Organizational Change Management: The #1 Key to Digital Transformation Success

Written By: Eric Kimberling
Date: August 18, 2018

Over the last few weeks, I have met in person with about a dozen CIOs in different parts of the world. During my discussions with each of them, I conducted an informal survey to find out what was keeping them up at night.

The number one response? By far, it was organizational change management.

Some are troubled by their organization’s lack of understanding of the term (see our related article about what is organizational change management?). Others are aware of the challenges associated with a large digital transformation. Still others have heard the horror stories about ERP failures related to lack of organizational change management.

Whatever the reasons, executives are becoming more aware of the importance of organizational change management. In fact, even some attorneys involved in ERP lawsuits are becoming more educated about the merits of organizational change management. For example, I was just recently retained to be an SAP organizational change management expert witness – a first in my 25+ expert witness cases over the last decade.

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Your digital transformation will fail without strong organizational change management

It is safe to assume that your digital transformation will fail without strong organizational change management guidance and support. Of all the failures we have helped recover and expert witness cases we have been involved with over the years, they all shared one commonality: they didn’t address the human component well. The inverse is true for the successes we have been involved with.

You are responsible for addressing organizational change

Your software vendor may provide you with great software. Your system integrator may provide strong functional and technical implementation support. But only you can ensure that organizational changes are properly managed throughout your digital transformation. Companies too often assume that someone else will address this critical success factor for them by default. It’s simply not true.

Your ERP system integrator probably doesn’t have strong organizational change management skills

Even if you want to completely outsource the human component (which you shouldn’t), your system integrator isn’t likely to handle it well. Big system integrators such as Deloitte, Capgemini, and Accenture may be world-class technical implementors, but they typically don’t handle organizational change very well. What little change support they provide typically very tactical in nature. I have found that these system integrators often overlook the more strategic and critical organizational change workstreams.

This video provides a case study of an organization that is in the process of building an organizational change management strategy as part of the implementation readiness stage of their Microsoft Dynamics 365 implementation:

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The key components of digital transformation organizational change management

So, what are the things that these system integrators and digital transformation project teams are typically missing? They typically address the obvious ones, such as basic system training and employee newsletters, but that just scratches the surface of what is required for success.

Here are a few things the big system integrators and resellers commonly miss:

  • Clearly defined and documented future-state business processes
  • Organizational design to support those new processes (for example, how are people’s jobs going to look in the future?)
  • Assessing and communicating change impacts to individual work groups and individuals
  • Defining a measurable benefits realization plan for your digital transformation initiative
  • Building an internal center of excellence within your IT department
  • Training your internal team to be more self-sufficient after the consultants leave

What next?

The good news is that – although they are rare – there are good organizational change management consultants out there. I started my career as an organizational change management consultant, so we have built a very strong change competency here at Third Stage Consulting.

Email me at eric@thirdstage-consulting or call me at +1-720-837-3604 to pick my brain about how you can better incorporate change into your digital transformation. I’m happy to help!

Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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