The Cost of Getting on the Same Page

It may surprise you to realize that the biggest part of any ERP project budget (in many cases 50% or more, of the total) is devoted to knowledge management - the extraction and migration of information between your implementation team, your consultants and your business community.

In the Planning phase, your team helps the consultants understand the business opportunities and challenges, the current processes, the desired future state and the (potentially new) organizational design.

Next comes the Design phase, where the process overviews are developed to make sure that the new processes meet critical business requirements. The users provide feedback to the consultants and your team to solidify the new design.

The consultants then Build (configure) the system and perform knowledge transfer (showing your team what they're doing and why).

During Testing, your team then uncovers data, security, work flow, reporting and transaction processing bugs within the configuration and communicates these issues to the consultants.

Once the system is stable and reliable, your team devotes several weeks to system documentation, the development of training materials and the delivery of training in preparation for Implementation.

Throughout the effort, Project and business leaders are communicating the need for the new system, the expected benefits and how the new system will affect processes, tasks and the impact on the organization - all the Communication and Change Management tasks.

In some projects I've been involved in, the cost of all these knowledge management and transfer tasks is equivalent of funding four years' college tuition for 300 students! That is a LOT of money.

How to Discover Leaders in Your Company

Want to discover where the leaders are within your organization? Just go through a big systems implementation.

In my experience, there's no better litmus test of leadership, than the effort of managing change in support of a major systems implementation.

Here are five reasons why your company might need to upgrade their systems. There may be many more, but I like to keep lists short. These reasons are listed in order of difficulty in managing change (from easiest to most difficult).

1. Real crisis (imminent demise). There's nothing that focuses your attention like imminent demise. When you have absolutely no other choice, it's pretty easy to get people "on board". It's far easier to jump from a second story window when the house is on fire.

2. (Believable) Manufactured crisis. I call this the "We fight them there so we don't have to fight them here" strategy. If your management team can create a believable doomsday scenario, it is far easier to overcome change in your organization. We can debate about the future credibility of management later. (I'm not endorsing this tactic.)

3. Compelling vision or market opportunity. Perhaps your company could grow substantially by conducting business globally, in multiple languages and currencies and your systems can't support that effort. If we do this, we'll get a "leg up" on the competition. Or perhaps you need to do it just to keep up with the competition.

4. Strategic operational improvements. If we only had visibility to our purchasing data, we could drop our costs by 10% (or improve cash flow or lower our inventories... you get the point). Operationally beneficial, but doesn't necessarily motivate all the troops.

5. Current course no longer an option. We can't get parts for our old mainframe anymore or the last APL programmer just retired. We have no choice. It's seen as a technical issue, not a business problem.

In most cases, ERP implementations are driven by reasons #3 or #4. And that's where you need all leadership, leading. And here's what good leadership does.

1. They take the time to understand the initiative and its importance (and perhaps internalize the benefits to their department or line of business).
2. They make it a priority (not just add it to a long list of projects). They identify what won't get done as a result of doing THIS.
3. They communicate with (not TO) their employees. They can answer the who? what? when? where? why? how? questions - or find someone who can.
4. They "walk the talk" - show consistency of purpose, ask about project progress. That which gets measured, gets done. They challenge those who aren't "on board". They lead by example.
5. They continue the dialog - not just a "kickoff" meeting, but quarterly (or milestone) updates as well.
6. They communicate expectations, expect results and hold people accountable.

ERP implementations are very stressful times for any company. As you manage through the significant change, keep your eyes open and you'll discover who your real leaders are.

And they can come from any tier in your organization.