The development team consisted of three groups. The functional group was responsible for training, change management and implementation. The technical group conducted all the programming, hardware configuration, interfacing and system performance. And then there was the management team that oversaw the total project delivery.
ERP Failure
ERP systems enable an organization to manage resources effectively and efficiently by providing a totally integrated information process which is standardized across the whole business. The most important attributes of ERP are its ability to automate business processes, share common data and practices and produce and access information in real time. The problem is that with all ERP systems implemented throughout the globe there is a high failure rate in the implementation of these systems. (Davenport 1998). Using the Bolman and Deans 4 Frame Model (Bolman and Dean, 2008) we can uncover the critical failure areas of the change process. Bolman and Deal (2008) viewed organisations in four distinct areas. These being, structuring organisations, human-resources-related issues, political dynamic and symbolic concerns. These areas they called frames, have their own limiting view of an organisation’s landscape and provide a different view point with set assumptions, actions and processes to bring efficiencies into the organisation. Each frame provides a picture of the organisation’s reality, and here we use these frames to identify the critical failures of this ERP implementation.
The structured system in the organisation where rational system based processed around goals, tasks and technology is all about having work tasks to differentiate and provide clarity for workers and gives the required coordination. This ERP implementation failed in both the clarity of task responsibility and data process integration.
In the early stages of the implementation of the ERP system it was becoming very obvious that this new systems was very complex as identified by Kemp & Low (2008) causing the project team and many general staff to become overwhelmed with the project. The project team simply did not have the number of staff required to get all project actions achieved according to the project schedule. Role responsibility was not well defined and with the integration of external consultants with internal specialists and functional team members there was a significant overlapping and confusions about the implementation of the system. It started to cause slippage in the project schedule due to the struggling efforts of the engineers to configure options and access data.
Also with data which was the most important area that needed to be addressed with this new system and there was a fundamental issue with regards to the master data that needed to be configured. As the system was to be a global one it was important that this master data was correct. The master data was coming from many different business areas which had different formats for the data. These differing data structures were needed to be merged together in the areas such as customers, venders and material information. With no set process in place to achieve this requirement, it took significant changes and multiple communications across many different countries and business divisions to finally come to a resolution. Yet still it was impossible to get different divisions to decide on how this master data would look.
It was decided that the new system would not run in parallel to the old and that the old system would be turned off at go live. This caused a very large amount of disruption within the business at all levels from sales and marketing to logistics and accounting. In addition it also impacted the customers. Orders were not getting put on the system correctly, incorrect equipment was getting delivered, goods where not turning up at all or delivery delays were experienced. Through this process the project team became more familiar with the system scope and issues relating to integration allowing for design changes to occur. This helped in addressing the critical issues and limitations of the system so changes could be made to improve performance, however, this constant change made employees have a lack of trust in the new system and in what it could deliver compared to what had been promised and produced skepticisms of the ERP system.
The Human resource sees organisations needing to motivate individuals through their ability to use their skills and talents, so there is a mutual benefit to all parties. The organisation failed in this area by not recognising what was needed to identify the required skills and needs when embarking on this project.
A significant pitfall was the issue of technology and the skill-sets of the employees to use this technology. The implementation of the ERP system saw a move to the reliance of staff to be more computer literate as the new system relied on users to interface with the ERP system via web based applications that were complicated to use and required many different log in environments. These were all new processes that needed to be learnt. The difficulty was that using these applications at the start of the new system led to constant PC failure which needed technical assistance from IT support. To make things even more difficult, the IT support team was based in India as the main Asia Pacific support team. Calls to request assistance with the language barriers was more a frustration than a help in overcoming simple log in problems. There was no local guidance at the country level to assist in any of the problematic issues that if corrected quickly would have reduced the frustration and the resistance to change.
The difficulties in the project and the stress levels that were created in particular areas of the business caused a large disharmony in the workforce. There as a lot of talk about the benefits of the SAP system of improved efficiencies, this led to an expectation from the staff, that this meant a move towards a reduced workforce. With this feeling by many, the atmosphere in the workplace was chaotic, tense and very de-motivating. Employees were asking for support from the team but did not receive the support needed. The comments were always that there was more important and pressing activities that needed to be done first. This presented a lot of tension and mistrust between staff and the project team.
Staff also felt that there was a very limited amount of communication being provided to employees. This lack of communication meant that staff did not recognize or even see the need to change the business systems and therefore didn’t see the benefits. The lack of communication before the go live date saw a high percentage of staff turnover in particular areas of the business such as customer service. It wasn’t till new staff were employed and the resistance to change was lower that the acceptance of the new system improved. At this stage training was still lacking and this did not help in reducing the fear and concerns about the new system. It was not until the new system was running and significant limitations were being seen that the organization identified that areas such as training and support needed to be boosted to assist employees that were struggling with operating the new system.
The Political frame is the view point is focusing on conflict and power. All individuals have a diverse range of opinions and beliefs that clash and there was significant clashes in this change process due to responsibility changes.
The business units from each division have had a significant amount of autonomy in their business and the process of implementing an ERP system was one that caused much frustration. Each business unit needed to hand over ownership and coordination of their business data including all customer and financial information. With the fear of losing control, many of the business units were reluctant to assist in providing the data required in a timely fashion. This in turn was making it harder to get approval for critical design decisions and the hesitation to make decisions. This in turn caused the loss of commitment of the business units due to the ever changing project schedule. The more frequently this occurred the more the business managers saw that they where losing their independence and control and were reluctant to get involved in the system. Bitterness developed and comments started circulating as to why there was an actual need for the ERP system.
The Symbolic frame view point shows that that people are creative through expression and energy so as to achieve at a higher level of being. This was most probably the biggest limiting factor of this ERP system implementation. It produced the largest cultural shift ever seen in this organisation.
The barrier to change was that the employees did not see the need to change which is seen with many other organizations that implement ERP systems. (Huq, Huq, & Cutright 2006) Whether it was the worker on the shop floor, supervisors, production managers, middle management and even senior management throughout the organization, there was a significant reservation about this whole process. The main reason for this was due to the culture of the business. Though the organization has been a global company for many years, there was always a sense that because each business division always operated independently they had the feeling of a much smaller and more personal business. As long as the business unit constantly achieved their financial targets set by the corporate office the business was left alone to do what if felt it needed to do to achieve its targets. Because of this small business feel, employees were given much flexibility in expressing themselves and being creative that gave them a personal connection to the organization. People could try new concepts and approaches to business which is one of the main reasons for the businesses success in the last 10 years. This flexibility and independence was feared to be lost with the change and in turn also affected the developed culture of being entrepreneurial as these new processes would stifle this idea.
What does not help with this feeling across the business also relates to an already major change in the business less than 8 months before. This change involved a major business unit restructuring project that saw the integration and separation of two divisions. This change process though important in aligning the business globally saw a significant negative cultural adoption by both divisions. This involved many employees requiring either moving offices or job role changes and having to handle organizational structural and cultural differences. This produced a new organizational division with new roles and objectives in a business that they did not totally grasp. This produced a significant negative cultural change and showed too many employees that the organization did not have a good handle on the impact of the businesses culture when implementing a change process. Having failed once already in a short period of time did not give any employee confidence that the organization would get it right the second time around.
12 months on from go live, the ERP system has become a lot more stable and is being better received from both the employees and the customer. There is still a lack of utilizing the system to its full potential internally, both at an employee level and management level and there is still a high resistance to the adoption of the system. Customers believe that their level of service is still poor compared to the level of service they received from the old system. There are many deep scars in the organization because of the ERP implementation and the biggest impact has been a significant negative effect to the organization in terms of sales and customer satisfaction as well as a reduced staff satisfaction level.
Conclusion.
It is a growing trend that large organizations are moving towards implementing ERP systems in an effort to improve efficiencies and to become more effective to allow for them to stay competitive in today’s market. Just take a look at the impact on Levi Strauss when they implemented a new of ERP infrastructure known as SAP. (Sterlicchi 2008) This change management was introduced to try and achieve greater efficiencies within the business by setting up of a more structured approach providing improved processes. The problem was that the new processes put in place did not consider how people in the organisation felt about interfacing with the new system. Because the business did not consider the human factor as identified by Ilkka Kemppainen in his case study on Change Management Perspectives in an ERP Implementation, (Kemppainen) in the change process the expected efficiencies were not achieved and profitability suffered as a result.
Implementing ERP systems however is not a cookie cutter process. Each system needs to be different to fit the business needs and requires re-engineering to achieve this. But it is not just a matter of implementing a process with the right skills and technology. It’s more importantly about the people. It is the people’s perspective on what the system means to them and their beliefs for such a change to be successful. Employees lose a lot of their own personality in the trend towards globalization. In this particular example where the main impact has been the integration of multiple business units and at many levels, implementing an ERP system in this organization has seen a core change in the way that the organization is structured, the responsibilities that people have, the culture of the business and the management requirements needed. When implementing change such as this, the organization did not fully understand the impact that would see issues develop in the areas of communication, implementation of change, change review, people culture factors, barriers of change and leadership. Though process improvements is one area that needs addressing, it’s the cultural and political areas that significantly limits change. (El Sawy, 1995)
If the business is to move forward and learn from this experience in the way in which they implement future ERP systems in other counties, the organization needs to consider the change management process carefully when implementing change. Management must demonstrate total support for the system and admit to limitations early on rather than indicate that all is running smoothly when it is obvious to others that there are actually problems. The organization needs to identify and develop strategies for barriers in the area of authority and control. Political power players need to be identified and strategies implemented to get these people on board with the process so as to limit the negativity that may be raised through these people. And finally communication needs to be facilitating early and often enough to improve the transparency of information. (Kemp and Low, 2008) Education to employees must be a priority from the start of the project and various forms of training need to be implemented to ensure this. (Roberts and Barrar, 1992).
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