What is organizational change management (OCM) in the ERP context? Unfortunately, it is a question that very few people are able to answer precisely. Obviously, we cannot manage something well that we do not understand, well enough, in the first place. A 2019 ERP Report published by one of the leading ERP consulting firms, finds Change Management as ERP’s Biggest Hurdle.
Multiple research studies have shown that the majority of key issues in transformation projects (67% – 75%, depending on the study) are due to adoption and change management issues, not software or even implementation-oriented problems. In another study, 90% of the respondents who included change management initiatives in their transformation projects, estimated the impact of change management to be responsible for 65%-70% of the project success.
Today's VUCA ( Volatile, Uncertain, Complex, and Ambiguous ) business environment specially after the onset of the Covid 19 pandemic, makes change management more important than ever before for many kind of enterprises, especially those trying to implement large scale business transformation projects such as an ERP project. If we really condense down what we mean by VUCA, it’s all about change. The speed at which change occurs, and more importantly, how change is managed. Success in a VUCA world demands that change is managed well. Many times, in the midst of ERP projects, there is a need for flexibility and change readiness to be built up, so that users can adapt to new processes, change direction or adopt to new regulations and policies that are introduced. As an internal ERP project Head within your enterprise, you may find that the ‘old way’ no longer works, but you are not completely sure what the ‘new way’ is. This is what change looks like in a VUCA world, where priorities change rapidly, information is not reliable and results are often unpredictable. Managing change effectively suddenly becomes one of the most important factor for being able to ensure the project success, particularly if your organization is operating in a VUCA environment, which is the reality today for most enterprises. Not everyone is comfortable with change, and that’s why so many transformation initiatives fall over. Many people see change fear and resist change.
A research shows that only 38% of people are naturally wired to come out of their comfort zone and adopt change. The other 62%, however, look at change immediately feel fear and discomfort. They may think.
Good change management involves clearly communicating the ‘why’, showing the 'how’, and explaining the end goal.
Yet, organizational change management (OCM) is still treated by many project teams as a “nice to have” or ignored entirely. It is quite likely that these teams do not really understand OCM or how to carry it out. Or, they think that OCM is simply a matter of sending out some project newsletters or training end users right before go-live. There is much more to it than this. Most technology initiatives designed to create change across an organization fail, when they are evaluated against their expected business benefit. While such projects are usually able to deliver their “product” (e.g., an ERP system), they often fail because they are unable to “change the operational DNA” of the environment. In fact, culture is one of the most overlooked aspects of organizational change and digital transformation initiatives.
This is especially true of multi-site and multi-national digital transformations. Diverse cultures, business operations, and political factors all underscore the importance of OCM. As a result, there are several important organizational change to-dos as part of a global digital transformation. They also require some distinct organizational change strategies for global digital transformations. The main reasons why an organization requires effective change Management to execute.