the new application. SAP provides limited internal issue-tracking capabilities and there is currently no process-management or workflow support. Expect to see this functionality added, especially the process and workflow support, which is key to simplifying and shortening the time required to manage data through a project and thereby reduce downtime (Barnes 1999).
According to Orlikowski and Hofman (1997) there are many methodologies for implementing change. One approach is rather traditional and stipulates that a team begins with a plan comprised of certain universal principles. There is considerable effort at ensuring every aspect of the project runs according to the plan. A more innovative perspective to the traditional approach is the improvisational change model . This model is aimed in implementing at the University of Nebraska (UN) as it seeks to increase its administrative efficiencies. This example describes and illustrates how the methodology can be used to manage change in the implementation of SAP R/3 at UN. Based on this model, the team enacts "an ongoing series of local innovations that embellish the original structure, respond to spontaneous departures and unexpected opportunities, and iterate and build on each other over time" (Orlikowski and Hofman,1997). The team identifies its objective then sets off toward the objective, responding to conditions as they arise and in an improvised fashion. Efforts are directed at reaching the objective rather than following a plan.
The Improvisational Change Model
The improvisational change model which was proposed by Orlikowski and Hofman(1997) recognizes three types of change:
* Anticipated changes are those that are planned ahead of time and occur as intended.
* Emergent changes are those that arise spontaneously from local innovation and that are not originally anticipated or intended.
* Opportunity-based changes are not anticipated ahead of time but are introduced purposefully and intentionally during the change process in response to an unexpected opportunity, event or breakdown.
Assumptions made by this model is that the changes related with technological implementations comprise an continuing process relatively than an event with an end point after which the organization can look forward to return to a sensibly steady state, and all the technological and organizational changes made during the ongoing process cannot, by definition, be anticipated ahead of time. This improvisational model also assumes there will be road bumps along the way to reaching the objective.
The uniqueness of the model is the flexibility to transform some of the obstacles into positive emergent and opportunity-based changes that will enhance the overall effectiveness of the organization, and the acknowledgement that emergent changes exist and that they have a profound effect on enterprise-wide implementations.
The Recurring Improvisational Change Methodology
According to the views of Orlikowski and Hofman (1997), the recurring improvisational change methodology, which is an expansion of the improvisational model proposed is a useful method for identifying, managing, and tracking changes in implementing enterprise-wide systems. It employs a diagrammatic method to outline the recurring levels of anticipated, emergent, and opportunity-based changes that arise in the implementation of enterprise-wide systems.
ERP effort was being undertaken at UN to improve the University's administrative processes through a customization process using the SAP R/3 software. University-wide steering committee - the Financial Systems Task Force (FSTF) - was created and given the responsibility for the overall management of the project scope, funding, direction and business issues. The FSTF also served as the initial change agents. The FSTF later created Campus Transition Teams to serve as liaisons between the ERP end users and the ERP development teams. The Transition Team members were empowered to lead the project as change agents (Michelle 1997).
Figure 1.3 :IT Indicates some of the changes that have occurred at UN since the initial SAP planning phase that began in 1997.
(Source: Michelle ,1997)
University has realized two major opportunity-based changes emanating from the larger anticipated change of implementing the ERP system: the formation of business centers, and the development of a comprehensive knowledge management system. opportunity-based changes tend to lead to more opportunity-based changes, which should lead the organization to greater success. Figure 1.3 distinguishes the recurring changes and how one change leads to another. application of this methodology, will expand on two opportunity based changes emanating from the SAP implementation at UN: the development of a comprehensive knowledge management system, and the formation of business centers. These two opportunity-based changes have and will continue to lead to several levels of anticipated, emergent, and opportunity-based changes. Development of a knowledge management system for supporting SAP implementation leads to providing opportunities for more efficient on-line help (an opportunity-based change), rather than traditional hard copy manuals. The formation of business centers, which itself is an opportunity-based change, leads to other opportunity based change (Michelle 1997).
Case Study
Oracle Corporation
Oracle provides change-management support within the Application Object Library--the repository in which all program files, reports, and forms are registered. The Application Object Library stores all revision information and displays log files to help organizations determine which patches have been applied and whether or not they were successful. The Application Object Library also provides support for tracking every version of a file and the particular patch builds in which those files are included, as well as support for analyzing developer-tested patches, recording the configuration, and building the patches on multiple hardware platforms. Within the Application Object Library, the Auto Patch utility can be used to confirm that a particular patch is appropriate for a specific installation. It helps organizations determine the versions of customer files and database objects currently installed and compares these with the versions being delivered via the patch. DataMerge is an installation utility that uses an algorithm to determine if data to be patched has been previously modified. If so, the tool will preserve that data as part of the upgrade. Oracle is expected to continue to focus on the upgrade process with its change-management tools. Oracle provides little change-management support for managing an initial implementation or ongoing customizations (Barnes 1999).
Allan (2001) defines the concept as Application Change Management(ACM)
Application Change Management is a process created to address the issues related to customizing pre-packaged applications. At the same time, ACM can help analyze and prepare for vendor software upgrades and patches. ACM systematically and accurately captures the changes, and dependencies, related specifically to the ERP customizations. Given the magnitude of the investment, both in the ERP software and the customizations, a company needs to consider how to preserve their total ERP investment. ACM provides a better approach to managing local customizations created to support a company's unique business model, and avoid unplanned outages during ERP upgrades.
The concept of ACM is fairly simple: Identify what has changed within an object (as compared to that object's previous state). Identify other objects, which may have dependencies upon this initial object. Understand the internal structure of the application database and program objects, i.e., their various characteristics and properties. Once the change dependencies have been identified, the knowledge of these changes is conveyed to managers and developers so they can easily evaluate which changes are significant, and which can be ignored (Allan 2001).
CONCLUSION
Change is about nothing if it is not about perseverance. This means persisting in the face of an a-unstable environment; persisting in the face of systems which are built for stability rather than change; persisting in the face of plans which are out of date as soon as there are formed. It means applying the same principles to people as are applied to 'things' that is, the knowledge that nothing is perfect. This means recognizing that people will act in infuriating and annoying ways but that, when necessary, will bring the genius of their humanity to solve apparently unsolvable problems. Many ERP vendors are addressing the need for change-management support within their applications. These vendors appear to be taking change management far more seriously, especially as ERP implementations take on greater significance within organizations. Change is not easy but it can be interesting. Change management is a necessity in supporting ERP implementation. Without change management, too much time and money will be spent manually carrying change forward, synchronizing the environments and resolving day-to-day problems.It is certainly worth the journey even if the place of arrival is surprising.
REFERENCES
Allan.Hooks(2001),Oracle ERP Change Management Project Whitepaper, http://www.oracle.com/collateral/cmowhitepaper.pdf.
Anonymous(2000a), IBM Global Services Australia makes ERP spell ROI with new Extended Enterprise Services, http://www.ibm.com/news/au/archive/erp.shtml
Anonymous(2000b), IBM Business Management Services/ERP: ERP Organization Change Services, http://www-1.ibm.com/services/collateral/erp_org.html.
Barbara Senior. (1997) Organisational Change, Pitman, Great Britain.
Barnes Michael(1999), Customization Of ERP Apps Requires Development Skills, http://www.informationweek.com/722/22iuerp.htm.
Connor, Patrick E. and Lake, Linda K. (1994), Managing Organizational Change, Greenwood, USA.
CGEY (2002), Extended Enterprise applications/Enterprise Resource Planning,
http://www.us.cgey.com/ind_serv/services/erp/approach_change.asp
Grundy T. (1993), Managing Strategic Change, Kogan , London.
Michelle M. Sieber. (1997), A Recurring Improvisational Methodology for Change Management in ERP Implementation, http://www.ait.unl.edu/fnah/SieberandNah.pdf.
Orlikowski, Wanda J. and Hofman, J. Debra. (1997) An Improvisational Model for Change Management: The Case of Groupware Technologies, Sloan Management Review, 38, no. 2
Pettigrew, A. and Whipp. R. (1993), Management change for competitive Success, Oxford, Blackwell.
Ricky, W.Griffin. (1990), Management, Houghton Mifflin, Boston.
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