Implementation of new information systems at sara petrochem and organisational change

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  • 1. P a g e | 1 Implementation of new information systems at Sara Petrochem and organisational change Key theme: Organisational change, Information systems, ERP, Kotter’s change model, Strategic change, change management.
  • 2. P a g e | 2 Table of Contents Introduction ............................................................................................................................................3 Organisational background and stated need for change .......................................................................3 Description of the change process..........................................................................................................5 Roles and perspectives ...........................................................................................................................5 Evaluation of relevant academic literature ............................................................................................8 What is Organisational Change?.........................................................................................................8 Why organisational change: ...............................................................................................................9 Types and models of Organisational Change....................................................................................10 Critical Analysis .................................................................................................................................14 Conclusions ...........................................................................................................................................19 References ............................................................................................................................................20
  • 3. P a g e | 3 Introduction Change is essential part of business management as firms operate in a dynamic business environment and must continuously change in response to change in their internal and external environment. But while change is essential, it is also challenging. Because every change alters the status quo, the individuals who are affected by the change are likely to resist change. Thus, managing change is not a regular business function- it is an art which requires combination of both professional and personal skills. This research investigates a large scale change program undertaken at a very large organisation Sara Petrochem (here after SP). The change program involved automating the information flow within the organisation through implementation of ERP system. Theoretically speaking the ERP system could have been very beneficial for the organisation; it would have streamlined the information flow within such a large organisation, would have helped eliminating inefficiencies and would has standardised the functions which would have made the expansion process very smooth. But the bureaucratic nature of the organisation combined with its culture, history and political system made it extremely challenging for the management to implement the ERP system. Organisational background and stated need for change Established in 1978 SP is a very large organisation with a very unique ownership structure. It also has a very unique organisation culture, albeit bureaucratic, which makes it essential to consider the firm as different. It partner with some of the petrochemical industry giants such as Aramco and SABIC to develop and market petrochemical products. At the time of implementation of ERP it employed just over 2000 employees who operated from three locations- two in Saudi Arabia and one in Kuwait. SP’s decision to implement ERP system was driven by certain internal and external factors. The internal factors that drove the decision were rising inefficiency in the organisation as well as rising conflicts on information ownership. Respondents indicated that as SP was growing in
  • 4. P a g e | 4 size it was realised that new offices will need to be set up and there was significant level of concern about information exchange within different business units. In particular, there were conflicts between the technical departments and non technical departments with each shouldering the responsibility of errors on the other team. Also it was found that some of the information was lost in communication. There was no record of unofficial communication and when conflicts arose, unofficial communication was often cited as the cause behind the issue. Since there was no record of unofficial communication, it was difficult to hold people accountable for errors. In addition, it led to significant level of dissatisfaction as employees started to engage in politics. The external issues which led to SP’s adoption of ERP were that the rising inefficiency was undermining the performance and reputation of SP. It was under immense pressure to improve efficiency and it was realised that the only way of improving efficiency was technological adoption. Since ERP was the buzzword and many of its competitors were moving on to ERP systems, the top management decided to call some ERP vendors for discussion. After several rounds of discussion, it was decided that ERP systems were the way forward. Although the decision was mainly focused on improving the operation efficiency there was a strong strategic aspect of this ERP implementation project. SP was expecting rapid expansion in years to come and it was considered essential to standardise the system so that the expansion could be undertaken smoothly. SP’s management felt that if SP had a standardised system in place, it would be easier to scale up both in terms of recruiting and training new employees but also in terms of setting up new offices. Standardisation is indeed one of the most significant benefits of ERP as a standardised system makes it easier to implement new systems/functions and train employees there on. The primary goal was to improve information handling and to improve efficiency. In fact theoretically speaking these are two main benefits of ERP implementation. SP, in collaboration with the chosen vendor, carried out a pre-implementation analysis which the time loss in information origin to information utilisation as well as information loss rate was calculated. After this analysis, a complex method was used to calculate to estimate the time and cost benefits that SP can expect to achieve with the implementation of ERP.
  • 5. P a g e | 5 Description of the change process Vendor was primarily selected on the basis of their experience of implementing ERP systems for similar firms. Since every industry is unique, it was considered essential to select a vendor which has experience and knowledge of the general requirements of industry. In fact, vendor selection is a huge challenge for the management because vendors play a vital role in the success of implementation of ERP systems. Implementation of ERP systems is a large scale change process which involves cultural issues. But SP’s management did not consider the cultural issues while making decision on ERP system. This is often cited as one of the most fatal mistakes made by the managers. The approach adopted at SP was the big bang approach. Management wanted to implement the system as soon as possible because the next phase of the plan (that is, expanding and setting up new offices) depended significantly on ERP implementation. In fact, the vendor selected was selected for his historical success with this particular approach. It was decided that the phased or pilot approach will be simply time consuming. A parallel system approach was also overlooked by the management team which was too keen to get over with the implementation so that they could get promoted to senior (top) positions in the new office. So ERP implementation was not an opportunity but rather an obstacle which they had to cross. The top management was also keen to set up new offices and expand into other markets because the competitive threat was rising. They were eyeing some strong deals with other petrochemical firms. It was essential to move fast and hence ERP had to be implemented as soon as possible. Furthermore, ERP was also considered essential because the top management felt that it will be good for their image if the organisation is computerised. So apart from efficiency the management was also looking at how the image of the organisation will be affected by ERP implementation. Roles and perspectives The line managers themselves were selected as change agents. Earlier the management considered appointing the new change agents but then it was thought that it would be very
  • 6. P a g e | 6 disruptive for the hierarchy of the organisation. There is a strong bureaucratic element present in SP which meant that disrupting the hierarchy would have led to chaos. To avoid this, management decided to keep the existing managers as change agents. SP’s management did not expect any lack in cooperation from the lower level employees because the organisation has a strong culture and most of the employees had spent their life working there. Management believed that it had a strong backing from the employees in whatever it did so much so that the managers never thought it is necessary to ask them. Strong leadership skills are required to facilitate organisational change especially the one as large as ERP implementation. Management could not be sure that agents were selected purely on the basis of leadership skills. Besides that the working environment of SP was not such where people got the chance to gain and show their leadership skills. It was much more structured and ordered organisation where any form of disorder was considered indiscipline. Indeed this is one of the problems with large organisation that any slight change to the status quo is considered disruptive; the larger the organisation more difficult it is to change it. Overall speaking, fearing that the lower level employees may not have the necessary leadership skills and fearing chaos because of disruption SP’s management decided to use existing managers as change agents. Both training and monetary compensation was offered to the change agents. The number of change agents was selected dependent on the division size (in terms of the number of employees). Top management considered the request of mid level managers in selecting these change agents because they wanted to avoid selecting change agents with conflicting perspectives. The idea was to select the managers most in favour of the change taking place; not only implementation of ERP but also expansion. Change agents were selected on the basis of following criteria: - Rapport with the employees. - Perspective (support) on change program. - Leadership skills - Organisational commitment/loyalty. - Years of experience working at SP
  • 7. P a g e | 7 Since SP had not undertaken any large scale change program in recent years, experience of managing change program was not considered as essential criteria for selection. The change teams were mixed; some of the internal staff and some external staff with experience of managing technological change projects worked together to manage the change process. The ratio of internal to external staff members was 2:1. External change agents were brought in to give their suggestion and guide the managers as and when necessary. They, however, lack the knowledge of the culture of SP. These external change agents had the hard (technical) knowledge but not the soft knowledge required to undertake change program in SP type organisation. Although these external agents were working with internal agents (who knew about the culture and could have filled the cultural knowledge gap), there was another problem. Although the internal members of the change management team knew about the culture but they never argued with the external team members because the external team members had superior technical knowledge and internal team members felt obliged to accept whatever those external team members said. In one sense, rather than working as equals, as team members, internal agents were taking orders from the external team members. Most employees thought that change agents were politically selected rather than being selected on merit. For example, most of the respondents questioned why only old individuals were selected as change agents despite the fact that they lacked technological skills. Employees believed that it was because they were closer to the management and were due to get higher posts in post ERP implementation stage. During the change process, the change management fulfilled only its duties towards the management but completely failed to convey their concerns to the management. For example, several key functions which are unique to SP were to be replaced without consultation with the staff members. Also the employees have been requesting the change managers to request the top management to start training the employees at an early stage so that they can learn the key IT skills but it was not until the implementation of ERP that any training was provided and that too was provided at a level which most of the employees could not understand. What was shocking for the employees was that the managers they have been working under for several years suddenly changed their behaviour towards them and started avoiding discussion on critical issues despite repeated requests. There was a seizure of communication.
  • 8. P a g e | 8 Evaluation of relevant academic literature What is Organisational Change? Van de Ven and Poole (2004) defined organisational change as “an empirical observation of difference in form, quality, or state over time in organisational entity. The entity may be an individual’s job, a work group, an organisational strategy, a problem, a product, or over all organisation” (p.512). Broadly speaking organisational change is a continuous process of improvement from existing state to desired state (French et. al., 2005). The desired state is often determined by organisational goals and objectives. Firms need to change in response of both internal and external environmental changes (Chaffey and wood, 2005). Internal factors can include organisational restructuring, mergers, and operational restructuring etc (Nyström et al., 2006). External factors than can trigger change include new innovations, competitive threats, and changing product life cycles etc. (Rabey, 2003). Firms can change in response to these internal or external factors or in anticipation of future changes. Despite the high level of research the success rate in change projects remain critically low; either the change projects fail completely or partially or are sometimes undertaken in a manner which forces the firms to revert back to status quo after some time. According to estimates (Jacobs, 2002) “around 80% of the change programs fail; around 50% fail completely while another 30% fail partially”. Some researchers argue that it is essential for firms to adopt a planned approach to organisational change which includes consolidating the existing changes. Some researchers argue that firms must choose a change strategy not on the basis of the context of organisation but on the basis of which can be the most efficient and effective strategy. But this again brings us to the point that we cannot eliminate the context of the firm and perspective of its members when we assess the efficiency and effectiveness of a particular change strategy. Simply speaking, their argument fails on the grounds that they are suggesting that there is a
  • 9. P a g e | 9 single magical approach suitable to undertake change in all the organisations, an argument which is strongly rejected by the popular school of thought. Why organisational change: Change is inevitable in today’s fast changing business environment. Several factors including but not limiting to technological innovations, rising competitive threat from global competitors and constantly changing consumer behaviour are key drivers of this wave of change (Härenstam et al., 2004). To become sustainable firms must anticipate and respond to change even before the change occurs; it requires a change in behaviour and perception from a static and responsive one to a dynamic and proactive one (Nonås, 2005). This ability of firms to manage themselves in view of both micro and macro level changes is known as change competence (Senior and Fleming, 2006). In addition, firms must be careful to choose a change strategy which is appropriate in the context of the firm and its members’ experience of change processes (Nonås, 2005). A firm is a collection of several attributes; its employees, its business competence its culture, its stakeholders etc. While all these attributes are critical to the success of the firm, culture and human resources are the two attributes which we are mainly concerned about in this paper. It is safe to say that almost all organisational changes will have an impact on the organisation’s workforce (Chaffey and Wood, 2005). It is this impact on the status quo and anticipation of the impact of change on their work environment which leads to employees resisting any organisational change (Schein, 1992). Whenever there is a conflict between culture and change, the former is likely to prevail because while a change is important for survival, employees are the soul of the organisation. As Svanberg (2007) recommends, before any major organisational change is undertaken we must assess its impact on the culture and workforce of the organisation because if there is a conflict between the two and if such conflicts cannot be managed, the change process is most likely to fail. Hirschhorn (2000), however; argues that even in cases of such conflicts the organisational change can be successful provided the managers can provide the employees a new basis for cohesion.
  • 10. P a g e | 10 Types and models of Organisational Change Lewin’s model: Lewin’s (1951, cited in Cameron and Green, 2004) change model includes three different elements, unfreezing, changing and refreezing. Figure 3: Lewin’s change model. Source: Cameron and Green (2004) In Lewin’s change model, the unfreezing stage initiates the change process; it involves moving away from the stationary state and towards a more desirable state. Next is the ‘move’ stage which involves implementation of change; at this stage the new order is formed. Finally ‘refreezing’ takes place; this involves consolidation of the changed state. Employee motivation is the most significant driver of change according to Lewin’s model (Cameron and Green, 2004). Especially the employees have to be motivated for unfreezing and move stages. Unless the employees are not motivated to move to the desired stage as envisioned by the top management, they will resist altering the status quo (Senior and Fleming, 2006) i.e. they will resist the unfreezing stage. Unless the HR managers can persuade the employees to buy-into the top management’s vision, it will be extremely difficult to unfreeze. HR managers are the main point of contact between the top management and the lower management, and are responsible for translating the corporate strategy into work based language allowing lower level employees to understand their role in the organisation (Daft, 2008). Thus, HR managers are responsible for communicating the change vision to the lower level employees.
  • 11. P a g e | 11 At the ‘move’ stage employees have to remain motivated to move to the desired state. This motivation can be maintained by HR managers. No change program is smooth and employees are likely to lose their interest in the program as new challenges emerge (Daft, 2008). HR managers remain in contact with the employees and are responsible for promoting organisational citizenship behaviour among the employees. This organisational citizenship is likely to improve employees’ commitment towards the change program. Finally at the refreezing stage, when the new state is to be consolidated, HR managers ensure that the employees are aware of their redefined roles in the altered state. This is an essential part of the change process because unless employees agree to this altered state, the refreezing process will not be accomplished. HR managers must provide employees a reason for cohesion with the changed organisation (Hirschhorn, 2000). It is within HRM's domain to ensure that the employee side issues of an organisational change process are handled adequately. HR managers can ensure this by implementing some methods such as “employee integration, acknowledgement of progress and a regular feedback on the achievements” (Appelbaum et al., 2000, p.649). HR managers are also responsible for ensuring that there is open communication between the management and the employees; this will “undermine stress among the unwitting employees and the possible conflicts which may arise” (Appelbaum et al., 2000, p.650). HR managers thus, play a vital role in facilitating organisational change. Kotter’s 8 step model: Kotter (1996) expanded, Lewin’s model in 8 stages. The role HR in these 8 stages is described below. Establishing a sense of urgency: The first step in Kotter’s model is to create a sense of urgency. Often firms fail to provide a strong rational for change while in some other cases, the employees refuse to accept the management’s rationale for change (Nach & Lejeune, 2008). In such cases, the changes process is likely to fail. Because organisational change has a huge impact on how employees undertake their roles, there is bound to be resistance to change (Rees, 2009). Management must thus create a sense of urgency but also ensure to prevent build up of negative environment in the organisation
  • 12. P a g e | 12 (Daft, 2008). By negative environment we mean the sense of insecurity and uneasiness which often builds up in cases of uncertainty. HRM policies of the organisation create an environment of trust between the organisation and its workforce. This trust is key to prevention of build up of negative environment at the time of change (Schraeder and Self, 2003). HRM policies also involve selecting the right communication tools, which are highly important when emphasising the necessity to perform the change (Daft, 2008). Creating the guiding coalition: This stage involves selecting individuals who can act as intermediary change agents. It is important for the firm to engage the right individuals for coordinating the change process (Schraeder and Self, 2003). HR managers can identify the right individuals who other employees are likely to trust and respect. The individuals ranking high on the following four characteristics are most suitable to such roles: position power, expertise, credibility and leadership (Kotter, 1996). HRM policies can be used to equip them with skills necessary to undertake the role of change agent. For example, HRM policies play a vital role in equipping these individuals with leadership and interpersonal skills which these agents will require to gain trust and respect of the team members they are responsible to guide. Developing a vision and strategy: Having a vision is critical for the employees to buy-in change projects. Kotter (1996) suggests that the vision should exhibit the following six characteristics: imaginable, desirable, feasible, focused, flexible and communicable. HRM policies are a vital aspect of corporate strategy as no corporate objective can be achieved without adequate efforts of the human resources of the organisation. Thus, HRM policies play a vital role in any strategy that the management designs. Communicating the change vision: Communicating the vision is extremely important for facilitating change. HRM policies include the communication strategy practiced within a firm; by selecting the right (i.e. open, transparent and reliable) HRM policies can affect the effectiveness of communication between the management and the employees; for example, firm’s HRM policies determine whether there is a two way communication between the top management end employees or only one way. Also the HRM policies determine the level of communication layers between the top management and the employees. HR managers can prove a vital link in communicating the change vision to the employees especially in the context of their jobs.
  • 13. P a g e | 13 HRM policies of the firm help the employees translate the change vision in the context of their roles which in turn helps them to understand how the change process will affect them and how they can contribute to the organisational strategy for mutual gains (O’Shea et al., 2007). Also the employees have to be rewarded for extra effort they will need to put in to acquire additional skills in context of the change. HRM policies take care of the rewards and performance management aspects which ensure that employees are duly rewarded for their efforts. Empowering broad-based action: It is important to empower the employees because they are the carriers of the change process. HRM policies can create a democratic environment where the voices of the employees are heard and accounted for. It is more likely that a change project will succeed when the end users are engaged at the decision making stage. HRM policies of the firm determine the extent of autonomy and level of engagement enjoyed by the lower level employees which will essentially determine the success of the change process in the long run. Generating short term wins: It is essential to create short term wins to convince the participants that change process is progressing in a positive direction. Short term wins are not only technical but also personal. These personal short term wins are what HRM policies of the firm takes care of. For example, carrying out successful training programs and motivating individuals to increase their human capital in wake of the change process are some HRM policies which can play a vital role in keeping the employees motivated. Consolidating gains and producing more change: Consolidation is a key aspect of the change process. At consolidation stage the HR managers communicate the revised roles and responsibilities to the employees. HRM policies ensure that employees are aware of and satisfied with their revised roles. This may also involve setting a new rewards policy to reward the employees for undertaking additional responsibilities and for agreeing to change. Anchoring new approaches in the culture: Finally, the changed stage should be embodied in the culture of the organisation. The HRM policies of the organisation play a key role in establishing and managing a common culture throughout the organisation. Altering this culture can be done through subtle changes in the HRM policies. For example, the organisation can alter its rewards or performance management strategy to reward employees who contribute the most to the altered form of organisation.
  • 14. P a g e | 14 Critical Analysis In several respects, the case of SP is similar to many cases of failure of ERP implementation. The primary reason for such failures is inadequate consideration of the end users that is, the lower level staff members. The locus of control remains in the hands of the managers but at SP lower level staff outnumber these managers by 25 to 1. Thus, not providing equal representation to these staff members is always likely to result in a system which will fail either because the employees may resist it because they may feel that it is being imposed on them or because the system would have been built by ignoring the human aspect of the organisation. SP’s management used a magic bullet approach in which the users have to learn the system because it is already in place and there is no choice. However; this approach is extremely risky in large organisation and in case of large scale changes because failures can lead to dissatisfaction and a feeling of insecurity as occurred in case of SP. Most of the employees felt that instead of implementing an ERP system, the management should have tried automating the existing system. This would have ensured that the employees understood what was going on. Instead the ERP system changed a lot of things; employees were thus left to understand both the system as well as their revised role. For example, for some employees their main job was to deal with the customers and suddenly they found that they are overburdened with administrative work of inputting information on daily basis. There were people in the workforce who had never used computers in their lives and the minimal training provided was about how to use the system; these employees did not understand what was meant by logging in, session etc. Training was not individualised and was carried out in large batches by people who used very technical language. It was obvious that a large bunch of people did not understand what was going on. The trainers took for granted that the employees had the basic skills of using a computer. For many employees this was a horrifying experience and they started to feel that they are not skilled anymore to do their job. They started to feel that they would be laid off anytime soon so many of them started taking computer lessons from outside institutes in order to improve their knowledge of computers. The situation grew more chaotic and employees grew more impatient with the system with time.
  • 15. P a g e | 15 There were a lot of rumours that there will be massive lay-offs with some rumours even suggesting that SP was going to be overtaken and that ERP implementation was being undertaken under instructions from the overtaking firm. There was absolutely no truth in any of these rumours but then the management was to blame because they failed to inform the lower level employees and instil trust in them. Instead the management should have adopted a transparent approach informing the employees about its plans. The level of dissatisfaction was understandable because many of these employees have been working for SP for whole of their professional career- all they knew was this organisation and when such level of uncertainty is in the air then insecurity, dissatisfaction and all kind of negative feelings come to mind. Many employees started to apply for jobs in other firms and some even started to enrol for training courses to look for other jobs. Overall the human aspect was very poorly handled by the management; the management had all good intentions for the organisation and its workers but the communication was poor. This was made worse by lack of participation from the lower level employees. Thus, SP’s management made three mistakes: firstly, the big bang approach was not appropriate, secondly there should have been more participation from the lower level staff and thirdly there should have been more open and continuous communication between the management and lower level employees. Several models can be used to analyse change projects. One such model is Kotter’s 8-step model which is essentially a detailed version of the ground breaking 3 stage model proposed by Levin. SP’s change project can be analysed using Kotter’s 8 step model. Establishing a sense of urgency: The first step should have been about creating a sense of urgency within the employees. Nach & Lejeune (2008) suggest that many firms change because of changes in external environment, even though these changes are not proven to bring any significant benefits. Such change processes are likely to fail. SP employees were unsure of why the organisation was implementing ERP and the reason that most of their competitors were implementing the same did not stand well with most of the employees. The management failed to create a buy-in situation with the employees. Quite the contrary, the employees believed that ERP implementation was intended to downsize the workforce. Due to the fact that the new ERP system will drastically change the way business is done, there will definitely be resistance to the new system and the new change (Rees, 2009). SP
  • 16. P a g e | 16 management should have created a sense of urgency and should have clarified that ERP was intended to streamline the information flow and not downsize the workforce. They could have clarified that the firm wanted to expand instead of shrinking and having an ERP system would have made it easy for the firm to expand. Management should take a very bold action which will immediately catch attention; this could have included shareholder action against the management and consequently against the workforce if some urgent action was not taken. This is where communication about the future vision (discussed later) could have been extremely beneficial. By keeping the lower level employees unaware of the future, the management deprived them of chance to make useful contribution in the development of SP which created a sense of detachment and disinterest. Creating the guiding coalition: According to the Force Field Theory Organisational change can be influenced by two invisible forces such as resistance force (negative force) and change forces (driving force or positive force). When the forces are evenly balanced the organization is in a state of inertia and does not change, to achieve change an organization would need to increase the change force and reduce resistance force simultaneously. According to the Gleicher's Formula Change can occur when D x V x F > R  D = Dissatisfaction with how things are now (status quo);  V = Vision of what is possible;  F = Initial, concrete steps that can be taken towards the vision.  R = Resistance to change Change managers can increase D and reduce R. Dissatisfaction with the status quo is a trait which does not occur naturally among the employees especially in large organisations. Thus, it becomes management’s responsibility to create this dissatisfaction by stimulating the minds of the employees and motivate them to achieve that greater self. The first and foremost step in this regard is to update the lower level employees of the strategic orientation of the firm and educate them on how they can contribute to corporate strategy. It is only by contributing to the organisational objectives that employee can achieve greater things for themselves and for the organisation. This requires effective engagement with the employee. In case of SP, end users were not engaged in the process right from the beginning. There was low awareness of ERP
  • 17. P a g e | 17 system in the workforce. The SMEs were considered as outsiders and no information exchange took place. Instead of recruiting outsiders to undertake the change process, change agents should have been chosen from within the organisation. The employees were likely to trust their team members more and these change agents would have been more aware of the culture of the organisation. These agents could have been appointed as change agents and could have been assigned responsibility to collaborate with the SMEs. It is also important for the firm to engage the right individuals for coordinating the change process. The individuals ranking high on the following four characteristics are most suitable to such roles: position power, expertise, credibility and leadership (Kotter, 1996) while the firm should avoid appointing individuals who ignore the values of team working and high ego. Developing a vision and strategy: Having a vision is important about the future is critical for the employees to buy in into change projects. For example, the vision of the organisation could include a customer-centric and fast growing organisation which would assure the end users that the future vision of the organisation is in their favour. Kotter (1996) suggests that the vision should exhibit the following six characteristics: imaginable, desirable, feasible, focused, flexible and communicable. SP management did not have (or atleast did not show) a clear strategy and vision in ERP implementation. Above all, the rationale for ERP implementation was very weak considering that the firm had a strong reputation for its quality of service. This vision along with the sense of urgency acts as a strong rationale for the employee buy-in process. Communicating the change vision: Lack of communication of the change vision was one of the most critical causes of failure of the ERP implementation project. This lack of communication led to a gap between what management wanted to achieve and what employees thought the management wanted to achieve; management’s ultimate objective was to standardise the operations so as to make expansion easier and smoother while the employees believed that the management wanted to downsize the workforce in the name of efficiency. This case clearly highlights the significance of communication in change management. SP management did not communicate the future vision of the organisation and employees created their own image of SP’s future vision. Management should have clarified how the change
  • 18. P a g e | 18 project contributes to their future vision of the firm. Change agents could prove very beneficial in this respect; management need to communicate the change vision to these change agents who in turn can communicate it to the lower ranks in the context of their jobs. However; in case of SP, the change agents itself were considered outsiders (as management’s agents) and hence there was a lack of trust between the employees and agents. O’Shea et al (2007) suggests that the purpose of change should be to create a state of the system where needs can be transformed to results in a social environment that increases peoples worth and dignity. It is important for the end users to understand the change vision in the context of their roles so that they can understand how the change process will affect them. If the employees are to assume more responsibility after the change process, the rewards attached to these extra responsibilities should be clarified as well. Empowering broad-based action: there was minimal participation from the employees and the process of change was localised towards the upper and mid end of management. As a result there grew a difference in perception of the change process. Lower level employees at SP felt that ERP was being forced upon them and in such situations the change project was likely to fail anyway. ERP implementation at SP should have been undertaken at a broader scale rather than through a small team working in isolation. End users should have been asked to provide their inputs. It is more likely that a change project will succeed when the end users are engaged at the decision making stage. In addition, end users should have been provided adequate training in order to make full use of the system. This would have assured the employees that the managers want them to use the system and not the system to replace them which, in turn, would have reduced resistance to change. The training provided was so minimal and inadequate that the employees grew more suspicious of their own skills and capabilities after the training. Generating short term wins: ERP implementation at SP took place at a very rapid pace and the project went live in one go. There was thus, no way of eliminating minor issues at early stages; these issues are very likely to magnify into large scale problems at the whole project level. ERP implementation in SP could be categorised as ‘discontinuous’ change rather than ‘smooth incremental’ change. Instead ERP implementation should have been undertaken in incremental stages with divisions being moved to ERP one by one. This would have not only
  • 19. P a g e | 19 eliminated any concerns that the end users had regarding the system but would have also ensured that all the issues with the system were resolved as they arose. Failure to resolve such issues at incremental stage is likely to result in the failure of full scale project. Consolidating gains and producing more change: In the incremental change process, it is essential to consolidate the changes from each stage and move on to the next stage of change. In cases, when the change occurs in one go, consolidation is extremely difficult and consumes a lot of time. In case of SP, consolidation never occurred and end users were not able to realise the benefits of the change. Anchoring new approaches in the culture: Finally, the changed stage should be embodied in the culture of the organisation. It will, however; only occur if the employees buy-in the change project. Otherwise, it will lead to a clash of cultures in which case, the old culture is most likely to emerge as the winner. Conclusions The key issues identified as the cause of failure of ERP implementation project in SP are as follows: - Communication: There was a lack of communication between the top management and the employees which led to a feeling of distrust amongst the employees. This also fuelled dissatisfaction and rumours thereby motivating the employees to resist change. Management should have communicated openly and transparently with front line employees. This could have ended the rumours. - Lack of vision: Management either had no clear vision or this vision was not properly communicated to the employees. A vision is necessary because it allows cross checking and benchmarking which are both key to success of a project. - Lack of employee participation: there was minimal participation from the lower level management which meant that the employees were excluded from the change process. This exclusion meant that the employees’ concerns were not addressed thereby leading to a feeling insecurity among the employees.
  • 20. P a g e | 20 - Lack of adequate training: Using ERP was new to almost all the employees and it was essential to provide adequate training to the employees on how to use the system. While SP’s management organised the training, the training program was poorly structured; firstly, it took for granted that all the employees had the basic IT skills while they clearly did not. Secondly, it was undertaken by technical people who spoke in a technical language making it extremely difficult for the trainees to understand even the most basic of things. Thirdly, the training program was undertaken in large batches which reduced the level of participation and engagement thereby reducing the effectiveness of the program. Finally, the training program was too short and fast for trainees to absorb the information provided. All these factors meant that the training program was a complete failure and employees knew as much about the system after the training as they did before the training. - There should have been more support available for individuals who were struggling to use the system. Feedback from the employees about how they are coping with the training and how much they are learning would have been useful. Instead the management undertook training as a burden which they wanted to get over with. References  Al-Mashari, M., Al-Mudimigh, A. and Zairi, M., (2003). Enterprise resource planning: a taxonomy of critical factors. European Journal of Operational Research, Vol. 146 No. 2, pp. 352-64.  Appelbaum, S. H., Gandell, J., Yortis, H., Proper, S., and Jobin, F. (2000). Anatomy of a merger: behaviour of organizational factors and processes throughout the pre- during- post-stages (part 1), Management decision, 38/9, p.649-661
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