ERP Culture & Digital Transformation
Who says you have no culture?
Eric Kimberling and the team at Third Stage Consulting serve as thought leaders in the digital transformation community, helping customers through software selection, change management, system implementation, and the integration of technology and business. Their “Transformation Ground Control” podcast series engages the larger business and technology communities to address various topics related to business strategy and digital transformation. Recently, I was able to sit down with Eric and discuss a topic that had become quite important to me in the field of ERP implementation — ERP culture.
What is ERP culture?
In our discussion, I defined “ERP Culture” as the set of attributes or characteristics of the company’s overall business culture that support or inhibit the successful implementation of an ERP system. Over the course of an hour, we covered several of these attributes and how they apply to a given implementation.
This topic formed organically enough — I had recently worked with two companies that had gone live on an ERP system within a similar timeframe. The two companies had a number of striking similarities:
- The two companies were of similar size.
- Both companies were privately-owned, family businesses, headquartered in the same state.
- The firms both worked in roughly-analogous market environments, providing products of comparable complexity.
- Both companies were coming from antiquated, 40-year-old business systems.
- They were implementing the same ERP system and using the same system integrator.
- The companies had similar project budgets and similar core team contributions.
The two companies had so many similarities, and yet one implementation was a ringing success and the other was a frustrating mess. In trying to perform forensics to understand just why one implementation was successful and the other a failure, I began to wonder whether the differences between the two projects were due to the significant differences in the cultural makeup of the two companies.
Having once worked in the area of Lean Six Sigma, the idea of “Lean Culture” had been well documented — the notion that a successful implementation of Lean methodologies was highly contingent on the culture of the organization. I tend to think that the same applies to the ERP community: that the success of an ERP implementation rests heavily on the cultural foundation of the implementing organization. That said, what are the elements that comprise the company’s cultural foundation?
ERP Culture & Digital Transformation
Clarity of Focus
Successful companies are constantly separating wheat from chaff — separating key initiatives from tertiary activities. They tend to be good at taking initiatives to their successful conclusion. They are good at avoiding distractions. In the words of Jack Welsh, they “pick a direction and implement like hell.” And when and ERP project occurs, they becomes the primary focus of the organization, and other initiatives get put on hold. Unsuccessful companies tend to be distracted by shiny objects and this distractibility infects their implementation projects.
Attention to Detail
Successful companies are process-oriented — they understand the importance of specific activities and are not prone to “skipping steps.” At times they are methodical to a fault. This is especially the case when you compare them to “cowboy companies” — companies that play it “fast and loose” in their daily business lives. In the execution of an ERP system, these tendencies quickly become evident, especially when implementing ERP functionality such as labor time entry and inventory management. Successful companies take great pride in the cleanliness of the data involved in these processes. Less successful companies tend to let their data devolve into chaos. And you can never successfully implement ERP from a foundation of chaotic data.
Initiatives such as an ERP implementation are not unfamiliar to successful companies, as such companies tend to plan out initiatives before they do them. They understand the value of a plan and its execution. Unsuccessful companies operate like a headless chicken — lots of activity, but very little direction. The value of such a tendency is self-evident: companies that don’t plan to get to a certain point rarely get there.
The term “empowerment” generally elicits eye rolls in the manufacturing community, as it sounds like something you’d hear in a mandatory diversity training seminar. If I were to give the term a more rigorous operational definition, I would describe it as the tendency to clearly define individuals’ areas of responsibility, making them accountable for clear outcomes in those areas, and providing them the resources and autonomy to achieve those outcomes. Unsuccessful companies tend to have a domineering management style, where a few “alpha dogs” fight over decisions, while the rest of the organization resembles an army of chronically depressed lemmings. A fundamental tenant of implementing Lean is the ability for teams to define the processes in their areas of responsibility. Such is the same in an ERP system, where configuration decisions can greatly impact process performance. Such a monumental task requires a team of individuals that have the responsibility, accountability, and support to see it though.
By nature, successful companies are proactive — they are perpetually looking to understand how the chess game plays out. The tendency to look ahead imbues the sometimes tedious steps of an ERP project with a degree of value that is easy to neglect. Such companies tend to be quick to solicit and receive feedback. Proactive cultures also tend to be quick to have honest conversations of the state of a project, when things are not going as planned. Such candor is not a mere complaining — it is the willingness to be accountable for uncomfortable circumstances. The opposite of these tendencies is passivity. In a passive organization, individuals might have trepidation or concerns about a given issue, but lack the proactive tendencies to get ahead of these concerns and bring them to the surface
Sense of Ownership
Ownership is the flipside of empowerment. Highly-empowered employees tend to develop a strong sense of ownership. They are not looking to have things done for them — they’re looking to understand the intended outcomes of a given task and take ownership of them. These are the best kinds of team members to have on an ERP project, as they are self-motivated and are constantly looking to move the ball forward. It’s a question of push vs pull: I’ve had project managers on projects where the team had a lack of ownership, describe the initiative as “pulling teeth” — they were perpetually having to drag the team along. This is generally an indication of ownership issues.
Companies vary considerably in the degree to which they encourage their employees to understand the overall company processes, outside of their individual silos. Successful companies tend to have a greater degree of cross-functionality then their unsuccessful counterparts. They recognize the value of understanding an organization from front to back. As a result, their team members are not content to just understand their own small areas of the map — they want to know the whole thing. One of the great outcomes of an ERP project is the level of cross-functionality that it affords.
Cultural Tendencies & ERP Success
An early mentor of mine once told me that an implementation is equal parts technical and cultural, and if you neglect the cultural, you’ll never achieve the technical endpoint that you desire. My life in ERP has proven this maxim time and again. ERP projects are never easy. But if a company lacks some basic cultural tendencies to support a successful implementation, they will find themselves struggling to achieve their lofty goals.