How to Manage the Organizational Change LaMarsh & Associates, Inc. Surviving ERP How to Manage the Organizational Change Herman A. Zwirn CIRM LaMarsh & Associates, Inc. K. Judge

participants will ... Learn a working model of Change Management Determine how to use Change Management strategies and tactics in your ERP implementation

The Nature of Change Mythology and Fact

Organizational change: and the beat goes on... "We trained hard-but it seemed that every time we were beginning to form into teams, we would be reorganized. I was to learn later in life that we tend to meet any new situation by reorganizing; and what a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency and demoralization." PETRONIOUS (1st Century Roman and advisor to Nero)

Some myths or Why we don’t need change management People will always adapt to change. Change happens, you don’t have to manage it. That’s what we pay our managers to do. The project will get done with or without change management. If you change the process, everything will change. ERP makes change happen.

Failure is Possible FAILURE No Plan for Implementation Fuzzy Definition of Desired State Failure to Integrate all Changes

Critical Success Factors User Involvement Executive Management Support Clear Statement of Requirements Proper Planning Realistic Expectations Smaller Project Milestones Competent Staff Ownership Clear Vision and Objectives Hard Working Focused Staff

Change is about... Organizations Individuals Results

Change is about... Structure Process Culture People

Stages of Change WHY? HOW? WHAT? Current State Delta State K. Judge Current State Delta State Desired State WHY? HOW? WHAT?

Layers of Desired State Company’s Desired State Department’s Desired State Target’s Desired State

Desired State Structure Process Culture People

Dip in the Delta Productivity K. Judge

Dip in the Delta Productivity K. Judge

Why? “There are many ways to achieve it, but managing change is no longer a competitive discriminator – it is just part of the ante to get into the game. Competitive advantage goes to the company that can manage change and embrace innovation, proactively, while minimizing perturbation of existing operations.” Based on Next Generation Manufacturing Project, The Agility Forum

The Methodology of Change

What is it? Change management is the methodology that integrates change and the ability of the organization and people to adopt it. It is an organized, systematic application of the knowledge, tools and resources of change that provides organizations with a key process to achieve their business strategy. It is a real tool to mitigate the risk and increase both the ownership and sustainability of change.

What you need A consistent and scalable model of change that matches the change process A disciplined methodology to implement the model that can be integrated into the way work is done A learning system that embeds a change capability into the workforce

External Change Drivers Internal Change Drivers Managed Change™ Model External Change Drivers Internal Change Drivers Prepare to Change Resistance Sponsor Target Change Agent Culture History Identify the Change Delta Current Desired Plan the Change Reward Communication Learning Implement the Change Sustain the Change

How? Methodology

Company Process Structure Culture People Apply a change model to the ERP implementation Introduce a change methodology Use the change methodology as a part of all aspects and levels of the ERP implementation Link ERP to business strategy Support an ERP Process Change Center of Excellence Define internal connections to build sponsorship cascade Define executive sponsor roles Culture People Build organizational change learning capability Process Orientation Create sponsor level Learning Integrated Enterprise Thinking Seeks change Focused, disciplined and patient

Departmental Process Structure People Culture Apply a scalable change model Apply a change methodology to implement the model Embed the change methodology into other ERP methodologies Build Departmental Sponsor Cascade Define ERP roles and responsibilities Create key role charters Define ERP performance measures People Culture Change resilient Knowledge based Value driven Cross-functional Partners Process-driven Customer focused Develop knowledge of ERP and organizational change Know enterprise role of the department Develop change agent skills Develop ability to use the change methodology

Individual Structure Process People Culture Design jobs to include change management Build in ERP role and measures Build change agent measures into performance evaluation Design work flow and methodologies to include change management tasks. Change management is a work habit People Culture Provide general change process knowledge Process thinking capability Apply change agent skills Develop target skills Create tolerance for change Knowledge driven Value centered People centered Customer centered

ERP Managed Change™Integration Governance & Identify the Change Go Live Prepare to Change Plan the Change Implement the Change Sustain the Change Plan Assess Develop Deploy Post-Audit Results Build Project Infrastructure Define goals and Set expectations Design and Finalize Communications Learning (Training) And Rewards Launch and Execute System Events: Communication Learning Rewards Event designs Turnover Responsibility Identify Next Steps: Knowledge Transfer Data Gathering and Analysis Identify Risk/ Identify issues / response Establish Sponsorship Build Team strength Change Communications Specific communications, learning and rewards events Executive Kick-off Business Assessment Analysis Implement System/ Processes / Policies Own It Configuration

Elements of successful change Commit to making change management a key competency and part of the ERP strategy. Explain why the Current State is no longer viable. Clearly define the Desired State that will result from the ERP implementation. Build a systematic change-management methodology to implement your change during the ERP Delta State. Integrate that methodology into the heart of the ERP project and the organization.

Discipline The ERP Desired State as requires the continuous, conscious process of applying a systematic change methodology to implement ERP and build a sustainable future that is owned by the greatest majority of people in the enterprise.

Why is this Important? BENEFIT RELATIONSHIPS Process technology Process automation Information System Technical / task based skills Information and business systems capabilities Enterprise understanding Inter-personal and collaborative behaviors Ownership/Innovative Application BENEFIT RELATIONSHIPS 60% 20%

It makes a difference It impacts 90% of project critical success factors It impacts 100% of the factors reported to cause projects to fail or be cancelled Benefits are obtained earlier Failure risks are reduced

Critical Success Factors MC User Involvement Executive Management Support Clear Statement of Requirements Proper Planning Realistic Expectations Smaller Project Milestones Competent Staff Ownership Clear Vision and Objectives Hard Working Focused Staff MC MC MC MC MC MC MC MC

Your Turn Questions Comments Concerns Ideas Herman A. Zwirn CIRM hzwirn@lamarsh.com www.lamarsh.com