ERP-Change Management
A Research Project Report on
ERP-Change Management Submitted in partial fulfillment of the requirements of the MBA Degree
ERP-Change Management
STUDENT DECLARATION
I hereby declare that this Research Project entitled “ERPChange Management” has been undertaken and completed by me under the valuable guidance of Prof. XYZ, M.P.B.I.M, in partial fulfillment of Degree of MBA program is my original work and that no part of the work has been submitted for any degree, diploma, fellowship or other similar title or prizes for any institution previously.
Place Date:
Student Name Reg No: XYZ
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ERP-Change Management
PRINCIPAL’S CERTIFICATE
This is to certify that this report is the result of Research Project “ERP-Change bearing
the
Management” register
number
undergone
by
Student Name
XYZ
the
guidance
under
and
supervision of Prof. XYZ. This has not formed a basis for the award of any Degree/ Diploma of any University.
Place Date:
XYZ (Principal)
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ERP-Change Management
GUIDE’S CERTIFICATE
This is to certify that this report is the result of Research Project “ERP-Change
Management”
undergone
by
XYZ bearing the
register number 1234567890 under the guidance and supervision of Prof. Jai Raj Nair. This has not formed a basis for the award of any Degree/ Diploma of any University.
Bangalore Date:
XYZ (Guide)
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ERP-Change Management
ACKNOWLEDGEMENT “Blessed are those who give without remembering and blessed are those who take without forgetting”. -Bernard Meltzer I would like to express my profound gratitude to Prof. Jai Raj Nair, Professor, M.P.Birla Institute of Management whose guidance was significant in the successful completion of the project. I wish to thank our Dr. Nagesh Malavalli, Principal, M.P.Birla Institute of Management for providing the means and encouragement. Last but certainly not the least, my family and friends who tolerated me and cooperated when I was not so very best.
Place Date:
(Student)
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ERP-Change Management
“ N o t h in g E n d u r e s B u t C H A N G E .” - H e r a c lit u s
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ERP-Change Management
ABSTRACT
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ERP-Change Management
ABSTRACT Many companies are adopting ERP systems worldwide. As ERP systems are based on best practices, it is expected that adoption will bring benefits in Efficiency, Usability, Reduced Costs and Centralized Control. Businesses
are
subject
to
continuing
changes.
Change
is
uncomfortable, and adapting to change is messy. But change is vital-it defines life itself. The key is to learn how to embrace the changes that face both professionally and personally. Exploratory Research is used to learn and understand the problems faced by the management as well as the IT people while implementing an ERP package in their organization. For a large percentage of ERP customers, ERP implementation was their
most
complicated
and
costly
software
project
they
have
undertaken. The study shows how by equipping IT with the appropriate Application Change Management tools & processes, a more intelligent and deliberate change framework can be created
that allows IT to
facilitate, and in many cases even drive, business process change.
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ERP-Change Management
EXECUTIVE SUMMARY
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ERP-Change Management
EXECUTIVE SUMMARY ERP covers the techniques and concepts employed for the integrated management of business as a whole, from the view point of the effective use of management resources, to improve the efficiency of an enterprise. That is, this technology attempts to integrate all departments and functions across a company onto a single computer system that can serve each different department’s particular needs. ERP systems are nothing more than generic representations of the way a typical company does business. Businesses are subject to continuing changes. Companies need to be flexible and innovative in the ways in which they deal with the unfamiliar situations they often find themselves in. The key is to learn how to embrace the changes professionally and
that
face
both
personally.
Change
Management is a structured process that will cause proposed changes to be reviewed for technical and business readiness in a consistent manner that can be relaxed or tightened to adjust to business needs and experiences. Information systems implementation failures have been widely cited in the literature and ERP systems are no exception. Given this is the case, little research still exists with which to theories the important predictors for initial and ongoing ERP implementation success. The objective of the project is to study the change management strategies for successful ERP implementation, the challenges involved in change
management,
the
risks
involved
in
the
process
of
change management and how to avoid them, the Change Management (CM) Tools used to implement a successful ERP Application. For a large percentage of ERP customers, ERP implementation was their
most
complicated
and
costly
software
project
they
have
undertaken. Notwithstanding, patches and new releases create ongoing support and
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ERP-Change Management business adaptation challenges that can chip away from the returns on ERP investments. Unmanaged changes to ERP applications have generated some of the most recounted project horror stories. Needless to say, Change Management is becoming the focus of attention in many IT organizations. By
equipping
IT
with
the
appropriate
Application
Change
Management tools & processes, a more intelligent and deliberate change framework can be created that allows IT to facilitate, and in many cases even drive, business process change.
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CONTENTS
CHAPTER NO.
PARTICULARS
PAGE NO.
1
Introduction
1
2
Purpose/Objective of the Study
5
3
Project Justification & Significance
7
4
Research Questions
9
5
Review of Literature
12
6
Research Methodology
26
7
Analysis & Discussions
29
8
Limitations of the Study
66
9
Conclusion
68
10
Bibliography
71
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LIST OF GRAPHS/DIAGRAMS
SERIAL NO.
PARTICULARS
PAGE NO.
1
Enterprise Resource Planning (ERP) Model
3
2
ERP Market
14
3
A
Suggested
Framework
for
Managing
30
Change Associated with ERP 4
A Model of Successful ERP Adoption
36
5
Managing the Complexity of Change
48
6
Reviewing Processes
7
Version Management vs. CM Processes
51
8
Assessing CM Processes & Practices
52
9
Change Management Matrix
55
10
Prevent Problems from being Promoted to
56
Current
Version
and
CM
50
Production 11
Create a More Effective CM Process
57
12
Understand
58
and
Document
Application
Baseline & Dependencies 13
Avoiding
Disjointed
Development
and
63
Promotion Processes
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CHAPTER 1
INTRODUCTION
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ERP-Change Management
GENERAL INTRODUCTION ERP covers the techniques and concepts employed for the integrated management of business as a whole, from the view point of the effective use of management resources, to improve the efficiency of an enterprise. ERP packages are integrated software packages covering all business
functions
like
sales
and
distribution,
production
&
planning, financial Management, Human Resource Management etc. Industry analysts are forecasting growth rates of more than 30% for at least the next 5 years. Why are so many companies replacing their key business systems? The answer is, ERP Allows easier global integration: barriers of currency exchange rates, language and culture can be bridged automatically, so data can be integrated. Improve decision-making activities. Increase competitive advantage by integrating people and data. Allows management to manage operations not just control them. Centralize control and Affect competitor’s behavior. ERP
has
diffused
many
“best
practice”
processes
into
the
system. The high cost of adoption (average of $15 million per system) also justifies investigation and the most common areas for budget overruns have been identified as: Training, Integration and Testing, Data Conversion and Data Analysis.
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ERP-Change Management
Enterprise Resource Planning (ERP) Model
Sales & Distribution
Production & Planning
ERP Human Resource
Finance & Accounting
For a large percentage of ERP customers, ERP implementation was their
most
complicated
and
costly
software
project
they
have
undertaken. Companies have made big investments in ERP software, and leading CEO’s now want to see IT contributing more to the bottom line – producing higher value at lower cost. Notwithstanding, patches and new releases create ongoing support and business adaptation challenges that
can
chip
Unmanaged
away from
changes
to
the
returns
on
ERP
investments.
ERP applications have generated some of
the most recounted project horror stories. Needless to say, Change Management is becoming the focus of attention in many IT organizations.
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ERP-Change Management By equipping It with appropriate Change Management tools and processes, a more intelligent and deliberate change framework can be created that allows
IT to facilitate, and
in many cases
even
drive
business process change. Sometimes changes are a result of problems with the programs or processes.
Sometimes
changes
are
spurred
by
the
desire
for
enhancements. Sometimes they are simply the result of not having all settings or functionality available as originally planned. For example, changes in SAP can come in the form of program code fixes and updates, customization changes, master data changes, or even upgrades essential
and
fixes
and effective
delivered
directly
change management
from tool
SAP.
The
in SAP
most is the
Correction and Transport System. SAP has done a good job in providing for the eventuality of change and this tool is an extremely effective source of change control.
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ERP-Change Management
CHAPTER 2
PURPOSE OF THE STUDY
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PURPOSE OF THE STUDY The purpose/objective of the project is to study the The
change
management
strategies
for
successful
ERP
implementation (successful ERP implementation requires matching appropriate strategies with the appropriate stage to overcome resistance sources (habits and perceived risks) effectively). The challenges involved in change management (organization culture, people, change in technology etc). The risks involved in the process of change management and how to avoid them. The Change Management (CM) Tools used to implement a successful ERP Application.
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ERP-Change Management
CHAPTER 3
PROJECT JUSTIFICATION & SIGNIFICANCE
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ERP-Change Management
PROJECT JUSTIFICATION AND SIGNIFICANCE Many companies are adopting ERP systems worldwide. As ERP systems are based on best practices, it is expected that adoption will bring benefits in Efficiency, Usability, Reduced Costs and Centralized Control.
The successful adoption of IT, and increasingly ERP’s, is becoming a major topic in the IS literature. It seems that a significant number of projects do not succeed due to human aspects being overlooked. Where there is conflict accepting the new system, something has to give; either the software or
the company must
change.
Information systems implementation
failures have been widely cited in the literature and ERP systems are no exception. Given this is the case, little research still exists with which to
theories
the important predictors for initial and ongoing ERP
implementation success. Businesses are subject to continuing changes. The success of mergers, depends
acquisitions
and
on
fast
how
reorganizations organizations
adapt these changes internally and externally. Companies need
can to
be
flexible and innovative in the ways in which they deal with the unfamiliar situations they often find themselves in. We are in a time of great change. The reality of yesterday proves wrong today, and nobody really knows what will be the truth tomorrow. Change is uncomfortable, and adapting to change is messy. But change is vital-it defines life itself. The key is to learn how to embrace the changes that face both professionally and personally.
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ERP-Change Management
CHAPTER 4
RESEARCH QUESTIONS
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RESEARCH QUESTIONS ¾ What
are
the
Change
Management
Strategies
for
Successful ERP Implementation? Improvement strategies, such as ERP implementation, commonly involve change. Hence, responsiveness to internal customers is critical for an organization to avoid the difficulties associated with this change. To assist top management with the complex organizational problem of workers’ resistance
to
ERPimplementation,
an
integrated, process-oriented conceptual framework consisting of three phases is used: 1. Knowledge Formulation, 2. Strategy Implementation, and 3. Status Evaluation.
¾ What are the Challenges of Change Management when implementing ERP? Change usually involves the introduction of new procedures, people or ways of working which have a direct impact on the various stakeholders within an organization. The key to successful CM lies in understanding the potential effects of a change initiative on these stakeholders. The main focus will be on Leadership Focus Commitment Resistance
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ERP-Change Management
¾ How to Reduce the Risk of Change? Packaged
applications
for
ERP
are
a
strategic
asset
in
many organizations. They provide the backbone for day-to-day business and
e- commerce
investment
applications.
Companies
have
to
make
a
big
while implementing ERP in terms of cost and time. If the
implementation doesn’t meet the requirement of a company then there will be direct affect on the returns of a company. Thus it becomes important for establishing the controls needed for to ensure the technical and business process integrity. The steps to be followed to reduce the risks of change are Managing the complexity of change. Reviewing current version and change management processes. Developing change management core competencies.
¾ How to Avoid the Common Mistakes While Implementing Change Management? “75% of application downtime is caused by ‘self inflicted’ errors.” In today’s world, 80% of IT budgets are used just to maintain status quo. CEOs and CFOs want to see more return on their ERP investments. In addition to spending
wisely
on
self-funding,
higher
performance
IT
investments, IT executives must provide change controls on business critical applications that support collaboration, visibility, speed and auditability. Some of the main steps which help in avoiding the common mistakes while implementing CM are Delta challenge Avoid disjoint development and promotion processes Avoid communication breakdowns on critical project issues Avoid an incomplete CM strategy
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ERP-Change Management
CHAPTER 5
REVIEW OF LITERATURE
ENTERPRISE RESOURCE PLANNING
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ERP-Change Management Enterprise Resource Planning (ERP) systems have been defined as an “online interactive system that can provide a ‘total’ solution to an organization’s information systems needs by addressing a large proportion of business functions”. This research will adopt the ERP systems definition of: Shared information systems, which are systems that cross typical organizational boundaries and therefore have multiple users and stakeholders who have different cultures and approaches to work. An ERP system is a single integrated software package that runs off a single database so that various departments can easily share information and communicate. This
technology
attempts
to
integrate
all
departments
and
functions across a company onto a single computer system that can serve
each different department’s particular needs. ERP systems are
nothing more than generic representations of the way a typical company does business. ERP’s enable automating the tasks involved in performing a business process so it is integral that implementers start with a clear articulation of the business
problems
being
addressed.
The
most
common
reason
that companies walk away from multimillion dollar ERP projects is that they discover that the software does not support one of their important business processes. Not only do the business functions need to be identified, the more company’s
subtle issues
such
corporate culture
as
the
and management style
must be examined to enable a holistic view of the implementation.
ERP
systems
stress
the
importance
of
accountability,
responsibility and communication within an organization. They focus on optimizing the way things are done internally rather than with customers, suppliers or partners.
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ERP-Change Management
ERP Market:
E R P Market 5
6
SAPAG O rac le 29
7 10
JD E dw ards P eople S oft B aan
Information systems exist in most peoples working lives. It is now generally accepted that the information system world is one where human, social and organizational factors are as important as the technological.
Choosing Consultants and Vendors: Because ERP packages are so large and complex, one person can’t fully understand single ERP system-or compare various systems. So, before choosing a software vendor, most companies study their needs and then hire a team of consultants to help choose the right software vendors and the best approach of implementing ERP. Working as a team, the consultants apply their expertise to selecting an ERP vendor that best meets their customer’s needs.
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ERP-Change Management After selecting the vendor, the consultants recommend which modules are best suited to the company’s operations, and which configurations within these modules are most appropriate. This preplanning involves not only the consultants and a company’s IT department but also the company’s management.
The Significance and B enefits of E RP Softw are and Systems: The significance of ERP lies in its many benefits. Integrated information systems can lead to more efficient business processes that cost les than those in unintegrated systems. ERP systems have these benefits as well: ERP
allows
easier
global
integration:
Barriers
of
currency
exchange rates, language and culture can be bridged automatically, so data can be integrated. ERP not only integrates people and data, but it also eliminates updating and repairing many separate computer systems. For example, Boeing had 450 data systems that fed data into its production processes. The company now has a single way to record production data. ERP allows management to manage operations, not just monitor them. For example, without ERP, getting an answer to “How are we doing?” require getting data from each business unit and then putting the data together for a comprehensive, integrated picture. The ERP system already has all the data, allowing the manager to focus on “What are we going to do better?” This enhances management of the company as a whole, and makes the organization more responsive when change is required.
Questions about ERP: How much does an ERP package costs?
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ERP-Change Management
Costs include several factors: ERP s/w New h/w that is capable of running complex ERP s/w Consultant’s and analyst’s fees Time for implementation(disruption of business) Training(costs both time and money) Large company might spend from $50 million to $500 million for an ERP system. In addition full implementation of the new system might take 4-6 years. The midsize company might spend $10 million to $20 million and have its ERP system up and running in about 2 years. Should every business buy an ERP package? ERP packages imply, by their design, a way of doing business, and they require users to follow that way of doing business. Some of the business’s operations and some segments of its operations might not be a good match for ERP package’s requirements. Therefore it is necessary for any organization to analyze its business strategy, organization culture and operation before choosing an ERP approach. Is ERP software inflexible? Once an ERP system is in place, trying to reconfigure a system while retaining data integrity is expensive and time consuming. That’s why thorough pre-implementation planning is so important. It’s much easier to customize an ERP program when the system is being configured and no data has been stored. What Returns Can Be Expected from an ERP Investment? Benefits provided by an ERP system is difficult to calculate because
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ERP-Change Management 1. Sometimes ERP increases revenue and decreases expenses in intangible ways that are difficult to measure and 2. Some changes take place over such a long period of time that they are difficult to track. Here are some factors affecting the return on an ERP investment: Because ERP eliminates redundant effort and duplication data, there can be a savings in operations expense. One study indicated that 33%
of
companies
saw
a
cost
savings
in
sales
order
management, and 34%of the companies said their ERP system significantly reduced their personnel needs. Because an ERP system can help move goods and services through the pipeline faster, more sales can be generated every month. In some instances, a company that doesn’t implement an ERP system might be wedged out of business by competitors who have an ERP system-how do you calculate the monetary advantage of remaining in business? A smoothly running ERP can save company’s personnel, suppliers, distributors, and customers much frustration-a benefit that is real but difficult to quantify. Because both cost savings and increased revenue occur over many years, it’s difficult to put an exact dollar amount accrued from the original ERP investment. Because ERP implementations take time, there may be other business factors affecting the company’s costs and profitability, making it hard to isolate the impact of the ERP system alone.
How Long Does It Take for most Companies to see a Return on an ERP Investment?
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ERP-Change Management The Return on Investment (ROI) for an investment project is calculated by dividing the value of the project’s benefit by the value of the project’s cost. An ERP system’s ROI can be difficult to calculate because of so many intangible costs and benefits. Some companies don’t even try to make the calculation; on the grounds that package is as necessary as having electricity. Some companies claim that an acceptable ROI began to accrue almost immediately and some companies wait longer to measure. Why Do Some Companies Have More Success with ERP than Do Others? All kinds of software implementations can suffer from delays, cost overruns, and performance problems. Usually, a bumpy rollout and low ROI are due to people problems, rather than computer malfunctions. The reasons being: 1. Some executives blindly hope that new s/w will cure fundamental business problems that are not curable by any s/w. 2. Some executives and IT managers don’t take enough time for a proper analysis during the planning and implementation phase. 3. Some executives and IT managers skimp on employee education and training.
CHANGE MANAGEMENT
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ERP-Change Management Businesses are subject to continuing changes. The success of mergers,
acquisitions
and
reorganizations
depends
on
how
fast
organizations can adapt these changes internally and externally. Critical in all change processes is the information inside disparate IT systems. For board executives, fast access to timely accurate information on any aspect of the business, at any level of performance, from any perspective, is essential to make the right decision at the right time. The crux is maximum ‘visibility’ across the enterprise combined with maximum ‘flexibility’ to react quickly to market conditions. For many organizations this has been a contradiction in terms since IT was introduced. Typically the Standardized
global
businesses
Enterprise
and
fall the
into
two main
Decentralized
categories
Enterprise.
–
The
former has full visibility across the enterprise and little flexibility, and the latter the converse. The Standardized Enterprise, where the central IT function is typically very strong, has decided to invest the time to create a unified technology environment. In the Decentralized Enterprise the local
business imperatives hold sway and the emphasis is on
flexibility. They do not have the time to become standardized and instead tend to favor a best-of-breed IT approach to suit local requirements. Internal and external forces tend to pull global organizations between these two states as they seek to achieve both visibility and flexibility. By their very rigid nature Standardized Enterprises typically do not have the systems in
place
that can
accommodate
change.
On
the
other
hand,
Decentralized Enterprises can respond quickly to change at the local level but cannot obtain a global overview of performance since there is no fast, cost-effective way of gaining the right data from all the disparate information systems. Neither is satisfactory. Many CEOs tell this story. They know the decisions they want to make and are prepared to make them. However, they have no way of accessing the quality of information they need fast enough to make the critical strategic decisions they need to drive the business forward.
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ERP-Change Management
Is an Organization’s Culture Impacted by the Change Caused by ERP Implementation? Organizational
cultures
are
resistant
to
change.
A
crucial
characteristic of most information systems is that individuals are required to change
their
behavior.
In
regard
to
organizational
change
and
information systems, four key characteristics have been identified: the content, the social context, the social process, and the context/process linkage. Consideration of these factors in combination will increase the chance of successful change. The implementation of ERP systems ultimately results in changes to processes (business-oriented activities), which in turn inflicts changes to work practices (people-oriented activities). Cultural change requires a thorough understanding of How cultures work, What factors about them are likely to produce what sorts of resistance to change in a given situation, and What levers cultures offer for producing change. The potential diversity of human behavior can lead to chaos and chaos can be threatening as new uncertainties arise. Some suggest that cultures cover up the disorder of existence and construct a precarious social reality that keeps chaos at bay. Culture as a socially constructed system of shared beliefs, meanings and
values
allows
for
individual
interpretations
of
the
context
of
the organization. Communication with those involved in the change process
is essential to ensuring “successful” change. Changing work
practices resulting from the implementation of the ERP include the altering
patterns
of information interchange amongst users. The most
significant change is that from a paper-based to electronic-based system. This change is likely to be acceptable to the IT culture of the School as IT people generally prefer to work with things electronically. They way that ERP’s enable information to be
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ERP-Change Management uninhibited by time and space limitations) is also a substantial change. For example, users can gather data at any time during the year therefore supporting planning activities.
A Recurring Improvisational Methodology for Change Management in ERP Implementation: Change has become an ongoing phenomenon and business process re-engineering has become a necessity for survival of organizations as we approach the 21st century. As participants in this ever-changing working environment, we must be innovative in managing change as it affects both our professional and personal 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 methodology. In this research, we propose the use of the recurring improvisational change methodology for managing such change. Change management refers to the effort it takes to manage people through the emotional ups and downs that inevitably occur when
an organization is undergoing massive change. 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. If the project is not successful, the fact that not every detail of the plan was followed is typically used as the rationale for the project’s failure. A more innovative perspective to the traditional approach is the
improvisational
change
model presented by Orlikowski and Hofman. Utilizing this approach, the team begins with an objective rather than a plan. 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” .The team identifies its objective then sets off toward the objective,
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ERP-Change Management responding to conditions as they arise and in an ad-hoc fashion. Efforts are directed
at
reaching
the
objective
rather
than
following
a
plan.
The underlying theme is that the team will do what it takes to achieve the objective.
The Improvisational Change Model: The improvisational change model recognizes three types of change: 1. Anticipated changes are those that are planned ahead of time and occur as intended. 2. Emergent changes are those that arise spontaneously from local innovation and that are not originally anticipated or intended. 3. 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. There are two assumptions made by this model: 1.
Changes associated with technological implementations constitute an ongoing process rather than an event with an end point after which the organization can expect to return to a reasonably steady state, and
2. 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: 1. 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 2. The acknowledgement that emergent changes exist and that they have a profound effect on enterprise-wide implementations.
The Recurring Improvisational Change Methodology: M.P.Birla Institute of Management
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ERP-Change Management
The recurring improvisational change methodology, which is an extension of the improvisational model proposed by Orlikowski and Hofman, is a useful technique for identifying, managing, and tracking changes in implementing enterprise-wide systems. It employs a diagrammatic technique to outline the recurring levels of anticipated, emergent, and opportunitybased changes that arise in the implementation of enterprise-wide systems.
ERP Implementation Strategies: When implementing an enterprise resource planning (ERP) system, top management commonly faces an unwanted attitude from potential users -for one reason or another, they resist the implementation process. Top management should, therefore, proactively deal with this problem instead of reactively confronting it. The enterprise resource planning (ERP) system is an integrated set of programs that provides support for core organizational activities such as manufacturing and logistics, finance and accounting, sales and marketing, and human resources. An ERP system helps the different parts of the organization share data and knowledge, reduce costs, and improve management of business processes. In spite of their benefits, many ERP systems fail. Many ERP systems face implementation difficulties because of workers’ resistance. Effective implementation of ERP requires establishing five core competencies, among which is the use of change management strategies to promote the infusion of ERP in the workplace. Although some studies tried to address this problem by identifying change management strategies that facilitate the success
of
ERP
implementation,
many
ERP
systems
still
face
resistance, and ultimately, failure.
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ERP-Change Management Another stream of research that also deals with the introduction of new products (or ideas) puts forth a different story. Despite the large number of new products and services that they introduce every year, marketers can still achieve high rates of success. The answer rests in the strategies and techniques employed by marketing professionals. A quick review of ERP research revealed different strategies for implementing ERP successfully. One can classify these strategies into 1. Organizational strategies, 2. Technical strategies, and 3. People strategies. Organizational strategies for promoting ERP implementation success include Change strategy development and deployment, Change management techniques, Project management, Organizational structure and resources, Managerial style and ideology, Communication and coordination, and IS function characteristics. Some of the technical strategies that have been proposed to determine ERP success include Technical aspects of ERP installation, ERP complexity, Adequacy of in-house technical expertise, and Time and cost of implementation. Examples of people strategies for promoting ERP implementation success include Staff and management attitudes, Involvement, and Training. M.P.Birla Institute of Management
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CHAPTER 6
RESEARCH METHODOLOGY
RESEARCH METHODOLOGY Research Method: Since little research still exists with which to theories the important predictors for initial and ongoing ERP implementation success, Exploratory M.P.Birla Institute of Management
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ERP-Change Management Research is used to learn and understand the problems faced by the management as well as the IT people while implementing an ERP package in their organization. Exploratory research helps in the formal study required in this area of research. The exploratory research relies Research
Techniques
which
deals
more heavily on Qualitative with
intangibles
like
attitude,
opinions etc. The different research tools used are In-depth interviews (usually conversational rather than structured). Case studies (for an in-depth contextual analysis of a few events or conditions). Elite or expert interviewing (for information from influential or wellinformed people in an organization or community). Documentary analysis (to evaluate
historical or contemporary
confidential or public records, reports, government documents and opinions). Along with the above research tools, appropriate tables, charts and matrices are used to analyze the research findings.
Sample Size and Sampling Method: The sample size for the research project is 5 people are interviewed who are on top management of different companies, 10 IT consultants of different companies and 2 ERP vendors. The sampling method used is Judgment Sampling where the sample members are selected conform to some criterion, here the criterion M.P.Birla Institute of Management
35
ERP-Change Management being the members chosen have experience on ERP implementation process.
Data Gathering Procedures and Instrumentation: Data gathering procedures used for the research project are primary and secondary data collection methods. Primary Data: Primary data has been collected through the interaction
with
by interviews.
the
The
top elite
management or
expert
and
ERP
interviewing
consultants is
used
for
collecting the information from influential or well-informed people in an organization. Secondary Data: Secondary data is collected from journals, magazines, case studies, websites etc.
Data Analysis: Data and information are collected from primary and secondary sources. Analysis is done on respondent’s opinion & experience, Case studies, articles published in journals, magazines etc.
CHAPTER 7 M.P.Birla Institute of Management
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ERP-Change Management
ANALYSIS & DISCUSSION
CHANGE MANAGEMENT STRATEGIES FOR SUCCESSFUL ERP IMPLEMENTATION A Suggested Framework for Managing Change Associated with ERP
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37
ERP-Change Management
Time 1 Knowledge Formulation Phase:
Time N Status Evaluation Phase:
Strategy Implementation Phase:
- Prepare - Measure - Identify
Change Management Strategies
Adoption Strategies Feelings Strategies Awareness Strategies
Habits
Habits
Habits
Risks
Risks
Risks
Improvement strategies, such as ERP implementation, commonly involve change. Hence, responsiveness to internal customers is critical for an organization to avoid the difficulties associated with this change. To assist top management with the complex organizational problem of workers’ resistance to ERP implementation, an integrated, process-oriented conceptual framework consisting of three phases is used: 1. Knowledge Formulation, 2. Strategy Implementation, and M.P.Birla Institute of Management
38
ERP-Change Management 3. Status Evaluation.
1) Knowledge Formulation Phase: The first step in effectively managing change introduced by IT is to identify and evaluate the attitudes of individual users and influential groups. This analysis should address such questions as: Who are the resisting individuals and/or groups? What are their needs? What beliefs and values do they have? What are their interests?
The answers to these fundamental questions may offer a good starting point in determining the sources of employees’ resistance to the ERP system. According to Hultman, employee-raised facts, beliefs, and values are good indicators of what may cause their resistance to change. This could well be applied to the context of implementing an ERP
system. For example, some users may raise issues about their
computer illiteracy, or may say that they have spent many years doing an excellent job without help from an ERP system. Other users may develop beliefs that their jobs will be threatened by the new system, or that they will not know how to do the job within the scope of such a system.
Yet
another group of users may stress values such as the importance of existing power and authority structures, which may be jeopardized by the new ERP system.
2) Strategy Implementation Phase: Management can use the knowledge regarding potential users from the previous stage to set up strategies that can best overcome users’ resistance to the ERP system, and to convince as many users as possible to adopt it. If this is the case, it is more appropriate to find an action sheet for implementing the selected strategies. The three-level adoption process (think-feel-do) provides a good framework for describing this phase.
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ERP-Change Management
In an attempt to change the attitudes of potential users of ERP, management must first try to affect the cognitive component of users’ attitudes. A major strategy for achieving this goal is communication. One effective communication strategy is to inform potential users of the benefits of ERP. The marketing people usually communicate the benefits of a product, rather than its attributes, to customers, in order to draw their attention and heighten their realization. Top management, in the same way, can create more effective awareness for the ERP system by communicating its benefits to the workers. In many cases, ERP implementation failed because of lack of communication. Knowledge about what the system can deliver to the organization and its workers can build anticipation for the system.
Nevertheless,
one
must watch
unrealistic worker’s expectations,
which
out for
may
deepen
the
resistance problem, thus causing its failure from the outset. Moreover, the success of future introduction initiatives building a cumulative
depends
base
of
on
credibility
by
management. Another communication strategy is to give a general description of how the implemented ERP system will work. In the marketing context, the marketers use this strategy to ensure a receptive attitude from users of a new product. Customers are usually reluctant to buy a product if they do not know, at least in general terms, how it operates. Likewise, ERP users are expected to be reluctant to welcome the new system if they do not know how it works. Teaching each of the various user groups how the ERP system works
is
Thus,
important in
from
the
creating
awareness.
outset,
management
should explain to potential users how the ERP system is going to work. For example, management should clarify the general inputs and outputs of the system, determine departments that will provide the data, and define the computer knowledge needed to operate the system, etc. In all cases,
it
is
of
paramount
responsible for executing
importance
that
the
support
these communication strategies
staff
possesses
adequate political skills so that the awareness stage ends up in accordance with the plan.
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ERP-Change Management The second step in the strategy implementation phase is to influence the affective component of users’ attitudes. The first strategy that can be used
by
management
is
cost
minimization.
The
marketing
intellectual, Porter, proposes the low-cost strategy as one that can be used by marketers to help an organization survive in a competitive environment. This strategy has a useful implication for ERP. If management wants the new system to be adopted by the users, then users’ adoption costs should be kept to a minimum. Further, if change agents convince ERP users that their net outcome of the adoption process will be positive, then they will develop strong feelings toward accepting and adopting the new system.
The cost minimization strategy should be developed in such a way that it affects both individual workers and influential groups. On the individual level, the ERP system has to minimize the perceived cost for each employee in order to create a positive adoption attitude. For example, if the worker realizes that the ERP system is an opportunity for enhancing his or her job, thus making it more appealing with minimal additional costs, then
he/she most likely will develop an interest in the ERP
system.
Similarly, influential groups within the organization are also looking at the cost aspect of the implementation effort. Another strategy that could help affect the adoption attitude of potential users is differentiation. In the ERP context, the user’s perceived high quality of the ERP system would surely have a positive impact on their attitudes toward that system. Some ERP systems have an unwieldy user interface,
which
can
cause problems.
Generally,
system
users do not scientifically measure quality attributes of the
system,
rather
each
user constructs his or her convenient perception
about the system depending on his or her real (or socially constructed) experience. Additionally, hands-on training is another important driver of ERP implementation success. Training offers a good opportunity to help users adjust to the change that has been introduced by the ERP system, and
helps
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ERP-Change Management build positive attitudes toward the system. Further, training provides handson experience for the users: they appreciate the quality attributes of the system and its potential benefits. The last part in the strategy implementation phase is the conative stage. Getting the endorsement and support of well-known individuals and opinion leaders is the first strategy that can be used. Marketers
use
individual
feels
this strategy to invoke
group pressure because the
the need to be accepted by the group. Applying this
strategy in the context of ERP would entail ensuring the support of the leaders
of
the
influential
groups.
To succeed in mobilizing opinion
leaders, management has to capitalize on its efforts in the second stage when it tried to build users’ intention to adopt the ERP
system
by
minimizing the adoption costs of the groups. Also, convincing group leaders to effectively participate in the implementation process and make them feel that they are key players (because they are making key decisions) will ensure their valuable commitment. Because of their commitment, leaders of the groups will try to convince their colleagues that the ERP system is to their benefit. Another strategy is carefully timing the introduction of the new system. From a marketing point of view, how introducing a product to a marketplace at the wrong time would result in a disaster for the organization. Further, the attitude is one of the critical factors that must be taken into account when timing the introduction of a product. The above described strategy gives top management a clear rule that the introduction of an ERP system should not be introduced until a positive attitude (i.e. an intention to adopt) is built and sustained among potential users. For example, do not introduce an ERP when a critical mass of your employees feels threatened by the system or feels forced (neither convinced nor encouraged) to accept the new system. Solving these problems before introducing the ERP would help set the stage for success.
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ERP-Change Management Last but not least, top management commitment is critical for the success of the whole ERP implementation process. Change requires a strategic vision to ensure its long-term success. In a recent survey by Zairi and Sinclair, leadership was ranked the number one facilitator of large transformation
efforts
ERP implementation management
(such as can
the one
only
be
is totally committed
introduced
accomplished
to
the initiative.
by an
ERP).
when
senior
Management
commitment and support is the ultimate strategy that will secure the necessary
conditions
for successfully introducing the change brought by
ERP into the organization.
3) Status Evaluation Phase: The process of monitoring and evaluating change management strategies
for
ERP
implementation
suggested framework. Besides
is
the
having a
last
component
of
the
performance measurement
system to ensure that the desired business outcomes were achieved, it is as important to have a performance system to monitor the progress of ERP change management efforts. It is imperative that top management makes sure workers’ anxiety and
resistance
to
ERP
is
under
control.
The
status
evaluation phase provides feedback information to top management in a dynamic manner. In order to be useful, the feedback should be timely, accurate, and systematic. Based on status evaluation phase outcome, top management takes appropriate action. The feedback coming from the evaluation phase may be positive, which means that recorded performance of counter resistance efforts should be maintained (at least). Alternatively, the performance feedback may be negative. Management may find that there is still strong workforce resistance to the operational changes resulting
from
ERP implementation. In such a case, top management
should make every effort to understand what went wrong. For example, top management may want to re-identify user’s needs and re-evaluate the execution of adopted change management strategies to find an acceptable fit between the two.
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ERP-Change Management
A Model of Successful ERP Adoption
Top Management Commitment & Support
Communicating ERP benefits Communicating ERP general operations
Favorable Awareness Response
Minimizing adoption costs Involving individuals & groups Enhancing ERP interface quality Hands on training
Favorable Feeling Response
Securing support of opinion leaders Timing ERP introduction
Actual ERP Adoption
Favorable Adoption Intention Response
To overcome users’ resistance to change, top management has to: Study the structure and needs of the users and the causes of potential resistance among them; Deal with the situation by using the appropriate strategies and techniques in order to introduce ERP successfully; and Evaluate the status of change management efforts.
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ERP-Change Management
THE MAJOR CHALLENGES OF CHANGE MANAGEMENT PROCESS WHILE IMPLEMENTING AN ERP
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ERP-Change Management
CHANG E
Companies need to be flexible and innovative in the ways in which they deal with the unfamiliar situations they often find themselves in. We are in a time of great change. The reality of yesterday proves wrong today, and nobody really knows what will be the truth tomorrow. The steadily increasing complexity of the world is asking too much of us. How can we -as individuals, as well as organizations, prepare ourselves for an uncertain future?
Through
creating
our
own
future.
Change
management means empowering organizations and individuals for taking over their responsibility for their own future.
Organizations
worldwide
are
confronting
more
turbulent
markets, more demanding shareholders, and more discerning customers, and many are restructuring to meet such challenges. Change is always happening, like a river winding its way to the ocean; it never ceases. Continuous and overlapping change has become a way of life in the corporate environment. Leaders who want to get ahead in today' s marketplace must learn to respond to a growing number of changes in how they structure companies,
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ERP-Change Management conduct business, implement technology, and relate to customers and employees. While most organizations focus on deciding what to change to improve company performance and quality, the human element of executing these decisions is often left unattended. To successfully implement major change, companies must find the connection between the organization, the worker, and the change initiatives being introduced. That connection is achieved by fostering resilience among individuals in the organization. Change is uncomfortable, and adapting to change is messy. But change is vital - it defines life itself. The key is to learn how to embrace the changes that face us both professionally and personally.
According to Webster' s Ninth New Collegiate Dictionary: "Change" is: To give a different position, course, or direction to To make a shift from one to another To undergo a modification of To undergo transformation, transition or substitution. And "Manage" is defined as: To handle or direct with a degree of skill or address To exercise executive, administrative and supervisory direction of.
In the organization’s view, Change is the implementation of new
procedures
organization with
or
the
technologies changing
intended
demands
of
to
realign its
environment, or to capitalize on business opportunities.
an
business
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ERP-Change Management Change Management is a structured process that will cause proposed changes to be reviewed for technical and business readiness in a consistent manner that can be relaxed or tightened to adjust to business needs and experiences.
Challenges of Change: Change usually involves the introduction of new procedures, people or ways of working which have a direct impact on the various stakeholders within an organization. The key to successful change management lies in understanding the initiative on these stakeholders. Will employees be scared, resistant, pessimistic or enthusiastic about your proposed changes? How can each possible reaction be anticipated and managed? As you begin to think about any kind of significant change, be aware of how the change will impact others in your organization and your customers. A new vision, set of driving values, mission or goals constitute significant change. So do new performance
standards,
new
policies
or
procedures,
a
new
computer equipment installation, or a relocation of business. These challenges may manifest themselves under different names or other guises but are essentially the challenges of: Leadership: changing the running of an organization from a command and control nature of management to the nurturing and motivational nature of leadership. Focus: making business choices to bring alignment and focus to the organization. Commitment: creating commitment to the future of the enterprise throughout the organization. Resistance: Resistance is a complex entity that directly affects the outcomes of change, both positively and negatively.
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ERP-Change Management Each of these challenges is unique, yet they are simultaneously independent and interrelated. Overcoming any one independently is insufficient for realizing sustainable change. For change to be successful in the knowledge economy, an organization has to overcome all the challenges.
Leadership: Leadership can make a great difference, and its importance for organizational success is intensifying. Change cannot be accomplished without the commitment and involvement of the organization' s leaders.The role a leader should play during the change process are Leaders must have a way of thinking about change. They should have a "model" which will guide analysis of the situation and help him to formulate the process of change to be implemented. Leaders must have clear goals. They must have a clear idea of what results the change will generate. Leaders should initiate change at the point where they have the most control
and
can
make
reliable
predictions
about
the
consequences of their actions. Leaders should recognize that change in any one part of the situation affects the whole. They must be alert for unanticipated consequences of their actions. The most important task of a leader is creating the climate that is conducive to the change being attempted
Focus: Without a consistent focus, it becomes incumbent on each member to interpret the environment and to make decisions on which opportunities to explore from his/her own perspective. The likely result is a collection of highly hard,
skilled
individuals,
and
pulling
the
working
extremely
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ERP-Change Management organization in a number of uncoordinated directions. Hence today' s leaders must rely more on the discipline to focus on the right opportunities for the organization to steer the followers in the right direction.
Commitment: Individuals who are asked to make a change are really being asked to make a commitment of personal energy. Company resources must be devoted to help workers understand the impending change, convince them of its value, and manage the resistance that will inevitably surface. As a leader
builds
understanding
and
generates
commitment,
the
intense resistance to change, born out of fear of the unknown, is abandoned and replaced by the courage to take new directions and to actively pursue change.
Resistance: Resistance to change is a human condition. Every human being and consequently every organization exists in a current reality; an understanding of themselves and a level of comfort with their current situation. Bringing new skills or knowledge into a company is not always easy. People fear change. Management should oversee this integration, and smooth the way by keeping
everyone
aware
of
the
company' s
objectives
and
how
new competencies have a valuable part to play. Resistance management may improve if the organization recognizes the potential benefits of resistance. Resistance may be a true friend to implement the correct change. It is much more complex than it may first appear.
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ERP-Change Management
Orchestrating Successful Organizational Changes: Change is an opportunity to do more business . . . if you are ready to offer Change to your customers and clients when the right time comes along. The keys are to be ready before they are ready or need to Change, to let them know you are aware of oncoming Change, and that you have the
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ERP-Change Management services and products that will help them meet Change. Before offering to help other effect Change, you need to do the following
Examine your business closely Breakdown business into 5 Categories: 1. Outputs: products, services, information, ideas 2. Personnel: people, salaries 3. Resources: equipment, suppliers 4. Operations: policies, procedures 5. Customers: former, current, prospects Apply the following questions to each of the above categories: 1. Can we adapt to the Change? 2. Is Change unimportant or dumb (from the recipient' s point of view)? 3. How are we going to do it? 4. How will other people outside the business view Change? How would I like them to see it? What should be done to achieve this? 5. Who will be responsible for the development? 6. How will this be integrated into our present offerings? 7. What it will cost others in time, space, effort, and money to accomplish Change?
If these questions are not answered adequately, Change can cause a revolution. If these points are not covered, it will have a negative effect on the business environment.
¾ Eight Steps for starting a bottom-up revolution by Gary Hamel:
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ERP-Change Management 1. Build a point of view (POV): Understand what is changing in the world and what opportunities these changes make possible. Create a POV that is credible, coherent, compelling and commercial. Start your journey with a sense of destiny. Don' t be afraid to dream big. 2.
Write a manifesto: Infect others with your ideas by demonstrating the inevitability of the cause, speaking to timeless human needs and aspirations, drawing clear implications for action and eliciting support. Think of your manifesto as a virus. It must build a case for
your intellectual authority and it must capture people'
s
imagination. 3. Create a coalition: Transform individual authority into collective authority by seducing, cajoling and convincing others to get things done. Build strength from below, as many new opportunities don' t fit neatly into any of the existing organizational boxes. 4. Pick your targets and pick your moments: Know and understand who in your organization can say "yes" and make it stick. Every event is an opportunity to advance your POV, but pick your moment carefully. Plus, always have an elevator speech ready. 5. Co-opt and neutralize: Win-win propositions are vital to your campaign. Make people see you as a catalyst for change. 6.
Find a translator: Find someone who shares your view of the future and who can better communicate to the influential people. This gives the audience a better/different view of the project.
7. Win small; win early; win often: Start small! Organizing efforts are worth nothing if you can' t demonstrate that your ideas actually work. Ask yourself, "What will constitute an early win?" 8. Isolate; infiltrate; integrate: Take action! Turn your experiment into a reality. Your experiment must take root throughout the organization and send out runners that will transform the landscape.
Our economic environment is changing. Today' s businesses are faced with new challenges as they continually try to position themselves for the future. What is required is a new set of rules. Today' s managers can no
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ERP-Change Management longer control their organizations, they must lead them. Their challenge is not one of managing to maximize utilization but of engaging the staff for maximum less
innovation. than
This
requires
nothing
personal transformation. A transformation
in which leaders learn to take responsibility for articulating the direction, for creating an environment that empowers the members of the organization to be creative and for enabling individuals to be driven by their own will to continuously innovate in the pursuit of the future. These challenges are not new. However, the environment is and we can no longer apply the old techniques and expect new results. We can be encouraged by the new world, which reflects more directly the deepest of our dreams as individuals and as organizations. So organizations have to follow the Law of Change: Change or Die.
MANAGING THE COMPLEXITY AND REDUCING THE RISK OF CHANGE Companies have made big investments in ERP software, and leading CEO’s now want to see IT contributing more to the bottom line – producing higher value at lower cost. Notwithstanding, patches and new releases create ongoing support and change control challenges that can chip away
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ERP-Change Management from the returns on ERP investments. Change Management is becoming the focus of attention in many IT organizations. This new level of awareness on change management issues is prerequisite for containing the scope of significant technology changes, as well as for establishing the controls needed to ensure
the
technical
and
business process
integrity of
business critical applications. Managing the Complexity of Change For the most part, complex technology changes stem from a fairly common list of business events and technology upgrades, including but not limited to: ERP Application Migrations Mergers and Acquisitions Downsizing & Corporate Consolidations E-commerce Initiatives Enterprise Application Integration Data Warehousing. If
the
implementation
doesn’t
meet
the
requirement
of
a
company then there will be direct affect on the returns of a company. Thus it becomes important for establishing the controls needed for to ensure the technical and business process integrity. The steps to be followed to reduce the risks of change are 1. Managing the complexity of change. 2. Reviewing current version and change management processes. 3. Developing change management core competencies.
1) Managing the Complexity of Change: Many CIO’s are struggling to determine the right approach to migrate their
complex
ERP
applications
to
support
web-enabled,
e-
commerce architectures. An example of this is Oracle Applications Release 11i, comprising more than 30 different products, each involving a complex array of forms, libraries and tables, the task of tracking and migrating customizations from one Oracle upgrade to the next is daunting.
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ERP-Change Management
Release 10.7
Standard Customized Patched Application Releases
Release ERP 11.x Application Versions
Inter Release Change & Impact Analysis
Consider all of the objects that must be managed in your Oracle Applications
environment:
47,000 columns;
3000
More
than
indexes;
2400
1000
forms;
1500
tables;
views;
300
libraries;
4000
packages; 800 triggers; 20,000 synonyms; 93,000 grants; 600 sequences; and three million lines of server code (packages, procedures, and functions).
• Managing
Concurrency
Issues
across
an
ERP
Implementation: Project concurrency issues are fairly common to ERP projects that involve
some
combination
of
Financials,
Manufacturing
and
HR
modules. Project concurrency issues can surface fairly quickly after a medium to large sized ERP implementation gets under way. While there are cases where an ERP implementation requires a “Big Bang” approach, most implementations are
staggered
based
schedule, scope of the implementation functionality,
etc.
on
the
module
deployment
effort,required ERP modules
are
commonly phased in as new functionality is evaluated, configured, tested and released. The underlying benefit of the ERP architecture, a common data and application architecture, also presents one of the biggest challenges.
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ERP-Change Management Since the various modules are tightly integrated, patches can affect modules which were not the original target of the patch. Large patches (or family packs) can affect many modules, not just the modules where the fix is desired. It is almost impossible to isolate changes to prevent unexpected consequences. As a result, extensive regression testing is used to validate even seemingly minor changes. Also, it is not unusual for the finance, manufacturing, or HR to have completely separate testing
and
instance refresh schedules. The right Application Change
Management strategy can mitigate the project risk that is inherent to these concurrency issues.
2)
Reviewing
Current
Version
Management Processes: New Release/Version
Local Application Customization
Test
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Change
Institute of Management 57
ERP-Change Management
ERP Environments
New Releas /Patch
Upgd*
Vendor Software Updates
New Release/ Patch Implementation
*Apps Upgrade Test Environment An initial
assessment of a company’s
Change Management
capabilities involves the review of current Version Management and Change Management processes
& tools
in
use.
Most
organizations have
implemented some form of version management processes to preserve the integrity of custom software developed within an organization. At the same time, these organizations have a formal promotion protocol established to manage the testing and release of custom-developed software. When ERP applications, or other large package applications are introduced, a number of new Change Management issues are encountered that are associated with maintaining and reconciling custom
and
packaged applications (i.e., ERP, SCM, CRM, etc.).
• Version
M a n a g e m e nt
vs.
Change
Management
Processes:
QA & Change Control
Version Management & Release
Impact Analysis
QA
Control
Release/ Build Bundling
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ERP-Change Management
Version Control and Promotion Version Promotion
Dev
Test
Prod
Documentation and Change Monitoring
Version Management: Managing version integrity and security (checkin/check-out processes), Build/Release bundling, new version promotion, version archiving. Change
Management:
Monitor
changes
to
application,
and
database, support impact analysis of changes (dependency analysis), reconcile differences across application environments (e.g. Test vs. Prod), and change documentation &publishing.
Generally speaking, Version Management software helps you effectively
manage
version
control
and
security
issues
(see
following diagram) that are typical to a software development and maintenance project. However, Change Management issues are more complex when an IT environment includes integrated applications, involving a mixture of custom applications and packaged ERP applications.
•
Assessing Change Management Processes & Practices:
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ERP-Change Management
Standard
Custom
aexmbe.fmb
New Release/Version
Test Database Local Applicati on Customiz ation
mexmbe.fmb
Test
Prod
Dev Upg New Rele ase /Pat ch
*
d
New Release/ Patch implementation
Develop ment Database
Since Oracle ERP Applications rely on extensive object referencing capabilities,
an
consider application &
effective
change
dependencies
management
strategy
across Oracle
must Forms
Reports (Oracle Developer), as well as the
database. An effective Change Management Strategy will improve your organization’s change analysis capabilities, and provide more fluid and efficient change implementation/migration processes. The following capabilities are key competencies of a successful ERP application change management strategy: Maintaining a current application baseline to perform change analysis. Finding
the
customizations
and
extensions
made
by
your
organization. Keeping your customized modules linked to the related Oracle module. Performing impact analysis on your changes to forms, libraries, server code, and the database.
Vendor Software Updates
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ERP-Change Management Knowing the difference between a customized environment and an unmodified Oracle Applications environment (Release 10.7 or 11.x). Generating and distributing your custom code along with Oracle’s code. Managing your development, test, and production environments.
3)
Developing
Change
Management
Core
Competencies: "Any change, even a change for the better, is always accompanied by drawbacks and discomforts." -Arnold Bennett, from the Arnold Bennett Calendar
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ERP-Change Management In today' s world, IT spending is under the value microscope as never before.
IT
budgets
as
a
percentage
of
corporate
revenue
have
increased sharply in the last five years. CEOs and CFOs want to see more return on those investments. In addition to spending wisely on selffunding, higher performance IT investments, IT executives must provide change controls on business critical applications that support collaboration, visibility, speed and audit-ability. Key indicators of an effective change management strategy include the following: Business Process Changes; Application & Database Change Management Processes; Vendor Application Patch Implementation; Change Impact Analysis & Dependency Analysis Capabilities; Other Change Management Processes. The following Change Management Matrix provides an overview of Change
Management
capabilities/functions
based on varying ERP
and custom application scenarios. This CM matrix is used to formulate evaluation criteria for change management software/utilities:
Change Management Matrix
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ERP-Change Management Small to Medium Sized Custom Application
Impact & Dependency Analysis Capabilities
Advanced Application & DB Dependency Recognition
Basic Change Detection (Database Only)
Large Custom and Integrated ERP/ Packaged Applications
Advanced DB &Appl Impact Analysis & Change Reconciliation
Active & Passive Change Detection & Documentation
Advanced Version control & Configuration Management
Basic Version Control (Check-in/Checkout)
Automated Version control, Code Migration & Code Generation
Major Software Changes & New Releases
Minor Version Changes & Patches
Automated Software Patch Migration
Change Adaptations & Migration Capabilities
•
Prevent Problems from being Promoted to Production:
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ERP-Change Management
Version Management & Release Control
Version Control & Promotion
Promotion Model
Test
ERP Environments
Prod
Dev Upgd*
*Apps Upgrade Test Environment
Implementing more complete
Version
Change
Management
Management
is
the
strategy.
first
Version
step
in
a
Management
processes help ensure that software version integrity will be maintained during both the development and promotion of new software versions. Version
Management software
is
commonly
used
in
development
environments to control access to source code, and manage the promotion process.
• Create a More Effective Change Management Process:
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ERP-Change Management
QA & Change Control
Impact Analysis
QA
Release/ Build Bundling
Version Control & Promotion
Promotion Model
Test ERP Environments
Prod
Dev Upgd*
*Apps Upgrade Test Environment An effective Change Management strategy simplifies and automates the processes that a developer must go through to manage and migrate changes. Without money will be spent resolving
Change
manually
day-to-day problems.
Management, too managing
Whether
seemingly minor patch, or preparing effective
change
for
the you
a
much time and
environments are
major
and
implementing new
release,
a an
management strategy can guard against potentially
costly production outages.
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ERP-Change Management •
Understand
and
Document
Application
Baseline
&
Dependencies:
Dependency Analysis & Change Doc.
Developer Functions
Developer Tools
Impact Analysis
QA
Release/ Build Bundling
Version Control & Promotion
Promotion Model
Test ERP Environments
Prod
Dev Upgd*
Baseline Documentation & Change Monitoring
*Apps Upgrade Test Environment
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ERP-Change Management Like looking for a needle in a haystack, someone must sift laboriously through thousands and thousands of lines of code to identify what has changed, what is affected by the change, and how the latest patch or revision from Oracle affects or is affected by the change. The average Oracle Applications form can contain up to 4000 objects; 90,000 lines of code; 35 attached libraries; and 10 referenced forms. There are over 11,000 lines of code in some libraries. Among all of these objects, where are your customizations? What has Oracle changed? What objects are missing? What objects are no longer needed? Maintaining a Documented Baseline: One of the biggest challenges to supporting ERP applications is to understand what makes up the current production baseline, and how to keep up with changes to the baseline. The best defense the support organization has is a well-documented baseline so the support staff can quickly determine which baseline
changes
caused problems.
to
the
Also, automated
production change
tracking
capabilities can be used to monitor the production environment(s) and provide a daily or weekly change reports. The world has changed. It' s a tougher business environment, and the pressure to perform has never been higher, especially for IT organizations. Companies want to see higher ROI from the enterprise software they' ve already purchased. And they want to move faster, to react in real time to business opportunities. Intelligent IT investments in this environment, means investing in IT solutions that truly contribute to the bottom line: Reduce Total Cost of Ownership (TCO) of software assets by reducing the level of manual intervention/effort needed to analyze & implement change; Reduce IT staffing costs by automating many manual tasks and improving efficiency of others;
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ERP-Change Management Improving efficiencies of manufacturing and customer management by bringing enterprise software implementations and enhancements to market much faster.
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ERP-Change Management
THE WAYS TO REDUCE COMMON MISTAKES MADE WHILE IMPLEMENTING CHANGE MANAGEMENT PROCESS “75% of application downtime is caused by ‘self inflicted’ errors.” In today’s world, 80% of IT budgets are used just to maintain status quo. CEOs and CFOs want to see more return on their ERP investments. In addition to spending wisely on self-funding, higher performance IT investments, IT executives
must
provide
change
controls
on
business
critical
applications that support collaboration, visibility, speed and audit-ability. Change and adaptability have become the central tenets to surviving in a new and unforgiving business landscape. IT strategies must mirror these new adaptive demands on the business or risk becoming another victim to outsourcing. Moreover, ERP applications are being put to the test in the harshest business climate that most have witnessed in their entire careers. IT managers are now looking to Application Change Management solves change-related problems. Some of the main steps which help in avoiding the common mistakes when implementing CM are 1. Delta challenge 2. Avoid disjoint development and promotion processes 3. Avoid communication breakdowns on critical project issues 4. Avoid an incomplete CM strategy
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ERP-Change Management
1) The Delta Challenge: Virtually every Oracle Apps support organization has experienced the “Delta Challenge”. This occurs on a day, like any other day, that starts out normally, but quickly transforms into a panicked search to find out what was changed the night before. An important feature is not working, and to make matters worse, you are also in the middle of a month-end close. If
you
are
responsible
for
production
support,
you
must
begin searching for a needle in a virtual haystack to identify what has changed, what is affected by the change, and why the change was made. If you are fortunate enough to have automated change tracking to monitor production changes, this becomes an academic exercise. Otherwise, the search is on.
2) Avoid Disjointed Development and Promotion Processes: An effective Change Management strategy simplifies and automates the processes that a developer must go through to manage and migrate changes. Without Change money will be spent
manually
Management, too managing
the
much
time and
environments
and
resolving day-to-day problems. The fastest way to make an Application Change Management strategy fail is to encumber the developer with extra control processes without providing automation to reduce the total effort required to maintain the Application Change Management process. Most development teams are already overloaded and will quickly find a way to shun new responsibilities that don’t add value to the development process. Key indicators of an effective Application Change Management strategy include the following: Source code management; Change trace-ability;
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ERP-Change Management Maintaining a current Baseline; Change impact analysis & dependency analysis; Both application & database Change Tracking processes; Automated code migration processes;
™ Vendor software patch analysis.
Developer Functions
Impact Analysis
QA
Release/ Build Bundling
Version Control & Promotion
Promotion Model
Test
ERP Environment
Prod
Dev Upgd*
Baseline Documentation & Change Monitoring
*Apps Upgrade Test Environment
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ERP-Change Management
3) Avoid Communication Breakdowns on Critical Project Issues: One of the common areas where Change processes can break down is in the area of Issue Management (typically referring to issues raised during the analysis, design and development phases). A common solution to issue management is a combination of email and spreadsheets. On ERP projects, this of
approach rarely
does
justice to
the
magnitude
the coordination problems, and the importance of tracking and
managing issues & defects during the pre-production phases. Spreadsheets quickly become unwieldy and difficult, if not impossible, to keep current. Invariably, the issue management process breaks down because it quickly becomes overloaded. Workflow
tools
designed
for
Issue
Management
&
Software
Change Requests, like Merant’s Tracker product, are ideally suited to this problem and satisfy most audit requirements for change traceability.
4)
Avoid
an
I n c o m p l e te
Application
Change
Management Strategy: A common Application Change Management strategy disconnect is that the people implementing Application Change Management do not understand how development and promotion processes work for a given ERP Application. Some of the most important features of Application Change Management can be discerned from some basic questions directed to the Application These
Change
Management
Software
Vendors.
questions should start with “How will this software help me
prepare for and manage significant software changes resulting from new vendor releases, major patches, and local customizations?” From an internal standpoint, Application Change Management also requires a certain amount of cultural change. Like other undertakings that require cultural changes,
you
can
implement Application Change Management in
phases; however the final state should be a fluid application change model that follows the entire lifecycle of
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ERP-Change Management application change, from the inception of the request (e.g., Issue & SCR Tracking) to the promotion of the change. At the end of the day, Application Change Management is not just a change management protocol; it is part of a larger IT project controls function. Project managers are now looking at Application Change Management strategies to implement tactical project controls. Since project change can cause the even the best project plans to unravel, a project manager’s best defense against this project variable is an effective Application Change Management strategy. For a large percentage of ERP customers, ERP implementation was their most complicated and costly software project they have undertaken. Companies have made big investments in ERP software, and leading CEO' s now want to see IT contributing more to the bottom line - producing higher value at lower cost. Notwithstanding, patches and new releases create ongoing support and business adaptation challenges that can chip away from the returns on ERP investments. Unmanaged changes to ERP applications have generated some of the most recounted project horror stories. Needless to say, Change Management is becoming the focus of attention in many IT organizations. By
equipping
IT
with
the
appropriate
Application
Change
Management tools & processes, a more intelligent and deliberate change framework can be created that allows IT to facilitate, and in many cases even drive, business process change.
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ERP-Change Management
CHAPTER 8
LIMITATIONS
LIMITATIONS OF THE STUDY
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ERP-Change Management The strategies for implementing change management differ from one organization to other as and when technology changes. The information is sensitive to a company, thus they are reluctant to give an adequate response. Time and cost constrains. The size of the sample is very less which affected the feasibility of findings.
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ERP-Change Management
CHAPTER 9
CONCLUSION
CONCLUSION In the organization’s view, Change is the implementation of new procedures or technologies intended to realign an organization with the M.P.Birla Institute of Management
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ERP-Change Management changing demands of its business environment, or to capitalize on business opportunities. Change usually involves the introduction of new procedures, people or ways of working which have a direct impact on the various stakeholders within an organization. The key to successful change management lies in understanding the initiative on these stakeholders.
Change Management is a structured process that will cause proposed changes to be reviewed for technical and business readiness in a consistent manner that can be relaxed or tightened to adjust to business needs and experiences.
To overcome users’ resistance to change, top management has to study the structure and needs of the users and the causes of potential resistance among them; deal with the situation by using the appropriate strategies
and
techniques
in
order
to
introduce
ERP
successfully; and evaluate the status of change management efforts. For a large percentage of ERP customers, ERP implementation was their
most
complicated
and
costly
software
project
they
have
undertaken. Companies have made big investments in ERP software, and leading CEO' s now want to see IT contributing more to the bottom line- producing higher value at lower cost. Notwithstanding, patches and new
releases create
ongoing
support
and
business
adaptation
challenges that can chip away from the returns on ERP investments. Unmanaged changes to ERP applications have generated some of the most
recounted
project
horror stories.
Needless
to
say,
Change
Management is becoming the focus of attention in many IT organizations. By
equipping
IT
with
the
appropriate
Application
Change
Management tools & processes, a more intelligent and deliberate change framework can be created that allows IT to facilitate, and in many cases even drive, business process change.
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ERP-Change Management
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ERP-Change Management
CHAPTER 10
BIBILIOGRAPHY
BIBLIOGRAPHY ™ Concepts in Enterprise Resource Planning- By Joseph A. Bradly, Ellen F. Monk, Bret J. Wagner. ™ Enterprise Resource Planning- By Alexis Leon.
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ERP-Change Management
™ Change Management: Evaluating CM Tools to Implement a Successful ERP Application CM Strategy- By Allan B. Hooks. ™ Change Management Must for today’s Organization- By Hemamalini Suresh. ™ Change management- By Chris Worsley, Kalido Ltd. ™ Change Management: How to Reduce the Risk of Change- By Allan B. Hooks. ™ Strategies for Successful ERP Implementation- By Adel M. Aladwani. ™ Ten Questions to Ask When Evaluating SAP Change Management Solutions- By Bob Wilkin ™ Organizational Culture and Enterprise Resource Planning (ERP) Systems Implementation- By Jenine Beekhuyzen. ™ Managing Changes in the SAP Environment, SAP Journal. ™ www.oracle.com ™ www.sap.com ™ www.dimensionconsulting.com ™ www.thinkbn.com
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