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How to Save an ERP Implementation From Organizational Silos

Organizational silos_ERP implementationMost of our clients pursue ERP implementations to address a host of operational and organizational issues. Inefficient business processes, ineffective technologies and subpar customer service are just some of the common challenges that our client organizations hope to remedy with new ERP systems. These challenges are especially ubiquitous in organizations that have experienced organic growth or growth through acquisition.

The dirty little secret of the ERP industry, however, is that some of these very challenges that organizations want to fix with new ERP software can actually be the things that disrupt an ERP implementation or, worse yet, cause it to fail. In fact, when we look at the majority of ERP implementations – most of which take longer than expected, cost more than expected or fail to deliver expected business benefits, according to our 2013 ERP Report – there are a number of issues that many companies struggle with. Our study found that organizational change management, for instance, is one of the most often cited challenges among companies that have recently implemented new ERP systems.

When we dig a little deeper into this specific challenge, we find that organizational siloes are a common change management difficulty that rears its head during implementation. Different departments, workgroups and office locations fail to work together to define the standard operational model to be adopted across the company going forward, which causes the implementation to struggle. In other words, the very issue that the ERP implementation is intended to fix becomes the reason why the initiative ultimately fails.

The good news is that this problem can be fixed with the right foresight and planning. Below are just a few of the strategies and tactics that organizations should use to ensure organizational siloes don’t derail a project and, instead, are ultimately “fixed” by the implementation:

Executive sponsorship is the key to removing organizational barriers. Securing executive sponsorship is arguably the most important antidote to organizational barriers. If executives support cross-departmental collaboration and walk the talk as it relates to the topic, then the organization will follow. If not, then it won’t. It really is that simple. Just as importantly, the executive steering committee needs to explain the purpose and value of collaborating across departmental, organizational and political boundaries within the organization. Once employees better understand expectations surrounding collaboration – as well as what exactly that means – the better they will be able to help remove the barriers that exist.

It’s about business processes, not people. This may sound like heresy according to many management gurus that suggest that people come first (it even conflicts with some of my own stated best practices), but executives need to get to the root cause of organizational siloes by depersonalizing the situation before addressing the people side of the equation. On the surface, tearing down organizational walls can suggest a number of scary things to employees, such as questionable job security, a disregard for individual contributions to the organizations in the past, or a lack of understanding of how things have always worked. When we depersonalize the situation and focus on how business processes should work rather than how people should work, we can take a more objective view of the operations and make rational decisions about how the organization should work going forward. Once these objective decisions are made, then attention can shift back to the “people” side of making those decisions stick.

Sell the value of cross-departmental organizational collaboration. Once rational and process-based decisions about the ERP implementation are made, then attention can shift back to selling employees on those decisions. Even when they are involved in the analysis and decisions, employees are likely to push back during implementation, so it is important to continuously sell the purpose and value of the changes to the entire organization via a variety of organizational change management vehicles. Employees are much more likely to adopt new practices defined during the business process reengineering stage of the project, many of which likely address ineffective organizational siloes of the past, when they understand how it will help them individually and the company overall. These messages should be relentlessly reinforced as part of an effective organizational change management plan.

At the end of the day, organizational siloes are common challenges that can derail a project if not addressed appropriately. However, with the right strategy and finesse, executives and project team members will inevitably be able to transform these organizational risks into organizational improvements. These tips, combined with organizational change management best practices, will help ensure that this is the case.

Learn more by watching our on-demand webinar, Five Key Organizational Change Management Challenges With ERP Implementations.

Written by Eric Kimberling

After 15 years of ERP consulting at large firms including PricewaterhouseCoopers and SchlumbergerSema, Eric realized the need for an independent consulting firm that really understands ERP. He began his career as an ERP organizational change management consultant and eventually broadened his background to include implementation project management and software selection. Eric’s background includes extensive ERP software selection, ERP organizational change and ERP implementation project management experience. Throughout his career, Eric has helped dozens of high-profile and global companies with their ERP selections and implementations, including Kodak, Samsonite, Coors, Duke Energy and Lucent Technologies. In addition to his extensive ERP experience, Eric has also helped clients with business process reengineering, merger and acquisition integration, strategic planning and Six Sigma initiatives. Eric holds an MBA from Daniels College of Business at the University of Denver.

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2 Comments

  1. ERP came for US markets and it fit well there but they also face difficulties in implementation because people want custom fit products. Hence, all sorts of difficulties are created to keep the identities of the empires so built. Problem is acute in developing economies where people are not used to transparent way of working where as ERP means transparency therefore roadblocks are created by people. Unless ERP is incorporated in the MBA, Mtech,MSc curriculum there will not be change in mindset and when these people go up that ERP will become workable.

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