Conditions Contributing to a Successful Change Management Triggered by an Enterprise System Implementation Process

Zelmira Vojkovic Mitic

Conditions Contributing to a Successful

Change Management Triggered by an

Enterprise System Implementation Process

A Case Study of an Internal Triadic Relationship at

AstraZeneca

Information Systems

Bachelor Thesis

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Abstract

A robust enterprise system will enable companies to simplify their business process to achieve the speed, efficiency and flexibility that are so fundamental for market survival. But implementations of such enterprise system and their assimilation into the organizations seems to be very tricky and very often unsuccessful. The reasons are many, because it is not just the system that is new, but also the processes, collaboration patterns and job roles. However it is safe to say that the failures are not just due to the technology, but also due to the inappropriate change management in connection with an introduction of a new enterprise system.

This bachelor thesis is aiming to identify, describe and explain the conditions contribution to a successful change management triggered by an enterprise system implementation process. This thesis is based on a case study in a large global pharmaceutical company that has embarked on a journey to transform their business processes

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Acknowledgements

This thesis wouldn’t be possible without a small, but powerful, group of people who supported me with their expertise, guidance, motivation, ideas and patience through this exciting, but at times, challenging experience.

My sincere appreciations to my supervisor Odd Fredriksson for the great guidance, the inspiration and the encouragement throughout the writing process, and when I lost all hopes that this thesis will ever be finished.

I would like to express great gratitude to the team at AstraZeneca for their participation in this work, and for considering it so important that they were willing to share with me their time, expertise and their honest responses.

Warmest thank you to my wonderful study group for their continuous and valuable feedback and all the pep talk.

To my daughter and my husband I can just say that they are beyond wonderful.

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Table of Contents

Abstract ___________________________________________________________________ 2

Acknowledgements __________________________________________________________ 3

1.

Introduction ____________________________________________________________ 6

2. Theoretical Background___________________________________________________ 11

2.1 What is Enterprise System? __________________________________________________ 11 2.2 Enterprise system implementation ____________________________________________ 12 2.3 Top management role and involvement ________________________________________ 16 2.4 Project management ________________________________________________________ 17 2.5 Change management ________________________________________________________ 18 2.6 Communication ____________________________________________________________ 22 2.7 Conceptual Framework _____________________________________________________ 24 2.7.1 Conceptual Model overview ________________________________________________ 25 2.7.2 Enterprise system characteristics ____________________________________________ 25 2.7.3 Implementation Complexity ________________________________________________ 25 2.7.4 Communication __________________________________________________________ 26 2.7.5 Top management _________________________________________________________ 27 2.7.6 Implementation team ______________________________________________________ 27 2.7.7 Users ___________________________________________________________________ 29 2.7.8 Successful change management _____________________________________________ 29

3. Results _________________________________________________________________ 30

4. Analysis ________________________________________________________________ 44

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4.7 Successful Change Management ______________________________________________ 52 4.8 Modified conceptual framework ______________________________________________ 53

5. Conclusions ____________________________________________________________ 55

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1. Introduction

1.1 Problem Background

To stay competitive in today’s global market organizations must keep pace with the rapid

technological development and embrace digitalization. Many companies are moving towards cloud-based solutions (Computer Sweden 2020) to be able to improve customer experience, integrate

applications or increase flexibility related to IT. The traditional enterprise systems architecture is being challenged by rapid development of Platform as a Service (PaaS) and AI, and is slowly moving away from software installation and maintenance to web based applications in the cloud (Computer Sweden 2018).

Despite the fact that digital age started a quarter century ago many corporations still struggle to embrace the advantages of digital technology (The Wall Street Journal, 2019). According to recent study by McKinsey Global Institute (2019:1) this is especially applicable for big established companies. Their findings also show that there is a difference in level of digitalization based on sectors. Media and finance are the sectors that are most digitally advanced, and the lowest levels of digitalization are observed in pharmaceutical and manufacturing sectors. Even Sebastian et al (2017:198), based on their research amongst 25 large and successful companies, recognize that “big old” companies are in the very early stages of their digital journey. They are not just trying to find the ways to compete, but also have the ambition to take the leading position in the rapidly changing digital economy. With the “big old” companies Sebastian et al (2017:198) refer to companies the average size of 82 297 employees and the average age of 104 years.

As much as embracing digital technology for the “big old” companies can unlock game-changing opportunities, it may also pose a threat, because they may not have the appropriate foundation required for a successful digital transformation. Sebastian et al (2017:202) claim that what is needed for a successful digital transformation is a combination of technology-enabled assets and business

capabilities that will be enabled by the technology. The two essential technology-enabled assets are an operational backbone, and the digital service platform. The operational backbone provides efficiency and reliability of transactional processes, and a digital service platform enables speed and flexibility for rapid digital innovation.

However, for “big, old” companies this type of transformation is a lengthy process (The Wall Street Journal, 2019) and it does not only include technology, but also the organizational culture. In addition to introduction of a new technology the transformation initiatives provide the opportunities for redesigning the roles and ways of working, and this process also takes time. However, for big

companies that may be beneficial, because the success is not guaranteed by having just the right digital strategy, it is the execution that is critically important (McKinsey Global Institute 2019:8). According to their recent research more than half of transformation projects fail to deliver the profit expectations and only one in ten exceeds those expectations.

An enterprise system is usually long-term investment intended to be used for many years. Today the frequency of system change range from 12 to 15 years (HerbertNathan & Co 2020:72). However, many system implementation projects turn out to be unsuccessful, and according to the existing research there several factors that impact the project outcome. Some of those are insufficient top management involvement, unrealistic expectations, unclear implementation plan, poorly defined business processes, and inadequately trained users. The implementations of a new enterprise system have huge impact on organizations and change management is an vital part of the implementation process.

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company with 70 000+ employees with offices across the globe. A department within the company has embarked on a journey to replace current technology with a best-of-breed solution for life-sciences. According to the department head, one of the sponsors of the initiative, the main reason for acquiring a new enterprise system is to resolve the unsustainable complexity and inefficiencies that exist today across the business. The business is moving from several fragmented, outdated and manual systems that are slowing down the way the business is conducted, and in some instances could even jeopardize the license to operate. The department head also mentions the compliance risks related to supply chain and the inability to meet the upcoming regulatory requirements that working in the current systems entails. The goal with the new enterprise system is to increase efficiency, accelerate and simplify the ways of working, and at the same time provide users with the system that is more intuitive and eliminates many repetitive steps. The new enterprise system is expected to simplify global

collaboration, enable the business to meet and exceed upcoming regulatory requirements by providing a data-centric platform. Such platform will establish the foundation for developing advanced AI capabilities that will enable the digital future, and drive innovation.

1.2 Purpose

The purpose of this bachelor thesis is to identify and describe the critical conditions contributing to a successful change management triggered by the implementation of an enterprise system from an internal triadic relationship between top management, implementation team and system users.

1.3 Target groups

The main target groups for this bachelor thesis are other organizations that may be preparing for similar enterprise systems implementation projects, and are interested in ascertaining the conditions contributing to successful change management during such projects.

The additional target groups that may be interested in this bachelor thesis are the case company and the students studying information systems.

1.4 Case company

For this case study, I have chosen to focus on a specific organization where I have been employee for

several years. This organization is part of AstraZeneca, a global pharmaceutical company with offices across the world and more than 70 000 employees. As an employee in this department, I have an active role in the ongoing project within the change management workstream. It was that role in the project that gave me the idea of a study topic for my thesis. To ensure the selected topic is also relevant for the organization I contacted the Section director, that is also the change management workstream lead, for his opinion. He confirmed that the successful change management is a very relevant concern in the ongoing project and he was very interested to participate in this study. He also suggested to contact the department head of the specific organization, that is also the project sponsor for the ongoing project, for a probing dialog. From the probing dialog with the project sponsor, we agreed that successful change management is one of the biggest concerns related to the ongoing enterprise system implementation project. From the probing dialog we agreed that the change management would be the most relevant problem to study as the organization is about to undergo a major organizational and process transformation that is inevitable when a new enterprise system is to be introduced.

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technology with a new best-of-breed solution, Veeva Vault, from an enterprise system vendor that is on the rise within the life science industry.

There are various internal and external drivers for this significant investment. The internal drivers are the need to replace the outdated technology with a technology that will enable end-to-end

processes and provide the ability to save data in one place, to work with “one source of truth”. This will ensure the simplification of business processes that will lead to improved efficiency, speed and data accuracy, and that will increase compliance. The external drivers are related to keeping pace with rapidly changing regulatory requirements and standards, but most importantly to prepare the

foundation for the advanced digital technology, e.g. AI, advanced analytics. Having “one source of truth” provides the foundation for better data quality, better results and enables innovation. The change is huge, not only because it involves implementing a new enterprise system, but because it requires a shift in the current ways-of-working. The ways of working are slow because of inadequate technology and being slow in this industry means losing competitive advantages. The top management recognizes that in this implementation project the change management is almost more important than technology.

1.5 Method

1.5.1 Research approach

Based on two probing dialogues I was able to define the purpose of my thesis and start the

literature review. Literature review includes studying research papers, material from previous courses, books, electronic articles and market research reports within the selected topic. The search for relevant material was conducted through search engines via Karlstad University´s library website and via Google Scholar. Keywords for searching after relevant material are: change management, enterprise system implementation, digital transformation, critical success factors.

The conceptual framework is used to visually represent the selected scope of the researched phenomenon and its design is based on the previously conducted literature review. As a primary empirical data collection method I have conducted 5 interviews with different stakeholders.

Based on my previous knowledge about the organization, and two probing dialogues I could ensure that the selected study topic is highly relevant. To ensure high degree of validity of this thesis I have conducted thorough literature review, based on which I have designed a conceptual model with relevant variables. Those variables were used as a basis for designing semi-structured interview guides used for primary empirical data collection. According to Patel and Davidson (2020:134) the validity in a qualitative study depends on data collection, but also how researcher prepares for the data collection and interprets the results. The reliability in a qualitative study should be considered in the context of the specific situation during data collection (Patel & Davidson 2020:134). To ensure the high degree of reliability the interviews were recorded in agreement with all respondents. The recordings were then transcribed and the interview transcripts were shared with all respondents. With that I wanted to ensure that I captured all responses correctly, and to give the respondents the opportunity to identify any misinterpretations.

Even though I am employed at the case company I have made the effort to remain unbiased by consciously refraining from expressing my opinions while conducting the interviews and writing the analysis. Being unbiased means to avoid being governed by own definite perceptions during

interpretations and analysis of the study results (Goldkuhl 1998:5).

1.6.2 Case study method

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The case study method means that the study is conducted on a smaller group, such as an individual, an organization or a situation (Patel & Davidson 2019:76), but it can also be conducted on more than one case. A case study provides an in-depth perspective of the selected case and as a method is often used when studying processes and changes. This is very appropriate for my case study as the case company is about to undergo a significant organizational and process changes. The research area in a case study is very narrow which means that the selection of a studied problem is specific to the selected group, and for that reason it can be difficult to generalize the results. This means that results can be

generalizedonly for the researched group, but through the wider range of information that is collected the results provide a much deeper representation of the researched case (Patel & Davidson 2019:77). If a case study is conducted at a workplace, which is the case in my case study, the information and data can be collected through interviews, observations and surveys or a combination of any of those data collection techniques. According to Patel and Davidson (2019:88) documents can be used as a data source for answering questions about actual conditions or events. In this study the documents that I had access to were confidential and could not be used as a data source, but the information in those documents helped me to design the interviews.

1.6.3 Interviews and respondents

As a primary data collection method I have used semi-structured interviews. According to Patel & Davidson (2020:105) the semi-structured interviews often take place through conversations between two people, the interviewer and the respondent, and often need a very low degree of structuring. The very low degree of structuring means that the respondent is given the opportunity to answer the question in more detail and in their own words and explain own perception of the phenomenon. According to Patel and Davidson (2020:105) the questions do not come in a specific order, but are rather structured as a list of discussion topics. What may be of the advantage for the interviewer when conducting the semi-structured interview is the prior knowledge of the researched phenomenon (Patel & Davidson 2020:106) that can be acquired through a literature study, but it is not necessary.

The respondents were selected according to snowball sampling method where my initial contacts, project sponsor and change management workstream lead suggested to interview program lead and two users that represents the user groups that will be significantly impacted by this change. According to Patel and Davidson (2020:141) snowball method means that the researcher initiates a contact with respondents that are relevant for the selected topic of the study, and then those respondents suggest additional relevant respondents.

The interviews were conducted via Microsoft Teams due to Covid-19 imposed restrictions, but also because the respondents live in different countries. Below follows a short background of each

respondent and their involvement in the ongoing ES implementation project.

Senior director and department head (project sponsor) has been working at the case company for 22 years and is based in Gaithersburg. He has over 10 years’ experience of IT projects with similar size and scope, and his role in this project is a project sponsor from the business side.

Section director (workstream lead) has been employed at the case company for the past 15 years, and is based in Gaithersburg. He also has previous experience with similar projects, and in this implementation project his role is the communication and change management workstream lead. His workstream is one of several workstreams within the overall implementation team. Each workstream is represented by a core team of experts that are responsible for specific deliverables within the project scope.

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Associate project director (user A) has been for working at the case company for the past 4 years and works at the Göteborg office. She has participated in IT projects before, but not in any project of this size and scope. Her role in this project is a subject matter expert representing her functional area, and will be active user of the new system, once it is implemented.

Regulatory information manager (user B) has been employed at the case company for 7 years and works also at the office in Göteborg. She has no previous experience of such IT projects. Currently she doesn’t have any active role in the ongoing project, but will be involved later as a subject matter expert, and will be an active user of the new system, once the system is implemented. The system that she is using today in her current role will be replaced by the new system.

Table 1 summarizes the details about respondents, their job roles and project roles, along with their office locations, date and length of the interview.

Table 1: Interview summary

Respondent’s role Role in the project Location Date Duration

Senior Director and Department Head

Project Sponsor (Business)

Gaithersburg, US Dec 7, 2020 57 min Section Director Workstream Lead

(Change Management)

Gaithersburg, US Dec 8, 2020 70 min Associate Project

Director

User A

(Subject Matter Expert)

Göteborg, SE Dec 8, 2020 65 min System Owner and

Project Lead

Program Lead Macclesfield, UK Dec 10, 2020 60 min Manager Regulatory

Information

User B

(Subject Matter Expert)

Göteborg, SE Dec 10, 2020 53 min

1.6.4 Conceptual Framework

In this bachelor thesis the conceptual framework is used to provide a holistic overview of the study to be able to analyze the selected problem. According to Fredriksson (2019) a conceptual model is created at the beginning of the study and it highlights the most important variables and indicators identified by the author. It is important to find the right level of conceptualization in order to achieve the most optimal empirical application of the model, i.e. the conceptual model should not be neither too complicated, nor too abstract. The conceptual model in this study (Figure 5) is based on the relevant literature review, and its variables, indicators, dimensions and relations served as the basis for the semi-structured interviews used for the primary empirical data collection.

1.6.6 Ethical considerations

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2. Theoretical Background

2.1 What is Enterprise System?

Enterprise systems are comprehensive software applications that support critical organizational functions with the goal to provide a dynamic and immediate information flow across the organization. Enterprise systems enable data integration where clean data is entered once into the system and used many times, and by acting as a central repository enterprise systems provide flexibility and eliminate data redundancy (Motiwala & Thompson 2014:6-7). They offer the potential for cross-functional data and process integration (Brown & Vessey 2003:65). They are large and complex systems that require many resources.

Enterprise systems enable the integration of critical data, “a single source of truth”, seamless transaction processing and standardized processes, and as such make up the key component of an operational backbone within an organization (Sebastian et al, 2017:201). A robust operational

backbone enables efficiency and operational excellence, automation of certain repetitive tasks, greater speed and accuracy, and provides foundation for accomplishing organization’s digital strategy. An enterprise system is multi-module solution that provides the organization with capabilities to automate and integrate its business processes and practices, to manage resources and enable access to common data and information in real time (Hau and Kuzic 2010:178). Enterprise systems improve productivity, efficiency, service quality and customer satisfaction, enable effective decision making and cost reduction.

The enterprise systems have evolved from their early days (Figure 1). Today, cloud computing is becoming more popular especially for those organizations that do not want to own or maintain the complex software installations for the whole enterprise. This reduces cost for having own IT staff, software licenses, upgrades, security, and overall maintenance (Motiwalla & Thompson, 2014:78). Cloud solutions are a great alternative for organizations that do not have IT as a core business.

However they come with the disadvantage that the organization are forced to a certain level of dependency on the vendor for maintenance of the enterprise system.

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In terms of software and vendor selection according to HerbertNathan & Co (2020:64) the trend when selecting the future system is definitely pointing towards preference for best of breed strategy, where customers have more flexibility to replace front-end systems or other applications according to the business needs without the need to change the overall enterprise system platform. This means that the customers have the flexibility to integrate standard software from different vendors.

2.2 Enterprise system implementation

Implementing enterprise systems is not as simple as just introducing a new technology, and

organization need to have clear understanding of their existing resources and future potential (Huang et at. 2019:2). Implementing large enterprise systems is a complex and risky endeavor, due to their large scope, the unstructured implementation nature, and complex characteristics of the technology (Bajwa et al. 2004:86). The importance of selecting the appropriate enterprise system that best suits the organizational and process needs is critical for successful outcome of the implementation project (Chatzoglou et al. 2016:1256). Even Hong and Kim (2002:28) mean that the extent of “feature-function fit” between the enterprise system and adopting organization impacts the success of an enterprise system implementation. Sumner (2018:1) agrees that the size and the cost of the implementation projects, their impact on business processes along with the overall risks for the business make them complex undertakings. She continues that implementing standardized business processes, best practices and shared data across an organization creates major technological, organizational and business challenges. Bajwa et al. (2004:85) argue that the implementation is probably the most crucial phase in enterprise system assimilation processes since many efforts fail due to problems encountered during this phase.

Bajwa et al. (2004:86) stress the importance of external project management tools to ensure that user and process requirements are accurately incorporated in implementation by facilitating

collaboration with all external stakeholders. Sumner’s (2018:6) comparative study between literature and practice confirms the importance of project management skills for successful implementation, including scope management, project planning and control, along with the soft skills, especially effective communication, teamwork and the role of project champion. Akkermans and van Helden (2002:36) agree that in addition to the "hard" aspects of the introduction of the enterprise system, such as clear goals and strong project management, the importance of the "soft" aspects such as team competence, communication and collaboration between departments is vital. User resistance is common byproduct of system implementations that can cause implementation failure, especially in context of mandatory system use, and it needs to be adequately mitigated (Haddara & Moen 2017:862).

Additional conditions for a successful implementation of an enterprise system are the requirements for adequate data migration, thorough testing and effective training (Sumner 2018:6). Sumner (2018:8) emphasizes the critical importance of data migration, including cleansing, simplifying and

consolidating legacy data streams, because poor data quality is one of the causes for implementation problems. Despite the criticality of data migration and conversion the time and effort that need to be allocated for those activities are surprisingly underestimated.

However, Sumner (2018:7) also observed few factors with great impact on implementation success that are more emphasized in practice then in the literature. Those factors are organizational

dependencies on vendor capabilities and support, emerging and important role of super-users and the importance of data quality for data migration. Chatzoglou et al. 2016:1256 stresses the importance of selecting the appropriate vendor that will provide full support throughout the implementation project. The vendor support could include everything from troubleshooting the system to mitigating

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not have in-house expertise about the acquired enterprise system and heavily rely upon vendor expertise and capabilities during implementation projects, but also on vendor support

post-implementation (Sumner 2018:6). A negative vendor relationship can seriously impact the project implementation success (Sumner 2018:7) and mitigating the risks contributes to project success. Most commonly mentioned risks are related to vendor failures, poor vendor technical support, and over-promising results.

Change management has significant impact on the implementation and effective strategies include communication of benefits, alleviating the concerns about uncertainty and realigning the incentive systems to promote an enterprise benefit perspective (Bajwa et al. 2004:86). A vision for change management needs to be communicated from the first project stage and then continuously reviewed and adapted, and then adequately implemented (Motiwalla & Thompson 2014:101). That process involves leveraging the knowledge that subject matter experts and other internal users provide in relation to affected business processes, as well as training and communication to end-users impacted by the new system. The user involvement and participation in defining business requirements, analysis of system configuration, data conversion and system testing is vital for achieving the optimal fit of the enterprise system to business needs (Esteves & Pastor 2004:51).

The enterprise system implementation project cannot succeed without employee participation and commitment (Chatzoglou et al. 2016:1256) and without their understanding of how to best use the system. Those abilities are provided through rigorous end-user training and Bajwa et al. 2004:86 points out that end-user training is another critical factor influencing the successful implementation. Lack of understanding of system functionalities among system users and lack of appropriate training are recognized as some of the critical factors that cause implementation failures (Huang et al. 2019:2).

When introducing enterprise systems, communication, preparation and clear expectations are as important as training and the actual introduction of business systems (Motiwalla & Thompson 2014:23).

The critical success factor approach has been a subject of numerous studies and by different authors Based on those studies Esteves and Pastor (2004:45) summarized the critical success factors applied to enterprise system implementations in an unified model. Their unified model for ERP implementations (Figure 2) provides overview of critical success factors from technological, organizational, strategic and tactical perspective.

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2.2.1 Business processes and Implementation Strategy

The enterprise systems come with pre-defined processes that should help standardize the existing business processes of the implementing organization and also with some built-in best practices from the industry (Parthasarathya & Sharma 2016:19). However, there is always a gap between the business processes within an organization and those predefined in an enterprise systems. The business

processes need changing because the best practices that are embedded in the system are generic and not compatible with the existing business processes in the adopting organization (Ram et al 2013:162). According to Motiwalla and Thompson (2014:23), change in business processes, also called

business process reengineering (BPR), is necessary to be able to make the full use of the enterprise system's functionalities. BPR is done to improve business performance, and achieve business benefits such as reduced cost, increased quality, service, speed and job satisfaction (Ram et al. 2013:162). In addition to this the goal with BPR is to eliminate inefficiencies and non-value adding operations and enable organizations to align business activities with industry related best practices. Motiwalla and Thompson (2014:23) believe that it is important that users and potential partners understand that business processes will change when a new enterprise system is implemented. It is also important to clearly communicate how the business processes will be changed with the introduction of the new enterprise system and to prepare all affected parts of the organization, but also the customers, for that change. Staehr et al (2012:447) findings show that business process improvement happens when managers and users understand the capabilities of the enterprise system and in collaboration with external expertise.

The choice of implementation strategy highly depends on the size of the gap between business processes and legacy systems, and organizational strategy related to enterprise systems and software configuration. Questions like implementation approach, impact of legacy systems on the transition to common business processes and new enterprise system, magnitude of change and business benefits need to be carefully considered when deciding on which implementation strategy to apply. Motiwalla and Thompson (2014:10) stress that decision to modify or not to modify the enterprise system

software to match the business processes is not an easy. They conclude that a wrong decision can have disastrous consequences for the organization, but the right one can reap vast benefits. Motiwalla and Thompson (2014:157/2014:19) mean that in some cases modifying the system to better fit the business needs may be very successful, but overall modifications increase the investments in the system and significantly increase the implementation risks.

According to Motiwalla and Thompson (2014:8), many system vendors claim that they have implemented best practices for certain business processes in their ES, and in some cases it may be beneficial for organizations to choose to follow them. When companies start making their own modifications to the ES during implementation they may lose those benefits. Custom modifications must be maintained and updated separately with each upgrade of the enterprise system, which in the end can be cumbersome and quite expensive. At the same time, Motiwalla and Thompson (2014:8) also point out that implementing the enterprise system as-is often involves new ways of working with processes and mean possible disruptions in the business operations. In addition to having to learn how to use the new enterprise system, users would also need to adapt to new ways of working and that can create resistance towards the enterprise system.

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The reason for preferring the as-is implementation is that customization often increase the cost of enterprise system implementation and maintenance. According to the results of their study

Parthasarathya & Sharma (2016:24) mean the level of enterprise system customization directly

impacts the system efficiency in a way where the higher level of customization mean lower efficiency. Therefore, it is important that companies weigh out the pros and cons related to making modifications to their enterprise system (Motiwalla & Thompson 2014:8). Sumner (2018:8) argues that despite the general recommendations not to customize the enterprise systems, customization occurred in practice and may have caused project delays and budget overruns, but they were business justified and the system implementations were considered successful.

Because business processes are often cross-functional, they involve people and resources from different departments, who collaborate, share information and work towards the same goal. Changes in business processes have direct impact on existing collaboration patterns and ways of working

(Motiwalla & Thompson 2014:23).

2.2.2 User resistance

The introduction of new enterprise system have direct impact on users. The change in established ways of working and uncertainty about current jobs are the main reasons for user resistance to change (Hong & Kim 2002:29).

User resistance is recognized as one of the major risks for successful implementation. When users do not understand the system capabilities they may invent manual solutions, and the usefulness of the enterprise system is directly affected because it is not used to the extent that it could be done (Staehr et al 2002:445) and (Kwahk 2018:64). Staehr et al (2002:445) stress that if the management continues to work according to the old work routines associated with the old system instead of adapting to the new enterprise system, the benefits of the new enterprise system would not be fully utilized. Even Kwahk et al (2018:64) point out that user negative attitude towards introduced system endangers the intended use of the system. The end-user resistance to system use and unwillingness to use it in the intended way is commonly cited in the context of mandatory system use.

Changes in working relationships in connection with a change of enterprise system are inevitable. The changes are reflected in the need to create new working relationships across departmental

boundaries and expanded areas of responsibility. They can also lead to resistance, confusion and even fear of using the new system (Grabski & Leech, 2007:25). Such behavior is common in connection with all types of changes, but even more so in connection with implementation of a new enterprise and related process changes. Users become concerned that their jobs will disappear or change to the extent where they no longer will be able to perform their tasks. That can cause low productivity.

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2.3 Top management role and involvement

It is well recognized in the literature that the involvement of top management is one of the most important critical success factors in the introduction and use of enterprise systems, (Holland and Light 1999:35), (Markus et al. 2000:263), (Haddara & Moen 2017:864) and (Kwahk et al. 2018:73).

According to Brown and Vessey (2003:66), in order to achieve the overall benefit of the enterprise system, top management should be actively involved in everything from project planning to project completion and also communication with the business. The top management involvement is visible through active participation within project oversight board and through being committed sponsors and champions of the project. Nah et al. (2001:293) agree that top management should be actively engaged in project activities, from project planning to project execution, and that the top management should be committed to promote use of enterprise system for achieving the business objectives.

It is well known from the research that top management support and commitment, and the ability to identify and mitigate risks associated with enterprise system implementation projects are critical. Top management commitment plays a vital role in reducing user resistance related to the new enterprise system (Haddara & Moen 2017:862).

However, in recent years, top managements’ competence related to IT questions has increased and has positive impact on enterprise system implementation projects (Fredriksson et al. 2010:3).The IT competence in form of previous experience of such implementation projects is a very important success factor (Fredriksson & Arola 2009:189). The experience of what went wrong in the previous implementation project enables top management to make thorough risk analysis. That risk analysis will help identify the risks that may cause implementation project failure and the strategies how to minimize them.

Since the introduction of an enterprise system involves changes in business processes and basic working methods, the top management involvement and support are critical for successful

implementation (Motiwalla & Thompson 2014:101). They also point out that the management's support should not end with the introduction of the enterprise system but should also continue in the stabilization phase. In the early stages of system use management should provide channels and encourage users to vent their frustration and concerns with the system. Managers should provide opportunities where users feel safe to express their concerns, but also take those concerns into considerations to successfully mitigate and ease users skepticism and frustrations (Veiga et al 2014:704).

If management provides sufficient support to employees, (Lee et al. 2010:272), users' interest in their own work and use of enterprise systems increase and their performance improves. If the top management is directly involved in the introduction of the enterprise system, the work with the implementation is perceived as important and that increases the employees' commitment to the common goal. Kwahk et al (2018:73) suggest that appropriate management of users’ expectations increases the perceived performance of enterprise system and improved chances of implementation success.

However, it is important to clarify that top management is not expected to have all the power and responsibility for implementing the enterprise systems. Some of the responsibility should be delegated to the middle managers, however, a permanent delegation of the responsibility to technical experts can increase the failure of the project (Akkermans & van Helden 2002:36).

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organization, and that top management must also be prepared to provide the necessary resources for the implementation in order to be successful (Holland & Light 1999:32).

2.3.1 Coordinating expectations

Umble et al. (2003:245) believe that many of the top managers see the implementation of the enterprise systems primarily as a technical challenge and do not understand that it also means a comprehensive change in how the business works. They say that “the ultimate goals should be to improve the business and not to implement the software”. Users' dissatisfaction, resistance and chaos in the organization are some of the consequences that can be expected if the organization is not prepared for such profound changes. On the other hand, if the organization is properly prepared for such fundamental change it will be easier to take advantage of the opportunities that the enterprise system provides.

Although the communication of benefits with system use is very important Veiga et al (2014:74) suggest that managers need to be careful not to overstate those benefits as this may increase user resistance, especially if users have a reason to suspect negative impact on their job roles. Management needs to be aware of those pitfalls, and be willing to provide adequate support depending on the system adoption stage.

The expectations related to system capabilities need to be addressed and Parthasarathya and Sharma (2016:19) point out that the different interests between organizations and vendors may cause the implementation failure, because there is always a gap between organization’s business processes and those preconfigured in the enterprise system. Kwahk et al (2018:64) mean that management of user expectations is critical in preventing the negative user attitudes towards the system, because user unwillingness to use the system as intended prevents organization to achieve the expected benefits with enterprise system.

2.4 Project management

According to Motiwalla and Thompson (2014:21), project management is “the glue that holds the project together” and as such must provide strong leadership, clear and understandable implementation plan and at the same time closely monitor the budget. They even claim that project management is the most important role in an enterprise system implementation.

The way the new enterprise systems are built is different from the early beginnings and hence the ways IT projects are managed needs to be adapted. The research also shows that the traditional project management methods with detailed upfront planning and “stage-gate” approach are no longer

sufficient and that there is a need for more flexible methods (Fredriksson et al. 2010:2). The agile methods within enterprise system change project management are becoming more popular as they are providing the needed flexibility in form of agile project planning and progress evaluation that enable decisions making about the project direction. For a successful enterprise system change project Fredriksson et al. (2010:5) propose set of new preconditions to be applied in combination with the established critical success conditions. The preconditions they advocate for are high management IT competence, modern technology, agile methods and narrowly defined projects, and balancing agile and traditional project management methods.

Excellent project management, including effective project team and appropriate implementation strategy, is a critical contributing factor to successful enterprise system implementation process (Chatzoglou et al. 2016:1256). Umble et al. (2003:245) state the same, where excellent project management includes clear project objectives and scope, carefully detailed work and project plan and progress tracking. Based on multiple case studies Bradley (2000:194) concludes that project

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Vessey (2003:67) claim that project manager’s experience is critical given the magnitude of the enterprise system implementation projects. What is interesting in Bradley’s (2000:195) findings is that the financial rewards are not necessarily what motivates project managers, but rather the recognition for the performance and the personal sense of accomplishment. Bradley (2000:195) also observes that a project champion is a role of great significance for the project success, but that using project steering committee as a project governing body does not necessarily guarantee the successful outcome. In addition to the project managers experience, it is the project team members that play significant role. The project teams should include the business managers with extensive knowledge in business processes and carefully selected power users that are among the best within their respective function (Brown & Vessey 2003:67) and should be dedicated to the project full time. The project team members should also be empowered to make decisions on behalf of their functions, because bureaucratic decision making slows downs the project (Brown & Vessey 2003:67), (Umble et al. 2003:246).

Despite the claims that project teamwork is a critical part of implementation projects Hau and Kuzic (2001:180) in their study show that only in half of the successful projects project teams supported the change management.

2.5 Change management

The change associated with the implementation of enterprise system that people and organization need to undergo is significant and often drastic (Kuruppuarachichi et al. 2002:126). The

implementation of a new enterprise system means a significant change to business processes and ways of working for numerous departments, since it usually involves replacement of several legacy systems. That is one of the reasons why Brown and Vessey (2003:67) mean that change management requires thorough planning and generous resourcing. According to them the change management should be an integral part of the implementation plan and should include training in the new system and processes for management and users, along with the continuous communication about the vision, expectations and the progress.

19 Figure 3: Change management influenced by IT projects Source: Kuruppuarachichi et al. (2002:134)

It is interesting that Kuruppuarachichi et al. (2002:134) do not mention top management as one of the critical factors of successful change management strategy (Figure 3), opposite to Aldawani (2001:273) and Hau and Kuzic (2010:180). Their study shows that top management support played a vital role for a successful outcome of the 91.6% studied implementation projects. According to Hau and Kuzic (2010:181) following are the most common components of change management strategies:

- Effective communication - Top management support

- Effective training and knowledge transfer - Project champions

- Clear and systematic change management plan

Motiwalla and Thompson (2014:23) mention that the change management was historically considered important, though very often lacked appropriate funding and staffing, but claim that that trend is changing. The awareness about the critical impact of thorough planned change management process on the overall implementation project success is increasing. The resistance to change and the fear of the unknown are normal elements of change and that is why communication and training are critical for successful change management (Motiwalla & Thompson 2014:239). Implementation of an aggressive training program is the best strategy to calm user’s fears, and knowing that they will be trained in what they have to do in the system will ease their apprehension.

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processes. However, the training should not just be aimed to end-users, but also to managers and the extra training and on-site support should be provided.

Effective change management is a major challenge during IT projects, because in addition to the technical skills and knowledge, it is also social skills that are of the highest importance for IT project success. Compared to conventional projects it seems that the social skills are even more important in IT projects (Kuruppuarachichi et al. 2002:135). The effective change management in a sociological context is as important for successful IT project as economic and technical aspects. The customer acceptance of IT system is a critical factor that determines the project success, and not only budget, timelines or the technological sophistication.

This means that utilizing adequate change management methods and techniques should prepare the organization embrace, the change and enable it to take full advantages of the opportunities that enterprise system provide (Umble et al. 2003:245).

2.5.1 Super-users

Obwegeser et al. (2019:75) highlight the knowledge-exchange processes between experts, consultants and end-users as the main project stakeholders as a commonly mentioned challenge. To mitigate that challenge the role of super-users (also called key users or expert users) is introduced in ES

implementation projects. Super-users are users with expert knowledge in a certain system or in processes. Both theoretically and practically, super-users have been used in two different ways to support the implementation process of new enterprise systems. They provide the expert knowledge about internal business processes to the project team, and can be used as knowledge hubs to facilitate training and support to end-users during and after the introduction of a system. Since enterprise systems integrate cross-functional processes super-user are important as subject-matter experts that understand the business processes for providing the functional expertise to the project team (Sumner 2018:8). Additionally super-users play an important role in overall system implementation success by being heavily involved in system configuration, testing, training and end-user support.

The super-user selection process is very important and that many companies struggle with finding resources with right competence (Obwegeser et al. 2019:78). They recognize the certain criteria that is important for super-users to be suitable for that specific role. Some examples are that super-users should be well-liked colleagues, they should enjoy helping and training others, have good knowledge of business processes and IT systems, have good communication and problem solving skills, and are not afraid to learn new things. Thus, the desired skillset is a combination of a technical, human and conceptual skills and they are especially interested in the selection and training processes required to develop super-users for the training of end users.

Obwegeser et al. (2019:78) describe technical skills as the understanding of a specific kind of activity, that requires specialized knowledge, analytical ability and the experience with the use of tools and techniques within the specific discipline. They mean that the technical skills are the most concrete and acquired through on-the-job trainings that usually focus on developing just these technical skills.

Human skills refer to a person’s ability to work effectively in a group and to collaborate within a team. Those skills are opposite to technical skills, and are primarily focusing on working with people. An example of a highly developed human skills would be the ability to accept different viewpoints, perceptions and beliefs, and also the ability to effectively communicate own viewpoints, perception and beliefs.

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Since human, conceptual and technical skills are closely interrelated it’s difficult to determine where one of the skills ends and another begins (see Obwegeser al.’s depiction in Figure 4). This makes it critical for organizations to know how to select and train skilled super-users for enterprise system implementation.

Figure 4: Overview of activities, skills and implementation phases Source: Obwegeser et al. (2017:83)

Fredriksson and Arola (2009:191) also emphasize the importance of the super-users having the right skills. They mention that super-user should be able to dedicate time to the project in order to achieve desired effects.

2.5.2 End-user Training

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Chatzoglou et al. (2016:1256) believe that no enterprise system implementation project can succeed without employee participation and commitment. Neither can the full benefit of an enterprise system be achieved without employees ability to fully utilize the system, and such abilities can only be achieved through the end-users training. An enterprise system needs a certain amount of knowledge among the employees in order to be used effectively. The company should provide regular education and training in the most common processes to improve employees' knowledge of how the enterprise system is used in the best way. Chatzoglou et al. (2016:1259) believe that such approach increases the chances for a successful introduction of a new enterprise system in to an organization. The impact of end users on the outcome of an implementation project is so great that all companies that are about to start such a project should place greater focus on the end users' training and education and involve them more in all phases of the project.

Dimitrios et al. (2011:13) also emphasize the importance of continuous training in the use of the organization's enterprise system. Continuous training is needed to be able to meet the changes in the organization and in the organization's business environment. They also claim that at the same time it is important for the organization to build a good strategy for knowledge transfer. They recommend that organizations use consultants with special knowledge of business processes and the enterprise system in much the same way as Obwegeser (2019:76) recommend that organizations use superusers as a facilitator for knowledge transfer between experts and end-users. Similar to what Obwegeser et al. (2019:82) emphasize about the selection process of super-users, emphasize Dimitrios et al. (2011:12) that organizations should apply a rigorous process selecting the internal consultants to whom the external consultants are to transfer their knowledge to. The most prominent employees from different business areas should be selected and should be involved in all steps of the implementation project. As it is difficult for consultants to transfer their knowledge to technically weak people, employees should, in addition to enterprise systems, also be trained in computer skills. Motiwalla and Thompson

(2014:52) agree that the training effort in connection with the introduction of a new enterprise system should also include training for end users in various security risks that may arise in an IT environment. User training should be continuous (Motiwalla & Thompson 2014:196/2014:200), (Dimitrios et al. 2011:13). Training for users should begin before introduction of the enterprise system and continue throughout the stabilization phase and then continue thereafter. The training does not have to be complete before the introduction but should have been concentrated on the most important

transactions. The training should cover all processes, otherwise the work in new enterprise system can feel overwhelming. For those processes that are applied more sporadically, it is enough that the users are allowed to learn while using the system.

According to Motiwalla and Thompson (2014:201), poor or too little training is one of the most common reasons why the implementation of an enterprise system fails. This is also the first thing to get cut out of the budget when budget adjustments are required. There is a vast variety of ways how to learn about the enterprise systems that are suitable for many different types of companies and this is good because people learn and absorb knowledge in different ways.

2.6 Communication

It is essential for every implementation project to clearly communicate the reasons and the need for change, along with providing clarity about expectations, return on investment and business processes (Motiwalla & Thompson 2014:23). Along with the training and implementation support, effective communication and coordination of expectations are essential for successful change management. The timely and effective communication will provide clarity to all stakeholders and increase the chances for problems to be discovered and mitigated before they can affect the project (Motiwalla &

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during implementation projects and according to research the insufficient communication between technical staff and customers is the reason why many implementation projects fail. Hau and Kuzic (2010:181) emphasize the importance of clear and effective communication at all levels of the organization before, and during the implementation project, in order to mitigate the risks related to negative attitudes and users’ resistance to change. To identify and deal with the risks related to user resistance Adalwani (2001:273) suggests feedback as one of the critical elements of the effective communication that should be included in change communication strategy.

Nah et al (2001:291) mean that effective communication is critical for implementation of an enterprise system and needs to be provided throughout the duration of implementation project. Project scope, objectives, activities and updates, as well as the promotion of the project team needs to be communicated to employees. Also communication related to education and expectations is critical throughout the organization. According to Akkermans and van Helden (2002:37), communication across departmental boundaries is an important success factor for achieving the main goals of the business system.

Communication is seen as very important dimension of successful organization change, especially for building change readiness, reducing uncertainty and gaining commitment (Matos & Esposito 2014:325). Communication is considered a tool and a technique to collate information, to curb the collaboration and to motivate people to participate in and be dedicated to the change process. This may imply that it is the amount of communication instances that impact the success of change, but actually it is the quality that is vital.

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2.7.1 Conceptual Model overview

The conceptual model is a visual representation of how different factors, actors and conditions contribute to successful management of change in connection to an enterprise system implementation project in an organizational context. The enterprise system is the IT archetype and the enterprise system’s characteristics represent an independent variable with indicators best-of-breed, integration capabilities and system performance. The influencing arrow from the enterprise system variable represents the trigger for the organizational transformation. The influencing arrow to the dependent variable successful change management represents the desired outcome of the organizational transformation triggered by the implementation of an enterprise system. The key indicators to dependent variable are selected based on the literature review and they are: increased efficiency, simplified business processes and increased cross-functional collaboration.

The actors top management, implementation team and users interact in an organizational context and all have a set of indicators or dimensions that represent how they impact the dependent variable, and the outcome of an organizational change that is eminent in connection with the implementation of an enterprise system. The conceptual framework is a relational model of an internal triadic

relationship between top management, implementation team and users. Triadic relationship is an inter-organizational relationship between three actors that are directly or indirectly connected (Vedel et al. 2016:142).

Implementation complexity and communication are independent variables that represent

interaction between actors and how that interaction contributes to the dependent variable. Intersection between independent variables and their indicators visualize their close interdependency.

2.7.2 Enterprise system characteristics

When an organization decides to invest into a new enterprise system they are making substantial investment that is intended to last for several years, and it involves large number of people within the organizations. That makes it even more important to select the software that will support the

organization for many years. The enterprise systems as a multi-module solutions provide the

organizations with great data and process integration capabilities (Hau and Kuzic 2010:178; Brown & Vessey 2003:65). By acting as a central repository (Motiwalla & Thompson 2014:6-7) they eliminate data redundancy and provide “one source of truth” (Sebastian et al, 2017:201) for seamless transaction processing and standardized ways of working.

The enterprise systems have changed very much since their early days especially with the existence of cloud computing. Cloud computing is a preferred alternative for the organizations that do not have IT as their core business, because it reduces the cost for their own IT staff, software licenses and overall maintenance (Motiwalla & Thompson, 2014:78).

The customers also want to have the flexibility to replace their front-end systems and application in accordance to the changing business needs without the need to replace the overall enterprise system platform. This strategy is called best of breed strategy (HerbertNathan & Co 2020:64) and it means that the customers have the flexibility to integrate standard software from various vendors to achieve their operational excellence. The best of bread strategy is becoming very popular.

2.7.3 Implementation Complexity

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implementing standardized processes, best practices and shared data across the organization creates major technological, organizational and business challenges (Sumner 2018:1).

The selection of appropriate enterprise system (Chatzoglou et al. 2016:1256) and the extent of how the system functionalities fit with organization’s business processes are critical for the successful implementation outcome (Hong & Kim 2002:28). The organization/system fit or the gap between the vendor’s standardized best practices and organization’s business processes impacts the decision about the appropriate implementation strategy. This implies that the selection of appropriate vendor that will provide adequate support throughout the implementation process and beyond is critical (Chatzoglou et al. 2016:1256), because organization heavily depend on the vendor capabilities and expertise during and post-implementation of the enterprise system (Sumner 20148:6). A positive vendor relationship is a paramount for successful implementation. The most commonly mentioned risks that can impact the relationship with a vendor, and thereby also the implementation success, are vendor failures, poor vendor technical support and over-promising results (Sumner 2018:7).

Adequate resourcing and the importance of user involvement and participation must not be underestimated. To achieve the full benefits of the system the users should be actively involved in defining business requirements, analysis of system configuration, data conversion and system testing (Esteves & Pastor 2004:51), so their expert knowledge needs to be leveraged.

The changes triggered by the introduction of a new enterprise system have direct impact on users and the established ways of working. Users feel uncertain about their current jobs, which is one of the main reasons for user resistance (Hong & Kim 2002:29), and unwillingness to use the system as intended. This is especially pronounced in the context of the mandatory system use (Kwahk 2018:64). Therefore the change management has critical impact on system implementations and effective change management strategies need to be applied. Effective change management strategies include

communication of a vision for change management (Motiwalla & Thompson 2014:101),

communication of benefits, alleviating users concerns about uncertainty (Bajwa et al. 2004:86), and rigorous end-user training (Huang et al 2019:2). The adequate amount of training increases users’ understanding of system functionalities (Huang et al. 2019:2), their confidence and willingness to use the system (Motiwalla & Thompson 2014:239).

2.7.4 Communication

Clear and continuous communication is an essential contributing factor to successful system implementation and change management, but is often overlooked, and insufficient communication may lead to implementation failure (Motiwalla & Thompson 2014:114). The communication needs to be facilitated at all levels of the organization (Hau & Kuzic 2010:181) and throughout the duration of implementation projects (Nah et al. 2001:291). Appropriate communication is powerful for identifying and mitigating the risks related to user resistance (Adalwani 2001:273; Hau & Kuzic 2010:181). Providing clarity to all stakeholders about the reasons for change and expected business benefits (Motiwalla & Thompson 2014:23) are some examples of timely and effective communication that can help discover and effectively mitigate possible problems.

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2.7.5 Top management

The role of top management for the enterprise system implementation success is a vital one. For achieving the overall benefit of the enterprise system, top management should be actively involved in everything from project planning to project completion and also communication with the business Brown and Vessey (2003:66). The top management should be an active participant within project oversight board and be committed as sponsors and champions of the project. According to Nah et al. (2001:293) top management should be actively engaged in project activities, from project planning to project execution, and that the top management should be committed to promote use of enterprise system for achieving the business objectives.

Many of the top managers focus on the technical challenges of the implementation of an enterprise system and have low understanding of the challenges such endeavor brings for the organization and the ways of working (Umble et al. 2003:245). This means that it is very important that top

management understands the extent of the change the organization will go through when the new system is introduced, and they need to show their support by providing necessary resources for the successful implementation (Holland & Light 1999:32). The top management is also responsible for coordinating expectations, by providing clarity about how the new system is meant to support the business processes, and how the organization and ways of working will change. The top

management’s active involvement signals the importance of the new system and have impact on users’ attitude towards the new system (Lee et al. 2010:272). Kwahk et al (2018:73) suggests that top

management needs to adequately manage users’ expectation related to system performance, because this improves the chances for successful system implementation.

The top management’s IT competence and previous experience of system implementation projects is very important for successful project outcome. This experience provides the valuable knowledge of what may go wrong and how to avoid the risks that may cause the implementation project’s failure (Fredriksson and Arola 2009:189).

2.7.6 Implementation team

Competent project management

Project management is according to Motiwalla and Thompson (2014:21) the most important role in and enterprise system implementation project and “the glue that holds the project together”. The project management must provide strong leadership, clarity about the implantation plan and control of the budget. Umble et al. (2003:245) agrees that clear project objectives and scope, carefully detailed work and project plan and progress tracking are the foundation of excellent project management. Chatzoglou et al. (2016:1256) agree that the project management is a critical contributing condition to a successful implementation project and mean that the excellent project management includes

effective project team and appropriate implementation plan.

Given the magnitude of the implementation projects project managers’ business and project management experience are emphasized as critical contributing factors for project success (Bradley 2000:194; Brown and Vessey 2003:67). Bradley’s (2000:195) observes that project managers performance is more motivated by their personal sense of achievement then by financial rewards. The project teams’ structure and decision making process are additional key elements of excellent project management. The project teams should consist of business managers with extensive knowledge in business processes and competent power users (Brown & Vessey 2003:67) that are empowered to make decisions on behalf of their functions.