IT transformation

Business simulation

Fast track to organisational readiness

Learn more about the well-proven methodology for how to create a smooth implementation of a cross-functional IT transformation through business simulation.

Business simulation

There are many reasons for implementing a new cross-functional IT system where replacing a variety of small internal systems and enabling business growth through a common platform are some of the main reasons. Unfortunately, many organisations fail in the process even after spending huge amounts of money and time along the way. The lesson learned is that no matter how good the business case is, it can be a risky endeavour if you are not aware of the pitfalls – and know how to approach the process.

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Below we describe how management of a crossfunctional IT implementation can be carried out by focusing both on the functional implementation of new processes as well as the people and technology side of the change. At Implement Consulting Group, we believe that this is accomplished through a thorough understanding of the new organisation and implemented through a business simulation.

A business simulation is an event to build capabilities and confidence throughout the organisation by letting the employees experience how their daily tasks will be after go-live. The setup is simulating the business activities and supports the fast track going from implementation to benefit realisation.

The article is structured as follows:

  1. Challenges in implementing cross-functional IT solutions
  2. Front-load reality through business simulation
  3. Implementation of business simulation and skills required for running a business simulation

Challenges in implementing cross-functional IT solutions

According to several reports and surveys, most of the pitfalls relate to the people side of change and the organisational implementation of the new system and processes (Prosci Research Center, McKinsey reports).

Designing and building a new IT system to support and run the organisation’s processes is certainly difficult, yet feasible. The success rate partially depends on to which extent the standard system to be implemented is customised to suit the needs of the specific organisation as well as a number of other factors tied to the technical implementation. However, in most cases the system runs as intended and supports the business in running their daily operations. Yet the project cannot be labelled a success as the organisational implementation has often left employees with a great deal of insecurity in relation to understanding why the changes are needed and how their jobs are to be performed after the implementation.

Three challenges need to be addressed in order to carry out a successful cross-functional IT implementation, namely challenges related to processes, people and
technology.

Challenges in it implementations

Business simulation

The scope of cross-functional IT implementation is larger than for other IT projects, both in terms of people and processes impacted. These implementations are large, span many different business areas and physical sites and are often difficult to anchor in the organisation.

Processes

Implementing a cross-functional system such as an ERP system affects the entire company due to the cross-functional capabilities. This means that processes are integrated and work across functions like a game of domino where one function impacts the next in line.

Organisations that do not have integrated systemsupported processes typically work in organisational silos where the dependency between functions relies on communication via telephone, email or paper-based work streams. For instance, information may be given in an Excel spreadsheet between the departments.

Having worked in a silo-based setup for many years, it may be difficult to understand that the dependency between two departments could be tightened even further through an integrated system such as an ERP system. The process way of thinking impacts the individual to a great extent.

Consequently, when running a cross-functional implementation, focus on the end-to-end processes is key. For instance visualise the business processes to outline who does what and when, how the organisation works today (As-Is) and how the future processes should be carried out (To-Be). This provides a picture of where the responsibilities lie and should lie in the future.

Integrating many business functions into end-to-end processes requires a deeper understanding of the value added to the process by each area and the value added from one area to another. Hence, it is important that all parties who add to the process are gathered to build the As-Is and To-Be processes. This may be the first time employees, at least on paper, see how they will depend on each other in the new processes.

Moreover, the system has not yet been introduced due to the fact that the implementation is driven from a business perspective focusing on end-to-end processes. Having depicted the processes, moving the organisation from being silo-based towards working cross-functionally in one integrated system with integrated processes is still a real challenge. The challenge is not only to get people to understand the end-to-end processes but also the difference between the physical flow and the information flow.

Cross-functional it systems

Cross functional it systems

The two flows may be easy to comprehend when described as in the boxes. However, people who have  worked with manual processes with no process integration between them will experience a great change in  their daily work routines, especially in terms of adding to  the information flow. Suddenly, the individual becomes a “domino piece” in the flow where information needs to be sent to the next in line to create a domino effect.

People need to change their way of working in a cross-functional IT implementation.

When changing to an integrated system, there is often a higher degree of registration, either when moving the product or when handling the goods financially, e.g.  invoices need to match a specific purchase number in order to make the payment transaction. The increased amount of registration in a common system instead of the individual’s own spreadsheet may be perceived as giving up control as well as knowledge – which is often due to a lack of understanding of the processes and the system supporting them. That is also the reason for emphasising focus on the people side of the implementation.

Physical flow

The physical flow is defined by a product that moves through the value chain of the organisation.  Production company example: Initially, the material or product comes from the supplier, passes through the factory and is sent to the internal customer where they are able to install or sell the product to the end customer.

Informational flow

The information flow is described by the information that is transferred through the company together with the product. The flow must represent exactly the same state the physical product is in. Production company example: The raw material is received in stock in the system and then registered upon transfer to the production.

People

People need to change their way of working in a cross-functional IT implementation. Typically when an IT implementation is announced, it has been on the top executives’ agenda for a long time. When the time comes for the implementation, the end users face new ways of working and have less time to adjust, accept and understand what this means to them as employees. It takes a great effort to lead the people side of change to meet the business objectives of an IT implementation, which in 9 out of 10 cases is overlooked as a project discipline.

The key activity is to be able to get people to understand where they are today (As-Is), where they are coming from and where they will be in the future (To-Be) – what kind of change will the people involved experience as part of this journey. The journey requires each individual to understand where they add value in the end-to-end processes and what their new roles and responsibilities will be. All this is linked to the subject of focusing on processes in the implementation.

Technology

Technology is the final area that needs to be addressed when aiming for a successful implementation. Basically, the processes developed by the business must be supported from a technology perspective. Further details in terms of the technology aspect will not be addressed in this article.

When an ERP implementation fails, it is often due to a lack of understanding of the core processes, the dependency between the various functions, the relation between the physical flow and the information flow as well as insufficient focus on the people side of change. As a result, it is important to understand the future processes and how the change impacts the individual roles as well as the overall organisation. However, the organisational change can be difficult to communicate in a simple way, and this challenge calls for a solution – the solution being executing a business simulation.

Front-load reality through a business simulation

At Implement, we believe that an IT implementation will have a higher success rate if we pay more attention to the people side of the change. The complexity of change can be addressed through what we call a business simulation. A business simulation is an event to build capabilities and confidence throughout the organisation by letting the employees experience how their daily tasks will be accomplished after go-live.

Running a simulation requires a dedicated change management focus from project start-up. This ensures that the change is assessed and that the organisation and its employees are moved from their current roles and responsibilities and brought into their future roles and responsibilities. This is often underestimated, and thus the transformation is not implemented and anchored in the organisation.

Change management has traditionally focused on building the competences of each individual who is part of the process. This is still very important. However, we have experienced the value of building not just the competences of each individual, but also the capabilities and confidence of the entire organisation in the new system and ways of working, including the tasks performed outside the system. As a result of the experience from a large-scale business simulation, the organisation feels confident that it is able to continue its operations – even with the great change, which a cross-functional IT implementation always brings.

The best way to front-load the reality of life after go-live is through a simulation where changes in the new operational setup, processes and systems are addressed and discussed thoroughly – both by the people affected by the changes and by the people with the right decision power.

A business simulation includes people, process and system alignment at the same time in a large-scale setup preferably lasting for 2 – 4 days, inviting all relevant users, managers, super users and solution architects to participate in the discussions and workshops. A business simulation is an event that simulates how the business  (both processes and system) works after go-live with the new system and processes implemented. A business simulation makes it possible to reproduce conditions that are similar to the real business.

Key benefits of a business simulation

The reasons for investing in a business simulation in the organisation are multiple. We have described that IT implementations sometimes split the understanding of the new ways of working, the system training and change activities. A business simulation combines all of the three elements in a large-scale event where people can discuss real-time issues while having the right
people in the organisation present. The right people covering end users to management. Other key benefits to the organisation, both in terms of business and behavioural impact, are: 

  1. Clarification of business roles and responsibilities after go-live. The new ways of working will introduce new roles and responsibilities to the business, not only to the employees who will use the system, but also to the entire organisation. In other words, a business simulation is executed to ensure that the employees know how to navigate in the new operational setup.
  2. Process understanding. Each participant will have the chance to see the entire end-to-end process in and outside the new system and discuss the new procedures that are connected to the new processes introduced.
  3. Common understanding. To get the opportunity to discuss face to face in real time and express relevant concerns, both in terms of the personal and the business changes experienced. And also to discover the areas where the organisation needs to prepare for specific actions in order to handle possible weak spots prior to go-live, both in the system and in thenew ways of working.
  4. Management insight. The managers will explore and capture the relevant concerns regarding the operational setup and be able to clarify questions of uncertainty from employees prior to go-live.
  5. Confidence. And finally, a business simulation ensures ownership, engagement and confidence of the employees.

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