Why is executive buy-in so darn hard and fraught with surprises? Well the answers are many, and in this blog, we’ll explore a few that you may not have considered.
Executive buy-in is a subset of organizational change management (OCM) and more than just terminology. An effective and well thought out OCM strategy is critical to the success of any ERP or digital transformation initiative. In fact, we have found the executive misalignment is one of the biggest root causes of ERP failure.
As consultants, we’re beginning to see more awareness about and around OCM being recognized as the key to “technology adoption” for employees. While this is a very relevant, less is written about executive buy-in and exactly what the challenges or hurdles might be.
The devil is in the details
C-level executives live above sea level. By this I teasingly mean they are high-level types of individuals. They are most comfortable with high-level decision making. Most don’t allow themselves (or have the time) to get bogged down in details.
So, what happens when it comes to an ERP project that is a myriad of decisions involving complex processes and technical workflows? Chances are you’ll get lots of attention around cost and implementation timing from the execs, but don’t expect software selection expertise, day-to-day processing knowledge, etc. So, where does this lead?
A huge amount of responsibility is placed on the project team to “get it right.” You better have a diverse, engaged and experienced project team, and if you’re strategic enough to do so, adding an independent outside ERP consultant to your bench is like an insurance policy. When you hear about implementations going sideways late in the game, it’s typically because the project team thought they had everything covered, but they didn’t.
Sometimes the root cause of ERP failures sprouts from delegating the wrong types of duties/ownership to a systems integrator or giving a series of green flags to upper management until suddenly a blow up occurs. Bottom line – while it’s important for your executives to be supportive, the onus and all the complexities of project success or failure will fall on the project team.
Sidebar: We recently received an emergency call for help from a business that had installed new software. They couldn’t close their books post implementation. While the software was performing as configured, data loaded into the new system was not reliable. The root cause of the problem turned out to be inadequate data cleansing, mapping and testing. This illustrates how one tentacle of a project can uproot an entire initiative.
Your initiative deserves to begin with a defined future state vision
One of the things you’ll need to know to achieve success is the “future state” vision for your company which must come from the C-level. Don’t begin your initiative without this. Without it, how can you even begin to plan for new software functionality?
This is critical buy-in of a different type. While the project team will typically be responsible for mapping out current state, the executive team must provide you with documentation of how they envision the company’s future state. This is a key step in determining how to get executive alignment as part of your transformation.
Some businesses will mistakenly forge ahead towards a goal of automating manual processes to create efficiencies. While this is (and should be) a goal of any ERP initiative, it can’t stop there. The time and expense involved dictates that your executives must create (and agree upon) where the company is going. The lifespan of many of these system initiatives is sometimes 10 years or more. If your execs can’t provide a clear picture of what the future state looks like, you need to push back. Educate them that technology can support the company in extraordinary ways, but only if the path is clearly outlined beforehand.
Sidebar: As independent ERP consultants we will regularity facilitate high-level digital strategy sessions with upper management of companies looking to define their future state. The dynamics and characteristics of companies are complex. While the CEO may see one vision, it’s very unusual for all execs to agree thus making the path forward ambiguous. Hard discussions are needed to come to consensus and sometimes the rigor of normal business operations don’t allow this to occur organically. Having an independent party coach and facilitate a group discussion (using a defined process) is considered a best practice – especially if that resource is familiar with OCM and what modern ERP software can and cannot do.
Each executive will have a different perspective
The business world is following new paths when it comes to recruiting and building executive leadership. By this I mean some companies are recruiting top-level leadership from different industries. A different, more traditional model promotes leadership from within. These differences are something you want to be aware of when seeking executive buy-in.
Some common traits we see as consultants that will impact ERP projects include:
- Execs hired from outside the business are more likely to draw on past experiences, technology, and processes that the company may be not be used to. This may challenge the old regime in unexpected ways. Executive alignment becomes more complex which has a direct relation to executive buy-in and creating a future state that the company can universally agree to and move forward with.
- If the business is being run by executives that have grown and been promoted from within, you may still encounter challenges. Silos are a common issue. As an example, the head of warehouse management may be an expert in their field and may live largely and interact within their own environment. So, what happens when new software enables wider visibility, different routines and multiple ways to measure results? This discussion (and buy-in) needs to occur early.
- Execs have different levels of experience and maturity related to the realities of ERP and HCM implementations. For example, less experienced types are more likely to fall victim to common ERP industry hoaxes. More experienced execs – who typically have the battle scars to show for it – are more likely to have realistic expectations and a clear vision for the transformation.
Hint: Some departments or divisions will encounter more radical change than others when going through an ERP implementation. To the extent you can be preemptive and open about this, the better. Executives generally don’t like surprises.
Your C-Level needs to support a realistic ERP resource plan and budget
Budgeting for an ERP initiative and timing thereof must be agreed upon as being somewhat fluid. This doesn’t mean loosey goosey, but it’s reality that the dollar and time estimates that are set on day one, will change. It’s best to use ranges and update them frequently.
This will be counterintuitive and uncomfortable for some executives. They are used to having a report completed by a certain date or expenses managed to a certain threshold. Many have never actively dealt with the transformative beast that we know as an ERP initiative or digital transformation. As mentioned previously, budgeting for and equipping your team with an independent ERP consultant will also help the project succeed from both a budget and timing perspective. (See our related article about how to estimate a realistic ERP implementation timeline).
The more qualified and dedicated resources that you can allocate to project the better the chance of finishing within time and budget targets. You want a diverse “A Team” of your company’s best employees fully dedicated. If your C-level can’t “buy-in” to backfilling to free up these resources, expect delays and overruns.
It will not be easy to get this type of message across, and we’ve seen it cripple initiatives time and time again. You can’t ask employees to do double duty for extended periods of time and expect superior results. You also need management support to replace team members that will leave during the project, because it’s very uncommon not to have turnover. You will have turnover, so understanding that your entire team will not remain completely intact must be taken into consideration and planned for.
Sidebar: One of the strongest examples of executive buy-in we’ve seen is a client dedicating a high-level executive to their ERP initiative. The exec (who was not an IT leader) had all duties shifted, so they could participate and help lead the project fulltime.
Executive buy-in is one of those behavioral sciences that easy to talk about, but hard to define or enforce. It’s complex because we’re not only dissecting leadership styles, but also motivations, personalities and how execs work within groups. For example, an executive may act differently with their peers vs. with a project team.
With that said, at a minimum you should seek clear goals from upper management – what the organization hopes to achieve now and in the future. If the ERP initiative will be largely delegated (and it probably will) upper management needs to be held accountable for developing the vison and strategy with as much detail as possible. This is a key ingredient for an effective ERP executive steering committee. Accept less and you’ll be accepting guaranteed problems and possible failure.
If you thought this blog was going to talk about exec buy-in as “being champions of the cause” or “understanding the benefits of new tech” – yes that’s important too. But ensuring your best chances for success has more to do with the harder definitions of executive buy-in explored in this blog.
Please feel free to contact us if you would like to brainstorm ideas to gain executive buy-in and to assemble a more effective steering committee. We are happy to help support you on your digital transformation journey!