This essay focuses on providing a critical review on the change management perspective of a global organization that has decided to implement an enterprise resource (ERP) system. The emphasis is on viewing the difficulties that have presented themselves throughout this process and analyzing the issues using Bolman and Deans 4 Frame Model (Bolman and Dean, 2008). This analysis will present critical issues about the system implementation and will present some general recommendations for future programs.
Background on the Organization.
The organization that I work for is a large global manufacturer in the industrial electrical industry.
We provide products and solutions in the electrical industry from residential systems through to heavy mining applications. A large portion of our business focuses on the manufacturing of a broad range of products which are distributed throughout the world and sold via reseller and direct to end users. The organization is predominantly sales based with local offices located in every major city in the world and employs over 100,000 people.
The organization has grown significantly over the last 10 years via a strong acquisition plan in an attempt to become the number one global leader in the electrical market. As various companies have been acquired, there has been a key focus on these businesses maintaining their existing business systems so as to allow these businesses to maintain their market presence and dominance that they hold in their niche markets and sectors. This strategy also helped the larger organization in not having to develop integration strategies for all these new businesses and therefore could focus on their core objectives of acquiring more companies.
As the company changed its strategy from acquisition to consolidation it identified that there was a need to start integrating each of the now isolated business units together. Similar to the decision by JTI a global tobacco company in 1999 where through acquisition the group was disparate, (Seguin and Pelster, 2005) it was identified that there was a significant limitation in being able to track revenue and expenses into a central point due to disparate business function systems in HR, Logistics, accounting, manufacturing and customer management. The disparate number of systems was leading to significant inefficiencies that were not in line with the corporate strategy of being the best in class and global leader in the electrical industry. Wanting to be a best in class global organization the greatest concern was about efficiency of the organization as identified by Spathis & Constantinides (2003). The electrical industry is a very competitive market as the products are very commodity based, meaning prices being driven down and margins being reduced.
Each local office and national head office had a great amount of autonomy where they managed the business activities on their own. Being locally run business units also meant that operational systems where decentralized with no ability to share information out to other business units. This would mean delays in product supply and the ability to get important information quickly to assist customers with their needs and issues.
The Change Decision.
To overcome these problems it was decided that the solution needed to be the implementation of a global enterprise resource (ERP) platform. This new business software system would be designed to assist in harmonizing many different business processes across multiple business units and provided a common platform to operate from. (Fui-Hoon, Lau and Kuang. 2001) This would link all divisions across the globe from Marketing and Manufacturing to Operations and Sales. This ERP system would streamline systems and provide an integrated financial control and reporting structure to allow many processes in the businesses to reduce costs within, as well as improve customer service to both external and internal customers. (Gupta, 2000) It was decided that the ERP system that would be implemented would be a SAP system as a number of existing divisions in parts of the world were already using this software system. The strategy was that each regional group would implement the SAP system in a stepped approach across different countries.
In Australia where the system was to be implemented a key project team was put together from both a functional and technical perspective and managed as a joint collaboration between SAP consultants and the internal development team out of head office in Europe. The project team’s main focus was to develop a list of requirements so the development team could design the new system and processes that were needed and that would be applicable to the countries business needs. Based on the main SAP modules, the development team reviewed the requirements identified by the project team and compared these with the SAP functionality. Gaps were then identified and solutions proposed.
The development team consisted of three groups. The functional group was responsible for training, change management and implementation. The technical group conducted all the programming, hardware configuration, interfacing and system performance. And then there was the management team that oversaw the total project delivery.