Are IT Vendors Driven by the Business Results of Their Customers?

Writing for CIO UK, David Henderson suggests several reasons “Why IT vendors must raise their game”. The second major point he mentions is that “IT vendors tend to be driven by their portfolios rather than business outcomes” for their customers. Henderson points out that IT vendors “continue to make significant investments in their portfolios but aren’t prepared to make the same investment in understanding how these apply to their customers’ businesses,” which can “lead to huge inefficiencies” once implemented at the customers’ sites.

As a result, Henderson continues, “vendors… tend to give poorly defined generic presentations that bear only passing relevance” to the challenges faced by the customer or prospect at hand. Henderson goes on to berate the ERP vendors for “me, too” solutions and their inability to “connect the dots” between their product offering real value for the firm that buys the technology.
I agree that IT vendors need to change. The economic picture is vastly different in 2010 than it was even three years ago.

Where I disagree with Henderson’s writing, however, is who should know what.

Starting off on the wrong foot

Computer-based technologies really were not available to any significant number of SMBs (small-to-mid-sized businesses) until after the introduction of the personal computer (PC) in 1981. Prior to that, computing power available from mainframe and mini-computers was available only to larger firms with significant capital for investment in such technologies.

So, in the early days of the computerization of the SMB market, almost every new prospect was anticipating moving off a system dominated entirely by paper and the necessary manpower to keep the paper flowing. As the price of PC-based technologies fell, more and more companies made the switch. This movement dramatically increased productivity and return on investment (ROI) for such a move was almost a certainty. As a result, many ERP salespeople came in the door talking about increasing productivity and providing rapid ROI for almost every SMB they approached. And, almost without exception, the implementation of that first round of technologies provided consistently rapid payback for the firms.

Unfortunately, as the market changed (i.e., SMBs’ next round of technology purchases were not taking them off paper-based systems but, more frequently, moving them into a comprehensive suite of application modules or moving some SMBs off the high cost of maintenance associated with mainframe and mini-computer systems), the sales approach of most technology vendors did not change. The technology vendors’ salespeople continued to make the same claims about productivity improvements associated with the first round of ERP implementations and the executives and managers at the customers’ sites continued to drink up the claims like Kool-Aid. In many cases, the SMB management was spurred on by the impending arrival of the year 2000 and the Y2K epidemic of fear. Many executives felt they needed to spend the money to upgrade their systems and took little thought as to the ROI of such an expenditure.

Nobody grew up and nothing changed

By the early 2000’s the ERP market had changed yet again. By 2005 or so, almost every CEO or CFO of every SMB had been through at least one – and usually two or three – implementations of new software (or other technologies) in their business environment. Add to that experience the fact that they now had easy access to the Internet by which to explore and make inquiry regarding almost any ERP software on the market, and the ERP-buyer had changed dramatically over a bit more than two decades.

When ERP was starting to be sold (20-plus years earlier), when the technology salesperson first met a prospect, the prospect was hungry for information about products and capabilities. Furthermore, these green-horn technology buyers were more than willing to make the salespeople their de facto “instructors” in the purchase and application of new technologies in their businesses.

In addition, as previously stated, ROI was pretty easy to achieve. Almost any SMB moving off labor-intensive paper-based processes or coming from costly mainframe or mini-computer technologies was bound to reap savings in operating expenses, and was almost equally likely to achieve increases in Throughput. However, by the middle of the first decade of the 21st century, all the easy ROI from traditional ERP – Everything Replacement Projects – was gone and not likely to return. Sadly, much of the technology salespersons’ product positioning remained unchanged and the sales rhetoric and promises from a good many ERP vendors still harkened back to days gone by – without, of course, actually mentioning that fact.

This unwillingness to face the change in the marketplace was not entirely one-sided. As the traditional ERP sales hype continued to make sweeping “rule-of-thumb” claims about delivering ROI for the ERP-buying executives and managers, these executives and managers proved themselves equally willing to accept the claims without taking the time and effort to discover for themselves what they really needed to know about their particular organization and its potential for reaping ROI from any particular foray into new or upgraded technologies.

What every executive and manager needs to know

As Eliyahu Goldratt has put it so well, there are three – and only three – things that every executive and manager needs to know to make effective decisions in every situation. These are they:

1. What needs to change
2. What the change should look like
3. How to effect the change

If, before making the leap to buy technologies based on “rules of thumb” and sales-speak, executives would just take the time to figure out the answers to these three questions, there would be far fewer stories about traditional ERP implementations failing to deliver expected business results.

IT vendors are not necessarily driven by business results for every client. And, as executives and managers, you should be aware that rules-of-thumb may not apply to you and your enterprise – and the ERP vendor or VAR is not responsible for your business’s not fitting the rule-of-thumb by which other enterprises may have achieved return on investment.

As executives and managers in your organization with your particular circumstances and requirements, you – not the technology vendor or reseller – need to know what needs to change in order for your firm to start making more money tomorrow than you are making today. You – not your vendor or reseller – need to know what the change should look like in your particular organization. (The vendor or VAR may help you understand how new technologies may be part of what that change should look like, but you need to understand the precise need in order to effect your desired ROI. (Read more in many articles found right here at GeeWhiz To R.O.I.)

And lastly, as executives and managers it is your responsibility to understand how to effect the change within your enterprise. (Here again, the technology vendor or reseller may help you understand the technology-related components of the change, but you and your team need to take full responsibility for creating a roadmap for change.)

Need help?

Contact me at rcushing(at)GeeWhiz2ROI(dot)com and I can show you a way to unlock your firm’s “tribal knowledge” to discover what needs to change so you can start making more money tomorrow than you are making today, and you won’t spend money needlessly on technologies that don’t bring almost immediate ROI.

©2010 Richard D. Cushing

5 Things SMB Decision-Makers Aren't Getting Right Yet About ERP

5 Things SMB Decision-Makers Aren't Getting Right Yet About ERP

Despite more than a quarter-century since the arrival of 'ERP' on the scene, far too many executives and managers are still struggling to get things right.

Click the link above to read the article in full.

Two Peas in a Prison

Have a good laugh at the expense of “Big ERP.”

Watch “Two Peas in a Prison” and then remember that the New ERP – Extended Readiness for Profit is what you really want.

Learn more about the New ERP – Extended Readiness for Profit by reading right here at GeeWhiz to R.O.I.
Thanks.

Decision-making about ROI and your technology spending

Dan Gilmore wrote in “The ‘Probability’ of Supply Chain ROI” propounds properly and rationally the fact that any “forecast,” including forecasts of ROI (return on investment) should not be a single number. Rather, as anyone properly trained in statistical methods will tell you, it should be a range of numbers. The range of numbers would generally be calculated based on a single calculated value plus and minus values that represent the confidence intervals or, simply put, how likely the statistician believes his estimates the calculates will approximate reality. A larger range indicates lower levels of confidence and a smaller range higher confidence levels.

Now, while Gilmore is mathematically correct, the fact remains that most small-to-mid-sized businesses (SMBs) simply do not have anyone trained in statistics on their payroll and they are not likely to go out and hire a statistician to produce ROI forecasts for their IT projects – since this would, by definition, automatically reduce the ROI of the enterprise as a whole in the short term.

Back on a growth trajectory

Gilmore makes another comment in his article with which I wholeheartedly agree: “[T]here is some evidence that companies are in fact looking at investments that can help them to get back on a growth trajectory (read: increasing Throughput) without having to add much in the way of head count (read: Operating Expenses) by achieving productivity gains.” Given the world-wide economic malaise that is showing some signs of lessening (for the moment, at least), Gilmore’s description probably suits the vast majority of SMBs across the U.S. and beyond.

Furthermore, many others besides me have written that a firm stand on return on investment will be the hallmark of technology spending in the 2010 and beyond. So, I can hardly fault Gilmore for suggesting that SMB executives and managers need to become increasingly sensitive to and realistic about ROI for every kind of investment in their firms’ futures.

Too much complexity already

Despite my agreement with Gilmore on theoretical grounds regarding forecasts – including ROI forecasts; and despite my agreement with him regarding the goal of companies to get back on a growth trajectory through wise investment of capital resources, I must disagree with him on the matter of adding useless complexity to the return on investment forecasting process.

Allow me to explain why I use the harsh term “useless” to describe such an effort in the development of a ROI forecast for an IT project.

First  of all, let me say that statistical methods ought to be applied where they make sense. Statisticians generally agree that a valid statistical sample must contain at least 30 members. This works great where you have 30 dogs, 30 cows, 30 houses, 30 automobile, 30 miles of roadway, and so forth for comparison. Then, of course, you need to factor for environmental differences. Thirty or more cows all in the same pasture, eating the same foods, and enjoying the same climate would make a pretty good statistical sample for some studies of cows. On the other hand, three Holstein cows in northern Minnesota, two long-horns in west Texas, 15 black whiteface cows in eastern South Dakota, and ten mixed-breed cows in central Florida are not likely to constitute a good “sample” for cow studies.

Why?

Simply because there are too many environmental dissimilarities surrounding the cattle. By the time these factors were accounted for, (generally speaking) any results would have such a large confidence interval as to make any prediction almost meaningless.

When considered as a whole, a typical SMB has tens of thousand of variable at work within the enterprise. Any number of those variables are likely to dramatically separate it any “sister” enterprises in a sample group used to forecast ROI outcomes.

Of course, the fact that traditional ERP – Everything Replacement Projects – are going to affect the whole enterprise is a big part of the problem of predicting ROI outcomes. With tens of thousands of variables at play, picking the winning number is far more challenging than winning the lottery.

Reducing the scope reduces the complexity

First of all, a good many SMBs today have a “pretty good” ERP system in place – regardless of its brand. Unless there is some pressing reason to undertake a traditional ERP – Everything Replacement Project, it is probably a far better idea to consider a New ERP – Extended Readiness for Profit project instead.

Narrowing the scope of the project reduces the complexity. And, reducing the complexity increases the likelihood that your ROI forecast will be more on-target. Allow me to give you a couple of examples:

• Warehouse automation – Suppose your Current Reality Tree (CRT) shows you that, in order to increase Throughput, you need to enable your warehouse to be able process 80 to 100 shipments per hour, rather than the present 30 to 40 per hour. Furthermore, you need to do this while holding the line on Operating Expenses.
  
• Business intelligence – After reviewing their Current Reality Tree and laying out a Transition Tree (TrT), your marketing and sales team has assured you that, if they are provided tools with which to better understand customers and markets, they will be able to segment the market and create UROs (un-refusable offers) and increase Throughput by 130% in two years. No additional staff or other increases in Operating Expenses would be required.

If your executive management team were to elect to pursue either of these projects – or both – the goals are specific and measurable – as would be the expected outcomes. ROI calculations become simple:

Where T = Throughput (Revenues less Truly Variable Costs), OE = Operating Expenses, and I = Investment.

Simple. Elegant. And ROI calculations are far more likely to be right than any calculation around traditional ERP – Everything Replacement Projects.

©2010 Richard D. Cushing

Changing the game for ERP/COTS implementations

I think we've all learned that implementing ERP/COTS using a traditional approach of (1) focusing on custom software and (2) having a purely requirements-driven approach results in greater Total Cost of Ownership (TCO). ERP/COTS can make for an expensive custom solution. What is required to change this trend is to evolve our implementation approach. Following are my top strategies for changing the game for ERP/COTS implementations:

(1) Focus on Business Results. Too often we focus on software scope and not the entire business solution (People, Business Processes, Technology). A challenge I make to my project team is to focus on all three components that drive business results. Also, spend time/effort on gathering requirements that drive value-add business results. Not all of the customer's existing business results drive real business value.

(2) Ask customers to formalize knowledge transfer on their existing business model. Every customer's implementation is unique and it is important that every member on the project team has a common understanding of the customer's existing business model. This knowledge transfer will enable implementation partners (consultants, IT) to better align with the explicit and implicit expectations of their customer. Implementation partners need to speak the language of their customers. Being in the same meeting or having the latest chat technology does not guarantee alignment nor collaboration.

(3) Implementation partners need to enable customers to lead during the implementation. This requires us to have a formal knowledge transfer plan and a progressive leadership style: Directing, Coaching, Facilitating, and Supporting. A new measure for success: the implementation partner leavers before the go-live because the customer is self-sufficient.

(4) Perform business solution modeling. Use prototyping for defining requirements and modeling to validate requirements/configurations. Use multiple validation techniques (peer reviews, modeling, testing) to identify potential problems.

(5) Implement to the current business process maturity level. Technology alone does not mature a business process. Meeting the customer where they are at will (a) reduce the challenge of emerging requirements, (b) reduce implementation risk, and (c) put you in a better position for a quick win.

(6) Minimize customizations and maximize enhancements. Every customer will have unique requirements that must be addressed via software. Some of these requirements add no material value to desired business results (customizations) while other requirements have a material impact to desired business results (enhancements). This is not meant to be a negative commentary but it deals with the reality that a customer's existing business process is not 100% efficient nor 100% effective (Lean Six Sigma). A key strategy for the project team is to focus on the requirements that drive enhancements and eliminate non value add customizations as quickly as possible (before Fit/Gap).

(7) Negotiate for success. This requires changing the customer's expectation of business software. If the custom expects a custom software solution then the results will be additional gaps, costs, and disappointments. Implementation partners need to understand the potential areas in the ERP/COTS software where software changes can be cost-effective. Negotiation will be required to foster adoption and yet not eliminate the inherent advantages of ERP/COTS.

(8) Accelerate decisions by generating more knowledge and less information. At the end of the day, decisions (not documents) move implementations forward. Sometimes we get caught up in generating too many detailed documents without ensuring they generate value-add results (decisions).

In summary, the key to effective ERP/COTS implementations is to have an implementation approach that maximizes the advantages and minimizes the challenges associated with ERP/COTS software.

Adapted from the book "Maximize Your Investment: 10 Key Strategies for Effective Packaged Software Implementations" by Brett Beaubouef.

Change comes through people - Part 3

We are continuing to revisit the Key Points raised in the Webinar on “Emotional Intelligence.”

Middle managers need to implement change while managing their employees’ emotions – anxiety, resistance and inappropriate behavior

Notice the tone of this statement and the mandate it sets for middle managers: middle managers need to implement change while managing their employees’ emotions. Here are a couple of questions I raised with the presenters during the Webinar:

1.       How much time, energy and money should a company spend in “emotion management”?

2.       At what point should executives stop and re-think their plans when their top-down actions raise anxiety and resistance from middle management and below to such a level that additional resources must be deployed just to “manage emotions”?

This statement amply demonstrates just how out-of-touch executives and managers in some organizations must be with the rest of their enterprise – i.e., middle management and below on the organization chart. Not only so, but it also shows that these same executives have no idea the damage that their distance from the organization’s “heartbeat” is likely to cause. And, I am not talking about damage to the “peons’ egos or sense of self-worth.” I mean sincerely the damage that is done to their enterprise in measurable terms with which CEOs and CFOs should be concerned – namely, lost Throughput and profits.

Interestingly, when I raised the question regarding when executives should stop and re-think their plans, the presenters of the Webinar pretty much told me that in the face of ego-driven ERP, once the enterprise gets far enough down the traditional ERP path to start raising anxiety and resistance from “the masses,” there is no turning back. It is the rare, rare exception that executive management would dare to stop and rethink the project underway.

This is a sad state of affairs and emphasizes just why traditional ERP – Everything Replacement Projects have such a lousy success rate when it comes to delivering return-on-investment.

Middle managers face the challenge of grasping a change they did not design and negotiating the details with others who are equally removed from strategic decision-making

This seems to get more ridiculous the further we drill-down on the details, doesn’t it? This statement reminds me of a combat situation. Here’s the scenario (in metaphor):

The generals (executive management) have come up with a battle plan – apparently with little or no consultation with the boots on the ground. The generals, in their wisdom, have passed this battle plan down from “on high” and told the lieutenants (middle management) in the field just how they are going to “take that hill.” The lieutenants – many of them being 90-day wonders, fresh out of college and with little practical experience – are now tasked with convincing chief master sergeants, master sergeants, gunnery sergeants and ground troops – some of whom have 15, 20 or even 30 years of “boots on the ground” experience that the plan promulgated by the generals is a good plan and ought to be carried out.

The problem is, the lieutenants do not necessarily understand all of the implications of the plan for those who must carry the weapons and bring the plan to success. They do not comprehend what it takes in day-in, day-out hand-to-hand combat to actually “take the hill.”

Nevertheless, it is the lieutenants’ job to “sell” the plan and “negotiate the details” with the seasoned front-line personnel who actually know the risks that they will be taking.

I think you get the picture. Is it any wonder that a firm operating in this way might experience some problems with their traditional ERP – Everything Replacement Project? Is it any wonder that fewer than half the firms undertaking efforts like this achieve any measurable net benefit from their traditional ERP effort?

No, of course there is no wonder.

Complexity rises for middle managers of change as work demands are modified and multiply, thus creating conflicts

This is a traditional ERP – Everything Replacement Project – after all. Executives have decided to tear the guts out of the entire organization and transplant new technological “guts” in the name of “improvement” that the executives themselves have likely not quantified. To say that “Hope is not a strategy” is an understatement at this point.

Executives have, more likely than not, promulgated a technology “strategy” based on little more than “hope” and the so-called “promises” of the vendors or resellers. Then, these same executives have largely left execution in the hands of lieutenants (see above) and third-parties (e.g., the vendors, resellers and consultants). Then, by some inexplicable stroke of magic executive management expects improved profits to be the result at the other end of this journey. Why else would you spend millions of dollars to disrupt virtually every operation in your enterprise virtually simultaneously and continuously for upwards of 18 months?

Of course “work demands are modified.” A “strategy” (falsely so-called) has been set forward and most of middle management have no idea what that strategy will actually mean for the “boots on the ground.” (See metaphor in previous section.) In this case, it is not “the enemy” forcing a change in plans. As Pogo once said, “We have met the enemy, and it is us.”

Lack of clarity renders new demands uncertain and frequently misunderstood; without clear understanding, managers can be seen as taking wrong actions or no action at all

Given our discussions up to this point, does anyone have an difficulty in understanding just why there might be “lack of clarity” in the traditional ERP – Everything Replacement Project?

Maybe it is because, while it is necessary to understand the operation of your organization as a whole – that is, as an integrated “system” – it is not possible to “focus” on the whole organization all at once.

If executives ask themselves the question, “What needs to change in order for our company to start making more money tomorrow than we are making today?” How likely is it that the answer that would come to mind would be, “Everything!”?

My guess is that the answer would never be everything! Typically, the number of things that need to change to begin making more money tomorrow is very small – say, fewer than a half-dozen. And, even if there are a half-dozen, they need not all be undertaken at once. Then, add to that, the fact that among those half-dozen things that need to change, it may probably be found that half or fewer of those things actually require a change in technologies to support the change.

Yet, purveyors of traditional ERP- Everything Replacement Projects will try to convince executives that what needs to change is everything – and then the company will make more money. Unfortunately, many executives are all too willing to believe this is actually “the solution” of which they have always dreamed. “Just pour it in and everything will run smoother, faster, longer and we’ll get better mileage, too.”

Summary

As W. Edwards Deming said, “You do not install knowledge,” and “Knowledge comes from theory.” These executives go far afield from actually helping their organizations improve because they lack a valid “theory” about how their “system” – their enterprise – actually functions in carrying out the customer-to-cash chain of inter-dependent functions and events.

Virtually all of what they need to know lies resident within their own organization in what I call “tribal knowledge.” But such executives as would seek to manage their employees’ emotions through “Emotional Intelligence” – read: manipulation – will never reap the benefit of unlocking the treasure of “tribal knowledge,” because, it seems, this knowledge comes from “the working class” and it is beneath their dignity to learn from “the man that runs the machine.”

It is the executives with such a mind that are the losers as a result. But their employees lose, too. Firms under such management will never be as profitable or durable as they otherwise might be. Employees cannot be paid as much, because profits are too low. Some employees will lose their jobs because the company cannot compete.

This is all too senseless.

©2010 Richard D. Cushing

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Change comes through people - Part 2

If, as we have shown, people do not willy-nilly resist change, let us take a look at just what might be happening in traditional ERP – Everything Replacement Projects – where management feels the need to bring in emotional management specialists to help smooth the way. We will step through the list provided in the Web presentation.

Only 30% of “change initiatives” succeed

Of course, in the context of the presentation, the presenters made it clear that a major contributor to the failure of “change initiatives” is the changing organization’s failure to properly apply emotional intelligence (EI) management to the reactions to change coming from “middle management” and below in the organization’s hierarchy.

One of the things that surprised me about the attitudes expressed in the whole presentation was the us-against-them sense, where it was executives and top managers pitted against the unruly emotions of the lower classes (e.g., middle management and below). With the help of EI, the ruling elite could, in fact, learn to foist things upon the “lower classes” and make them like it – or least squelch outright rebellion in the ranks.

Sadly, in my limited contact with folks from “Big ERP,” their attitudes frequently have reflected this same elitism. Their snobbery seems to be rooted in a sense that “the ruling class has chosen us, so you – the masses – must listen up and fall in line.” I am certain that they are not all this way, but I have no doubt that some are.

I soundly reject this kind of management. I am confident that no one knows more about running the machine than the one who runs the machine day-in and day-out. The people who know best what needs to change in each part of “the system” – the entire organization – are those in the trenches. Most people really want to do a good job and really want the company they work for to succeed. These people frequently fight an uphill battle against poorly thought-out policies, procedures and assumptions promulgated by executives and managers trying to make things “work.”

Apparently, EI dumps on these people, suggesting that what is needed is for the elite to learn how to “manage” the emotions of the working class rather than learn from the wealth of “tribal knowledge” carried about in the hearts and minds of those who “run the machine.”

Is it any wonder, then, that only 30 percent of change initiatives succeed? It is quite likely, if what we are seeing and hearing is, in fact, the attitude of executive management, that only 30 percent of what they promulgate as change is worthy of success. Perhaps only 30 percent of “change” handed down from on-high will really have any positive effect on the ability of the organization to achieve more of its goal, and “the masses” know it better than the executives do.

It takes about five years to see ROI from a typical ERP implementation

No wonder!

The organization we have just seen depicted in the us-versus-them, the executive elite versus the common man, cannot possible be working as an integrated “system.” Not only it is very likely that there are departmental and functional silos within such an organization, having high and nearly impenetrable walls between them; it seems apparent that there is an even higher and more impenetrable wall between “management” and “the workers.”

In such a situation, there cannot be “integration” and the organization cannot possibly be managed as “a system.” When a business enterprise is not managed as a system, the symptoms are consistent:

·         Lower than expected overall performance

·         Sometimes overwhelming challenges in securing or maintaining a sustainable competitive advantage in their markets

·         Financial difficulties

·         Nearly constant fire-fighting by management

·         Rarely meeting customer service expectations

·         Chronic internal conflicts

Not managing the organization as “a system” is a management and cultural issue that cannot be remedied by installing “integrated” software. Technical integration does neither mandates nor assures functional and interpersonal integration across organizational silos. And it certainly does not create integration vertically in the chart of accounts.

With only 30 percent of change initiatives succeeding and the organization continuing to experience all of the symptoms associated with the failure to manage the organization as “a system,” it remains no mystery that it takes five years or longer to see return-on-investment from a traditional ERP – Everything Replacement Project.

Change fosters significant confusion for middle managers, which can spur anxiety and stress, thus impeding or paralyzing decision-making

The change that “confuses” middle management (and below) is the change for which they are not yet convinced of the true benefit to the organization. Intuitively, most managers understand that “good” decisions in a for-profit organization are those leading to actions that will tend to help the organization make more money tomorrow than it is making today. Such actions, naturally, lead to stability and increasing job security.

If executives and managers have really thought through their traditional ERP – Everything Replacement Project – and are well aware of just how (in measurable terms) ripping the guts out of the organization’s infrastructure and replacing it with something that is promoted as being “newer,” “faster,” or “better” will really help the firm make more money tomorrow than it is making today, then let them come forward and explain those details to “middle management” (and below), and the confusion, anxiety and stress will largely be assuaged.

The fact that executives and managers are not forthright with middle management (and below) when a traditional ERP project is undertaken is, for the most part, the executives and managers do not, themselves, know (in measurable terms) just how ripping the guts out of their organization and replacing it with “newer,” “faster,” or “better” will – in reality – help the firm make more money in the future than they are making today. Instead, their decision is likely predicated largely on hope and generalizations supplied by promises from the vendor or reseller of the new technology.

It is, then, no wonder that middle management remains confused, anxious, and full of stress.

[To be continued]

Stay tuned.

©2010 Richard D. Cushing

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Change comes through people - Part 1

Today I attended a Webinar on applying “Emotional Intelligence” or “EI” in the implementation of ERP systems. The name of the organizer and presenters shall go undisclosed because it is not they who are the target of my disagreement. Rather, my disagreement is with the thrust of the application of EI.

Definitions

In the presentation, the following definitions were given:

·         ERP Change Management (CM) – refers to identifying, assessing and managing the elements that are needed to move an organization from its current state to a future state when ERP software is the transaction engine.  The goal is to realize ROI of the project.  The areas addressed include change strategy, leadership, envisioning, project team building, change history and readiness, benefits realization, stakeholder management, communications, approach to handling reluctance and sustaining commitment, Knowledge transfer, organization and business impacts, new skills and ways of working, organization restructuring, roles and responsibilities, alignment with HR processes and the enterprise strategy. [sic]

·         Emotional Intelligence (EI) – refers to the ability to recognize and understand emotions and the skill to apply this awareness to manage ourselves and others through transitions.  Emotional Intelligence is made up of 4 unique skills that cover how one recognizes and understands emotions, manages his or her behavior, and manages relationships.  These skills are self-awareness, self-management, social awareness, and relationship management. [sic]

Key points

Some pertinent points were brought in the course of the presentation, not the least of which were these:

·         Only 30% of “change initiatives” succeed, while 70% of “change initiatives” fail

·         “It takes about five years to see ROI from a [typical] ERP implementation”

·         “Change can foster significant confusion for middle managers, which can spur anxiety and stress that impede or even paralyze decision-making”

·         “Middle managers need to implement change while managing their employees’ emotions, including anxiety, resistance and eager but inappropriate behavior”

·         “These managers face the challenge of grasping a change they did not design and negotiating the details with others, equally removed from the strategic decision-making”

·         “Complexity rises for these managers of change as work demands are modified and multiply, which can create conflicts”

·         “Lack of clarity renders new demands uncertain and frequently misunderstood; without clear understanding, managers can be seen as not taking action or taking the wrong action”

These points all raised many, many questions in my mind, and I hope to speak of them in this article. However, here was the real kicker that came in response to a question at the end of the presentation:

"A lot of ERP decisions are made on the basis of executive ego.... [Therefore], there are a lot of cases where the ERP [software selected] is a mismatch [for the firm]."

Mind you: these statements – and, most notably, this final statement – is coming from two professionals serving companies of all sizes in industries including finance, health care, education, and manufacturing. And the presenter’s statement did not stop there. Examples were given in terms of “being the first in an industry,” or “having the biggest Peoplesoft implementation ever,” and more.

Notice also that the presenter did not say, “Sometimes” or “occasionally”; rather, the statement made was that “[a] lot of ERP decisions are made on the basis of executive ego.” And, frankly, my own experience confirms this – if not the original purchase decision, at least the decision to carry on with a project even when the evidence may be almost overwhelming against the net result being a positive one for the firm undertaking a traditional ERP – Everything Replacement Project.

It’s got to work

At an international trade show I attended some years ago, I became involved in a conversation with an executive from a fairly large firm. I asked him if they were considering a new ERP system, at all. His response was, “Oh, no! We are just wrapping up an SAP implementation now – after a little over two years.”

So, I said, “Well, you’re to be congratulated, then. There just aren’t a lot of companies that ever actually ‘wrap up’ a SAP project. It seems that they so frequently become ‘evergreen’ projects for SAP developers and DBAs.”

To this, he chuckled. Then, with renewed earnestness he said, “Well, there are still a few things that aren’t quite right, but we’ve spent so much money already that it’s got to work!”

This is telling, don’t you think? If ego did not initiate this ERP implementation, ego was certainly going to see it through. No executives in that company were going to admit that – after spending some millions of dollars – the ERP solution they selected was not going to work for them!

Dispelling an old myth

Who do you think started the myth that “people hate change” and “people resist change”? Do you think it was started by the people being accused of “resisting” and “hating,” or do you think it was started by those in power – monarchs, politicians, generals and executives – who wanted certain changes to occur, but were having some difficulty in getting “the people” to accept the changes set forth?

I think you will agree with me that it was, most likely, the latter group and not the former that leveled the charge and created the myth.

The following should dispel that myth once and for all – at least for my readers:

The Change	Scope of Change	Comments
Getting married	Monumental	Most people embrace and look forward to this change. They do not resist it. In fact, they dream about it and even plan for it.
Having children	Monumental	Here again, even though this is a huge change in their lives, most people look forward to having children and many even lay out plans in advance for childbearing.
Announcement that one’s salary will be doubled starting next month	Big	This change will likely bring significant lifestyle changes, yet I doubt that many would be found resisting this change.
Announcement that one’s salary will be cut in half beginning next month	Big	The magnitude of this change is equivalent to the magnitude of the change for doubling of one’s salary, yet this change is likely to bring screaming resistance.

The point is, people do not resist change. What people resist are changes about which they are not yet convinced the result for them will be positive. For example, in getting married – even though most candidates for marriage recognize that there may be some down-side to the marriage compact – they are convinced that the change will be a net positive for them in the long run.

With this in mind, in our subsequent posts in this series, we are going to revisit the Key Points raised in the Webinar on “Emotional Intelligence.”

Stay tuned.

©2010 Richard D. Cushing

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