Enterprise Software optimize

Understand the organizational impact of ERP training

Anthony Giasi explains how training and organizational change work together when a company implements an ERP.

By Anthony J. Giasi

Large-scale software implementations affect more than just your company’s computer systems. These enterprise applications often force changes on the organization’s structure and/or business processes. This is particularly true in cases where companies are implementing enterprise resource planning (ERP) systems, such as PeopleSoft or SAP. ERP implementation is frequently part of a larger reengineering effort, involving the redesigning of business processes, changes in the organization’s structure, and possibly changes in the culture of the organization.

At many companies, training is what forces employees to confront the changes mandated by an ERP implementation. (Unfortunately, many companies blow their ERP budgets on hardware, software, and development, skimping on training. However, that’s another story…)

To understand why training must be a key and integral part of any change strategy, it is necessary to understand the dynamics of the organizational change process. This article focuses on organizational changes that occur as the result of ERP implementations. This information should help you understand what’s at stake when you develop your own ERP training program.
This is part one of two articles on the relationship between training and organizational change. In this first installment, we discuss how training and organizational change rely on each other and go hand in hand to be successful. Our follow-on article will cover the training lessons learned from ERP implementation.If your organization has completed or is undergoing ERP implementation, we’d like to hear from you. Please send us a note and tell us how training fits into the ERP implementation in your company.
How ERP implementations affect organizations
Organizations are not composed of “black boxes” but rather of subsystems that determine how they behave. So state Fremont E. Kast and James E. Rosenzweig in their book, Organization and Management: A Systems and Contingency Approach. Their model states that a change in one subsystem can cause a change in others. We’re going to look at how ERP implementations affect five subsystems: Technology and Procedures, Goals and Values, Psychology, Management and Leadership, and Structure.

Technology and Procedures subsystem
An ERP implementation creates change throughout the organization. The most obvious subsystem affected by an ERP implementation is the technology and procedures subsystem. This subsystem serves as the repository for the policies, procedures, tools and technology, and “know how” used by the organization to accomplish its purpose. ERP packages enable organizations to automate their HR, payroll, and financials functions, and will likely result in changes to their business processes and, to a certain extent, their procedures. Most companies find it easier to modify their business processes to fit their ERP package rather than incur the time and expense required to modify the ERP to fit existing business processes.

Goals and Values subsystem
ERP implementations also affect the Goals and Values subsystem. This subsystem houses the organization’s objectives and the values and rules of conduct under which the organization’s members operate. For example, as part of its PeopleSoft implementation, a large insurance company established a Call Center that took over many of the help functions of the HR department. The new missions inherent in the Call Center created a new set of goals and values for the insurance firm and its members.

Psychology subsystem
The turmoil, uncertainty, and stress of ERP implementations affect the Psychology subsystem. This subsystem represents the “human dimension” of the organization and is made up of such elements as employee morale and interpersonal and intergroup communications. In the minds of some employees, the changes associated with an ERP implementation pose a threat to their job security and chances for promotion. Also, the new business processes may require employees to undergo retraining or transfer to new work environments—both stressful situations.

Structure subsystem
The Structure subsystem consists both of the formal “organization chart” and the important (and frequently powerful) informal groups within the organization. Changes to organization structure, as the result of ERP implementation, can be obvious, as in the case of the new Call Center noted above, or can be more subtle. An example of the latter occurred during the establishment of a Wide Area Network (WAN) at a major military headquarters. Before an e-mail system was implemented, staff officers hand carried “decision packages” to the other staff agencies to obtain consensus on policies and procedures. A benefit of this process was the informal exchange of information among the staff officers, which often helped them solve problems in other areas. When they started sending the decision packages by e-mail, this exchange of unrelated, yet important, information no longer occurred. Once the officers realized how much information had been shared during this process, they made a concerted effort to continue informal communications in other ways.

Management and Leadership subsystem
The Management and Leadership subsystem, which spans the entire organization, is responsible for overseeing the implementation of an ERP package and may also undergo changes as the result of the implementation. This subsystem sets goals, develops and oversees the execution of strategic and operational plans, exercises control, and orchestrates the interaction of the organization with its external environment. The ERP package may require management to assume increased responsibilities and master new technologies. Of particular importance is the need for enhanced “people skills” to deal with the challenges to the Psychology subsystem, noted above.
Training is the principal means by which change is effected in organizations. ERP implementation is an obvious example—employees must be trained on the new business processes and associated new technologies. Training can be used to create change in all five subsystems. For example, training can be used to change employee behavior and patterns of communication (the Psychology, Goals and Values, and Structure subsystems). Organizations have traditionally used training as a means to change and improve their management practices (the Management and Leadership subsystem), for example, through management development programs and initiatives.
Training Facilitates Organizational Change
Now that you understand how deeply ERP implementations reach into a company, you can see how this should change your thinking about how to design an ERP training program.

When planning your ERP implementation, remember that organizations are systems and that training can be used to effect change throughout the organization. Training can change the operation of the subsystems of an organization, facilitating the use of new technologies and processes, and altering employee behavior and patterns of communication. A carefully planned and timely executed training program can help ensure a smooth transition from a company’s current state to its desired final form.

A particularly important benefit of training is that it can help employees accept change. A well-executed ERP training program should not only train employees on the new technologies and processes, but should also explain the need for these innovations. This facilitates employee buy-in and helps to overcome the resistance to change that is present, to a greater or lesser extent, in all organizational change situations.

Anthony J. Giasi is a training and documentation consultant with Bianco Hopkins & Associates, Inc. He has a background in human resources, organizational development, and international relations. He is currently pursuing his Ph.D. in political science at Georgia State University.