Lessons Learned:

The Organizational Impact of an

ERP Implementation

Doug Whittle
Partner
The Diagonal Group
9 Eagle Court
Randolph, NJ 07869
973-361-1341
www.thediagonalgroup.com

, The Diagonal Group 2002

Lessons Learned:
The Organizational Impact of an ERP Implementation
Introduction.......................................................................................................... 1
Background .......................................................................................................... 1
Project Benefits ..................................................................................................... 2
Organizational Change ............................................................................................ 2
Training ............................................................................................................... 4
Lessons Learned .................................................................................................... 5
Process Owners Keys to Success .............................................................................. 7
Doug Whittle Contact Information............................................................................. 7

Introduction
Doug Whittle is a partner with The Diagonal Group. Prior to joining Diagonal, Doug
managed the training, change and communications efforts for a 5-year worldwide ERP
implementation for the worlds leading developer and producer of agricultural genetics as
part of his 20-year career there. Doug recently completed his PhD in Organizational
Leadership at Iowa State University.
This document addresses the following topics:
What should team members and process owners focus on-- what are the big things?
What are the real benefits gained from the systemfinancial and/or business?
What were the keys to success?
What were key lessons learned and what would you have done differently?
What was the status of systems in existence prior to the implementation?
Does the project change the work processes significantly?
Does the project shift workload significantly, and if so, where?
What do you need for support after the project?

Background
Company ABC is a $2 billion global organization with research stations and production
plants located all over the world. Their ERP implementation was a 5-year project involving
an initial implementation with 2 go-live dates scheduled one year apart, followed by an
immediate upgrade. Approximately 2400 licensed users access one or more modules
including finance, production, human resources, warehouse management and inventory.
They also implemented two bolt-on systems at the same time, one a third-party system and
the other a custom-designed system. Company ABC migrated from dozens of home-grown
systems to its ERP system.
Company ABC used the Big Bang approach, shutting down all old systems and converting
to the ERP system right out of the gate. The two go-live dates occurred on the first date of
the fiscal year. Some old systems were maintained in the background, but the message to
end-users was There is no alternative. Company ABC did not regret taking the big, tough
slice first.
The first pilot was in Italy. Company ABC felt that Italy had great market potential and was
needing process review anyway. Italy was excited about the reorganization and they
volunteered to go first. Everyone who served on the original Italy project then transferred
to the North American team.

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Lessons Learned:
The Organizational Impact of an ERP Implementation
During the implementation, there was a need to run duplicate parallel processes and
systems for about three months until everyone came up. Some countries only implemented
certain modules. Smaller countries used a third-party financial system that was compatible
with the ERP system.
Prior to the ERP system, each plant had its own unique processes, and frequently its own
vocabulary. Everyone was attached to their own way of doing things, so standardizing
processes was a big change for the organization.

Project Benefits
There were two types of benefits from this project. Company ABC definitely benefited from
its investment with improved financials and standardized processes. There were also
organizational benefits, including improved working relationships. Specific benefits
included:
Immediate data availability: This is incredibly valuable in the supply chain.
Better traceability: Company ABC can tell you exactly where any product or
component is across the globe.
Improved sales knowledge: Sales now knows their projected revenue and sales
volumes earlier than ever before. Company ABC recorded a record year in 2001. It has
been suggested this was, in part, as a result of the ERP system.
Much less duplication of effort across the company.
Improved business discipline.
Amazing global perspective.
More consistency.
Springboard for organizational change. (see section below)
IS and the business are now merging. IS people are now moving into business
roles, vice versa. The cross learning and breaking down of organizational silos can be a
huge benefit of implementing the ERP system.
In 2001, Company ABC was one of only 3 SBUs of its parent company that met its profit
goals. Many believe that the ERP system played a significant role in this achievement.

Organizational Change
This is the time to enact change. This initiative will bring significant organizational
change as well. As your major processes and systems change, use this as your opportunity
to review roles and responsibilities as well.
Be prepared for fear of change. At Company ABC, everyone had their own
spreadsheet, their own way of doing things. And, as such, they became the owner of
that information or process. Knowledge is power. With an ERP system, you cant hide
data or create your own processes any more. This can be seen as a threat by those who
have been gatekeepers of selected data in the past.
Expect criticism, and communicate responses. At first, many in the business were
critical of the investment and skeptical of its value. Continually explain the rationale, and
use your critical success factors/key performance indicators to demonstrate the projects
contributions, both projected and actual.

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Lessons Learned:
The Organizational Impact of an ERP Implementation
Recognize that you cant please everyone. Some people will have to give up
functionality or certain processes for the good of the overall organization. Tell those people,
I hear where you are coming from, but this is what we need to do for good of the global
business.
Take change down to the grass roots level. Identify everyone who will be impacted,
either directly or indirectly, by this implementation. Build two-way communications
strategies to hear their concerns and fears and address those honestly and in a timely
manner. Listen closely to the grapevine. Company ABC team members actually received
anonymous messages with ERP failure war stories. Be prepared to address these quickly.
These are signs of denial and resistance on the part of employees.

The Change Curve

Uninformed
Optimism

Denial
Informed
Pessimism

Acceptance

Commitment

Resistance

Hopeful
Realism

Exploration

Anger/
Checking Out

Expect, surface, and address resistance. Listen and observe carefully for signs of
resistance among the end users. In Company ABCs case, it became evident that many
plant managers were convinced the organization would go back to the old systems once it
was realized that the new system wasnt working. It took a face-to-face meeting with a
senior VP and the plant managers to make it very clear that there would be no turning
backthat, indeed, the ERP system was the next move and it would go forward.
Use the grapevine to your advantage. Supporters in the business can be your best
information carriers and your best source of feedback.
Leverage the usergroup network. Definitely learn from those who have gone before
you. Dont reinvent the wheel. ERP users are more than happy to talk with you and share
their lessons learned. Attend local user groups and industry conferences.

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Lessons Learned:
The Organizational Impact of an ERP Implementation
Build expectations for project roles and responsibilities into performance
evaluations of all employees, including managers. At Company ABC, training
expectations were built into employee performance forms and evaluations, but not for
managers. This caused a lack of alignment around goals, which proved disruptive for the
organization.
Respect cultural differences in various countries. Dont assume that what you
develop in North America will work in Europe. And, when it doesnt, dont necessarily
attribute it to lack of buy-in or resistance. Appreciate the need to adjust your strategies,
training and communication to fit the culture, while still remaining true to the project
charter.

Training
Dont underestimate the need, the time, and the resources for training.
Use business people as trainers. In its first year, Company ABC relied on technical and
outside trainers, because the business would not allocate people from the functional areas
to be trainers. Once they saw the value, there were ample volunteers the next year, and
the training was more effective and overall training costs were reduced.
Focus on business process, rather than technical procedures. Company ABC focused
on procedural training the first year, which was a mistake. Help people first understand the
business process flowsthey will pick up standard operating procedures quickly.
Use business people to support the system. The help desk is a valuable resource, but,
their understanding of the business needs to be complemented by those in the business.
Company ABC developed a SuperUsers program that used business experts to help support
end users. Their services complemented the skills of the Help Desk staff.
Build training expectations into employee and manager performance evaluations.
Everyone needs to be aligned around the same goals. Training must be a requirement for all
end users. Managers must also be expected to attend at least high-level orientation and
business process education.
Highlight the integration inherent in the system. Since ERP systems are integrated,
one change in data or functionality can impact something else downstream. Business users
need to understand this to appreciate the importance of their role in data entry, and, the
reasons why certain functionality can or cannot be adjusted.
Take advantage of distance learning: Company ABCs users were geographically
dispersed throughout North America. A central training site was used for all training, which
then required travel costs. However, much of the overview and information training can
be delivered through distance-learning techniques, where users can obtain this information
from their own locations and desktops. This minimized the amount of time that users were
away from their home locations. The use of distance learning was accepted so well by
Company ABC end users that the overall learning culture has changed. Many employees
have expressed a preference for distance learning, whereas before, they always wanted
classroom-based, instructor-led training.

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Lessons Learned:
The Organizational Impact of an ERP Implementation
Online support: Company ABC had attempted to build online support systems with other
initiatives, but now of those efforts succeeded. The training strategy for the ERP system
included a strong investment in a context-sensitive online support system. Training focused
on the use of this system. Overall Help Desk usage was reduced due to the implementation
and use of a detailed online support system.

Lessons Learned
This is not just another IT project. While Company ABC spoke this, it did not
necessarily show this in its action. In order for this project to be successful, it needs to be
viewed as a business project, not an IT project. Company ABC almost allowed the business
people to toss it back to IT as just a system make sure there are always owners in the
business involved. These owners need to continue their roles after go-live.
Get support from the very top. There will always be parallel initiatives. Make sure
everyone is clear that this is a priority project, and has appropriate resources to be
successful. At Company ABC, the VP of finance was the ultimate project champion that
helped drive this home. All of the executives, from the CEO on down, need to understand
the critical nature of this project.
Trust the system. ERP systems are designed for all businesses. While each business has
unique characteristics, at a fundamental level a business is a business. Dont overcustomize the system; trust the features and general business rules that are part of this
system. The more vanilla you keep your system, the less complex is it to implement and
maintain. Customize the system when there are solid business reasons to do so. But avoid
detailed customization simply for maintaining political peace.
Dont burn people out. At Company ABC, they did not move the go live date even when
the project scope changed. As a result, the team experienced a lot of burnout. Be sensitive
to your team members, the workloads, and pressures that are inherent with a large-scale
implementation effort like this.
Be supportive of the people who are picking up the work from the dedicated project team
members. For every person on the team, there is someone else in the organization doing
the work that they are not. Be aware of the overall resource impact. Include these people
as part of your stakeholder analysis and communications strategies.
Go-live is not the end of the project. Keep your project team intact for awhile after golive. Company ABC let 1/3 of its experts go back to the business one month after go-live,
and it caused issues, both from a work productivity and functionality perspective, but also
on an emotional and motivational level.
Start thinking now about post-implementation strategies. Build in knowledge
transfer from the project team (both consultants and business people) to the permanent
business process owners. Ensure that the help desk, competency centers, and other
support groups are ready not just for the first wave, but can absorb the questions into their
ongoing routines. The sooner you begin working on post-implementation strategies, the
more efficient the process will be once you go live.

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Lessons Learned:
The Organizational Impact of an ERP Implementation
Build in enough time to test. Test often and include the right people. Be clear on the
ground rules for testing. There can be a tendency for people to want to increase
functionality or to increase scope of project during these sessions. Dont underestimate the
value of testing nor the time involved in doing thorough testing.
Focus on data entry. There can be extraordinary amounts of data entry needed initially to
load the system. Company ABC under-estimated the time and resources this takes.
Address reporting early. Company ABC did not. (note: ERP reporting is more robust
than when Company ABC did the implementation.) The more you plan now for reporting,
the better will be the perceptions and reception of the end users once you go live.
Communicate intentions about roles and expectations from day 1. People often
assume that there will be layoffs when a company undertakes a project like this.
Communicate early and often about your plans for this to stop rumors and fears. Be honest
in what you hope to achieve and how you plan to achieve those goals.
Have a process to manage scope creep. Inevitably, people will request additional
features that are not planned for the first phase. Company ABC allowed too much to be
included in Phase 1, and they put in lots of extra hours to accomplish this, which increased
project scope, increased workload, and added to burnout.
Do an ROI on the requests for additional features. Estimate the resources to include the
extra features and functionality, and make a business decision based on the cost to
implement vs. the advantage to the business. Keep a list of all functionality requests so
these can be addressed in upgrades and post-implementation plans.
Create a parking lot/wish list for future functionality, and publish it so everyone knows
what is coming and when.
Stick to standards, even for home grown systems. Company ABC had two parallel
projects for internal systems as well. These systems were developed with a graphical
front-end, and a different look and feel than the ERP system. This caused some issues in
the user community, since the ERP system was not very flashy (at least, at the time it was
implemented by Company ABC). Establish overall development standards for usability and
look & feel as well as functionality. Strive for consistency in end user interface to help
minimize confusion and change for end users.
There is no such thing as over-communication. In the absence of formal
communications and information, employees will create their own information. The
corporate grapevine should be addressed throughout the project. Use multiple approaches
to create two-way communication between the project team and the end users. Also pay
attention to internal communications among the project team sub-teams.

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Lessons Learned:
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Keys to Success for Process Owners and Team Members

Walk the talk.

Attend information and training sessions when you canshow that you support the
project by being visible and present.
Dont assume your role is to sign a memo about trainingyou need to be involved.
In your heart know what the advantages of the project are and be able to talk about
those advantages with your employees.
Be realistic dont hide the fact that changes will occur and that some level of pain will
be felt.
Present a consistent leadership focus and face to employees. Your staff will pick up very
quickly whether all the executives are on board or not. Dissension at the top leads to
lack of support in the ranks.
Set expectations for your supervisors & managers especially. Let them know we are
serious, and they have to be on board. Give them indications of how you will know
whether they are or are not on board. Build accountability into their performance plans.
Surface your own fears at the process owner committee meetings. Use your peer group
effectively.
Manage your own expectations. This project will take a lot of money, and a lot of
people. And, you wont see the return for a while, but, you will see the return. Youve
got to have faith.

Doug Whittle Contact Information

Email:

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Phone:

515-987-8989

Cell:

515-707-4226

doug@thediagonalgroup.com