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Change Management and Implementing
New Systems
By Sheldon Needle

Corporate management and software resellers alike tend to view implementing a new system as strictly an IT and technical process. That approach sometimes leads to failure, particularly with SFA and CRM projects, but with other complex applications as well. A significant number of IT projects fail, with failure ranging anywhere from not meeting initial goals to having to abandon a new system outright. Certainly many elements of such failure relate to technology issues, but a number have been traced to failure to provide change management. The reasons are simple: most people and organizations resist change and change generates conflict. Without specific countermeasures, this resistance and conflict erodes the organization’s ability to make the requisite adaptation to a new IT system where some changes behavior is needed. In other words, system change is a disruption, which management is rarely equipped to handle.

Most simply, change management involves analysis, communication and leadership to ensure that an organization can effectively adapt to a required course of change. Following are some of the key issues to consider when that change includes a major new IT system:

1. Hire a Change Management Consultant
Probably the most important issue is engaging a suitable consultant, as few mid-sized firms have the requisite skills internally. And software resellers are likewise not equipped to handle this aspect of new systems implementation. More importantly, they will almost never mention it. The reasons are that it is:

• Not relevant to them, and outside the scope of their thinking
• A diversion of funds from their project
• A wild card third party is introduced, whom they may have to deal with

But an experienced consultant can forestall major problems, some of which can be virtually unfixable if not addressed up front. The appropriate consultant should be able to lay out specifically what the problem areas and risks are, based on an assessment of the organization and type of system under review.

2. Employee Involvement & Communication
Involvement of effected employees should begin early, and not as an afterthought. Communication needs to be a two-way process, starting with a forthright discussion of:

• what will happen
• when will it happen
• why it is being done
• what is the expected outcome
• who it will effect
• how it will effect them

Without this communication, management should expect everything from people not understanding priorities to outright opposition (frequently covert). In addition to telling employees about the changing environment, they need to solicit specifications and suggestions about the system, alternatives and other issues. This is called buy-in and also helps to prevent mistakes and oversights throughout the process.

3. When Management is Not Leadership
Most organizations are management-led, not leadership led. That is, they rule by fiat, simply issuing memos to obtain their objectives. That rarely works when complex systems are involved. There are several reasons, but probably the most important is that if the new system and change management are not seen as having an unequivocal CEO mandate, both employees and senior executives will feel free to virtually ignore them. Thus the needed integration, cooperation and participation may never materialize. Companies often have the idea that complex new systems are plug-and-play, not realizing that leadership may be required to make them fully work, organizationally. Although large enterprises often, but not always, have both the understanding and resources required, that is often not the case with mid-sized organizations.

4. Sell the New System
Selling the system means informing employees of why and how the new system will benefit them. Unless they have a stake in its success, they may be indifferent or downright hostile, for a variety of reasons. This is a serious element of success and assuming that it is unimportant has caused some implementations to fail.

5. Dealing with Fear
Fear is a natural byproduct of implementing a new system. These are some of the main manifestations of such fear:

• Are they going to eliminate my job – or me?
• What if I can’t learn the new system?
• What if my position isn’t as dependent on my years of skill?
• What if I lose power? This is a management fear.

The problem with fear is that it leads to behavior that in some way is oppositional to the new system. Or it may lead to departures, from employees who can’t deal with the uncertainties.

6. Be Prepared to Resolve Conflict
Conflict can easily arise with a new system, as gateways are opened up between different departments and divisions, and turf battles erupt. Often it is based on the last fear noted above, but there may be other motivations as well, most specifically a drive for personal power at the expense of the organization. Most organizations prefer to ignore conflict and send signals that it should remain hidden.

Unless specific steps are undertaken in order to first identify and then resolve conflict, it will just fester and the system performance will simply degrade. Often an honest broker is the only participant who can take these two steps, but only if granted an unwavering charter to do so by the CEO. Conflict can include anything from refusing to attend project meetings (too busy) to not allowing employees time to work on conversion issues.

7. Involve HR
There are several major HR issues that effect whether a system may ultimately succeed, at least to the fullest extent possible. The first of these issues is determining whether the effected employees are capable of adapting to the new system. Specifically, they may need to make ad hoc decisions, may need to interact with customers, and they may need to learn complex workflows, none of which they were required to do previously. If some employees are unable to make the leap to the demands of the new environment, performance of the
system is jeopardized. Thus redeployment of such employees may be indicated – and before the new system is installed.

This same issue may also relate to managers as well, as a new system may create significant new demands. If an organization is not prepared to deal with these potentially painful issues, it should expect significant operational problems. Thus HR should undertake a review of personnel who will be impacted by any new systems. Of course, this can only be done in conjunction with a change management consultant with the skills to analyze changing job requirements.

At the very least, job descriptions may need to be seriously revamped, which in turn changes position requirements and compensation. In some cases, this may also trigger the need for reorganization of a department or larger entity.

The other key issue is a review of compensation policies and plans, as a new system has the potential to alter the nature of work being performed. Specifically, rather than a static hourly rate, is there a way to incorporate incentive compensation that rewards improved performance? A new system may and should provide new metrics that permit feasible measurement of job components that was previously irrelevant or infeasible.

8. Plan for Real World Training
Many new system installations, particularly with mid-sized or smaller firms, only provide initial training when the system is installed. There is often no provision for retraining/upgrade training for existing employees and none for new hires. As a result, the full benefits from the system may never materialize. Or they may even materialize and later erode, as skilled personnel depart.

9. Interdisciplinary Cross Training

10. Measure Training Effectiveness
Cross training means providing training to employees who are not direct users of the system, or at least of that portion relating to cross training. Benefits include:

Measuring means testing, and that does a number of things. Knowing they will be tested on the training provided, employees will significantly increase the level of effort they put forth in training classes. Training certification can be a prerequisite to wage increases as well as an incentive in its own right. And a bonus for meeting a certain score can further increase the level of concentration and learning that occurs.

11. Implement in Stages
Typically, companies plan for a staged implementation due primarily to IT issues, such as scalability, testing, IT resources, etc. However, the timing of such stages should also incorporate an objective assessment of the organization’s ability to absorb the human changes that will occur. If the stakes are such that the most rapid IT implementation possible is necessary, that means that more effort is required in pre-adapting. This means that things such as simulations, increased training, temporary personnel be brought in to take over routine functions, etc. In other words, employees are at a higher state of readiness as the system is brought online.

12. Provide Feedback & Information
In order for employees to retain faith in the system and management, they need affirmation of forecasts made prior to inception of the new system. If they were supposed to be able to handle more orders with a lower error rate, give them the data to show what happened. If it didn’t happen, they may even know why. The system will generate new data and there are benefits to sharing it. But the most basic reason is performance that gets measured generally improves. There are other softer (but real) reasons for doing this, most notably a sense of collaboration and not subjugation.

About Sheldon Needle
Sheldon Needle CTS President, has been evaluating construction software vendors since 1983. Your free 10-15 minute Smart Shortlist Consult™ with Sheldon is your opportunity to find out latest information about accounting software and get all of your questions answered. Download the Accounting Software Selection Kit now.

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