Business process reengineering: addressing sources of resistance and sabotage tactics.
Business process reengineering (BPR) and business process automation (BPA) are related organizational initiatives that aim to enhance the speed, efficiency and quality of organizational processes (Aler, Borrajo, Camacho, & Sierra-Alonso, 2002; Hammer, 1993; Hesson, 2007; Taher, 2013; Taher, Krotov, & Dixon, 2012). BPR involves fundamental rethinking and redesigning of organizational and operational processes to reduce cost, improve quality and optimize time dimensions of organizational processes (Hammer, 1993). BPA typically involves capturing business process workflows and using technology to automate and streamline these workflows (Hesson, 2007; Samaranayake, 2009). The ultimate goal of BPR and BPA is to improve competitiveness of an organization by reducing costs or improving the quality of the products or services offered by an organization. Today, large enterprise systems (such as ERPs) are often used as the main platform for BPR and BPA.
Despite the fact that BPR and BPA can produce substantial benefits for an organization, these initiatives often encounter fierce resistance from employees and can quickly become a political battlefield (Krotov, Boukhonine, & Ives, 2011). This is especially likely to happen in young organizations and especially if these organizations are operating in emerging markets. If BPR turns into a political battlefield, the losses resulting from this infighting, both direct and indirect ones, may outweigh the benefits of BPR. This may lead to an unfortunate yet rational decision to halt BPR for the sake of "organizational peace." Several individual and organizational factors may lie behind user resistance to these initiatives. These factors include lack of organizational maturity and stability, conflict of traditions and ideologies, weak project leadership, poor communication, lack of technical skills among users, fear of losing power and lack of perceived personal benefits. Most of the time, these factors manifest themselves in the form of a somewhat passive opposition to a BPR. But they can also become "fruitful soil" for the outright sabotage of a BPR project. The typical sabotage tactics include deflecting goals, diverting resources and dissipating energies.
The main goal of this literature review article is to synthesize the literature on the sources of organizational resistance to BPR and sabotage tactics that resistors may employ. Possible ways of addressing the resistance factors and neutralizing the sabotage attempts are also proposed based on the existing literature on leadership and change management. The focus of this article is mostly on the human, organizational and political aspects of BPR and not on the project management techniques that can be found in abundance in business literature. It is written primarily for practitioners in charge of BPR and BPA initiatives in young organizations or organizations operating in emerging markets. The case study of Natural Springs, a Russian startup company introduced below, is used to illustrate the theoretical concepts derived from the literature (Krotov et al., 2011).
In 1992, a successful British entrepreneur (hereafter referred to as "the CEO") sold one of his start-up companies to a multinational company. He decided to celebrate the profitable deal by treating himself and his family to an extended tour of Europe. One of the stops on that tour was St. Petersburg, Russia. There the CEO and his family boarded a ship to go on a three day leisurely cruise along the Neva River. While the CEO and his family enjoyed the river cruise, one thing was bothering them--the ship's tap water. It had a somewhat unpleasant taste. When the CEO went to buy some water at the ship's bar, he discovered that bottled still water was unheard of in Russia.
The cruise boat stopped at Krivogda--a small town approximately 100km North-East of St. Petersburg. The CEO, together with other passengers, went to tour a notable historical building. There he met the owner of the estate ("the Landlord"). The CEO asked the Landlord whether he could get some drinking water in Krivogda to take with him on the boat. The Landlord took the CEO to one of his plots of land nearby. The land had several natural springs that were a highly regarded source of water for the locals. As soon as the CEO took a few sips, the idea of establishing a still water bottling company in Russia was born. He shared the idea with the Landlord. The Landlord was skeptical that anyone in Russia would want to pay for plain water--something that had always been free. But the town and the local church community that the Landlord was a devoted member of were in a dismal economic situation. He had little to lose. So, the Landlord greeted the CEO's idea with enthusiasm. The two became partners on the spot.
Construction of a bottling facility began in Krivogda in the same year. Most of 1993 was spent constructing the factory, setting up a head office in St. Petersburg and creating a distribution network. The work was supervised by the newly hired Chief Operating Officer ("the COO"). The initial products offered by the company were 0.5 and 1.5 liter bottles of still water. The sales for 1994 were less than one million dollars. The CEO was quite disappointed. To increase sales and build a good foundation for subsequent growth, the CEO hired two additional officers--a Chief Marketing Officer ("the CMO") and a Chief Financial Officer ("the CFO"). By 1996, the sales of bottled water had exploded. The company also managed to attract private equity financing from two British investment funds. While numerous competitors offering bottled still water sprung up in Russia, Natural Springs was an undisputed market leader.
Pleased with the results of the first years in operation, the CEO was already thinking ahead. Knowing that sound administrative and financial controls would be essential for ensuring future success of the company and securing an IPO in London, he sent his CFO to Krivogda to work on strengthening controls there. After spending a few weeks in Krivogda, the CFO was dismayed by the inefficient and archaic business processes at the factory. Customer order fulfillment process was the most problematic area. In an attempt to improve these processes, the CFO pitched to the CEO the idea of implementing an Enterprise Resource Planning (ERP) system at Natural Springs. The objective of the ERP project was to streamline communication between the head office in St. Petersburg and the factory in Krivogda. Improved communication could potentially improve the customer order fulfillment process, especially when it came to reconciling shipment and invoices between the factory in Krivogda and the head office in St. Petersburg. Moreover, the system could strengthen administrative controls within the company, allowing the head office in St. Petersburg to exercise financial and inventory controls over the factor. In addition, the system could produce financial reports in compliance with international accounting standards. All this was essential for the envisioned IPO. The CEO was convinced by the business case outlined by the CFO and approved the project in early 1996.
Sun Systems (distributed by Systems Union, a British software company) was chosen by the CFO for implementation. The CFO had had a successful experience implementing the ERP system at his prior place of employment--a well-known American consumer goods company. The system was well-suited for automating inventory control, sales management and financial controls in accordance with the International Accounting Standards (IAS) and Generally Accepted Accounting Principles (GAAP). Moreover, the CFO had developed a good relationship with a local partner of Systems Union. The partner was responsible for sales and support of Sun Systems in Russia. For all these reasons, the system was an easy choice for the CFO.
Before the implementation, the CFO recruited a bright accountant from his previous employer and an information systems consultant from the local partner of Sun Systems. The implementation was first carried out at the St. Petersburg office. The modules that were implemented were sales and financial controls. The implementation in the St. Petersburg office was quick and relatively smooth, thanks to the help the CFO received from his newly hired associates. Encouraged by the implementation success at the main office, the CFO and his implementation team moved to Krivogda to carry out the ERP implementation there. Organizational resistance to ERP implementation and BPR started at the factory even before the team got there.
SOURCES OF ORGANIZATIONAL RESISTANCE
Lack of Organizational Maturity and Stability
Organizational maturity and stability are essential for minimizing the disruptions of a BPR initiative and achieving its goals (Jurisch, 2012; Kudray & Kleiner, 1997). Organizational maturity is a reflection of accumulated organizational resources and capabilities within the specific business domain that the organization is functioning in (Taher et al., 2012). Stability is a result of long-term collaboration and team building among employees and business units (Taher et al., 2012). Lack of organizational maturity and stability often results in a lack of change management capabilities and frequent conflicts among employees and business units (Nedovic-Budic & Godschalk, 1996; Trkman, 2010). Because of that, BPR and BPA initiatives may become a political battlefield rather than a vehicle for positive change in cases of constant conflict among employees and business units (Krotov et al., 2011).
At the time of the ERP implementation project Natural Springs was still a young organization functioning in the emerging Russian free-market. Because of that, the company was facing a number of operational and strategic challenges. The Russian banking system was slow and unreliable. Telecommunications, while tolerable in St. Petersburg, were slow and unreliable in provincial towns like Krivogda. Qualified and motivated employees were hard to find. Crime, corruption and a draconian tax system amplified the numerous internal problems that Natural Springs was struggling with.
Moreover, by 1996 the CEO of Natural Springs was tired and bored of running the company. A visionary and entrepreneur at heart, the CEO was interested in conceiving and implementing new ideas and investing in the financial markets. At the end of 1996, the CEO announced his intention to resign from the CEO post and continue with the company in the more advisor-like role of Chairman.
The COO saw himself as a natural "heir to the throne." The COO was born in Brazil to the family of Russian immigrants who fled the 1917 Russian Revolution. After obtaining an engineering degree in Brazil, the COO worked in a number of engineering roles in Canada and the United States. Soon after the dissolution of the Soviet Union in 1991, the COO moved to Russia. There he met the CEO and joined Natural Springs. Despite being born and raised outside of Russia, the COO spoke fluent Russian and was a devote Russian Orthodox Christian. His traditional upbringing won him unconditional trust and support from the Landlord (who was also a devoted Orthodox Christian) and the parochial factory workers. The CFO was another candidate for the CEO post. The CFO was a young Russian national with an MBA degree from a well-known American business school and several years of successful executive experience at the Russian office of a prominent American consumer goods company. The CFO was credited with instilling effective administrative and financial controls in St. Petersburg. This was essential to attract the first round of financing from the British investors and lay the foundation for the future IPO. The CMO was the third contender for the CEO title. The CMO was a young British national. He graduated with a degree in Marketing and Russian from a top university in the United Kingdom. Under his watch, the sales at Natural Springs skyrocketed. Moreover, he spoke fluent Russian and, as a British national, enjoyed trust from the British investors.
Conflict in Traditions and Ideologies
A BPR initiative may involve not only radical changes of processes, but also a certain degree of change in traditions and ideologies of employees (Barley, 1990; Hammer, 1993; Jurisch, 2012; Lapointe & Rivard, 2005). Different traditions may lead to different views on how business processes should be carried out and can become a source of conflict among employees (Jurisch, 2012; Kudray & Kleiner, 1997). For example, BPR projects can create a conflict among the old and new generation employees (Taher et al., 2012). This can be traced back to different traditions, backgrounds and worldviews that different generations of employees may have. The older generation of employees may view BPR as a way to maintain and enhance existing business practices. The new generation of employees, who are usually more "tech-savvy" and receptive to new ways of doing things, may favor a more radical change in business processes (Taher et al., 2012).
At Natural Springs there was a very clear contrast in traditions and ideologies between the head office in St. Petersburg and the factory in Krivogda. The St. Petersburg office was comprised primarily of young Russian professionals. Many of them were smart, ambitious and unencumbered by the deeply ingrained Soviet way of management. The organizational culture at the St. Petersburg's office was "work hard, play hard." The entire team, under the lead of the CFO, would often continue late nights at the office at nearby trendy bars and restaurants catering to the local expatriate community.
The culture at the factory in Krivogda was quite different and very indicative of the organizational culture in post-Soviet small Russian towns. The economic turmoil that Russia was going through after the collapse of the planned economy of the Soviet Union lead to the bankruptcy of many government-owned enterprises that were fueling life in small towns like Krivogda. Young people, or anyone with skills and ambition, would leave small towns to try their luck in big cities like St. Petersburg. Most of the people who stayed were the ones nearing retirement. These people had spent most of their lives working under the Soviet administrative system. The system rested largely on compliance with the numerous standards and regulations imposed by the central government. Personal initiative did not lead to any tangible personal rewards and was often discouraged. Obedience and meticulous compliance with the numerous government rules and regulations were valued and rewarded. The factory employees, led by the COO and the Landlord, would frequent Sunday morning masses at a local church.
Different functional units and employees within these units may have different needs and concerns in relation to a BPR project. Moreover, they may have different perspectives on how business process reengineering and automation should be carried out (Barley, 1990; Bensaou & Earl, 1998; Crowswell, 1991; Trkman, 2010). In the absence of effective communication across the organization, functional units may fail to understand each other's concerns and reach a consensus on how to reengineer business processes. The longer the communication gap exists, the more likely it is that functional units will start "demonizing" each other's goals and intentions. After some time, functional units may become very eager to meet and talk. Not to make the project work, but to "settle things once and for all."
The CFO did try to communicate to the factory workers the importance of installing and properly maintaining the Sun Systems in light of the future IPO in London. The CFO and his team from the head office organized several meeting with the factory's bookkeeping staff where he would try to educate them about various features of Sun Systems and how these features would benefit the company. However, he failed to persuade them. The bookkeeping staff would refuse to acknowledge the CFO's concerns in relation to the IPO and would talk about their difficulties in complying with the numerous complicated (and often contradictory) Russian accounting standards. The CFO, in turn, was reluctant to listen to the concerns of the factory staff. In his mind, the future IPO was Natural Spring's ultimate goal. The COO, naturally, would listen to the concerns of his staff and was reluctant to accept the CFO's ideas.
Absence of Project Leadership
Proper leadership and support of a BPR project are essential for its success (Crowswell, 1991; Kudray & Kleiner, 1997; Taher, 2013; Taleai, Mansourian, & Sharifi, 2009; Trkman, 2010). While a project manager is often assigned to a BPR project, his or her leadership of the project may be lacking several important components (Davies, 2011). First, the person in charge of the project should have enough authority and influence within the organization to make important decisions and allocate the necessary resources to the project (Crowswell, 1991; Davies, 2011; Silva & Backhouse, 2003; Taher et al., 2012). Second, the person in charge of the project should have transformational leadership capabilities: the ability to use positive power and influence to encourage people to change their beliefs, behaviors and invest time into acquiring new skills (Burns, 1978; Crowswell, 1991; Ginzberg, 1981; Grover, Seung Ryul, Kettinger, & Teng, 1995; Northouse, 2007, 2013; Taher et al., 2012). Third, an appropriate governance structure with a formally appointed project manager, executive sponsor and project steering committee must be created to cement and formalize executive support of a BPR project (Davies, 2011; Taher et al., 2012). Absence of any of these components in BPR leadership can lead to the failure of the entire project.
Lack of Technology Skills
Lack of technology skills among employees is often a major barrier for a successful transition to new, technology-enabled business processes (Bensaou & Earl, 1998). Lack of technical skills often leads to poor understanding of the role of technology in supporting organizational processes and strategies (Crowswell, 1991; Trkman, 2010). This makes it hard for a user to understand the importance of adopting the technology for one's work. Moreover, an initial attempt to try new technology often results in a state of "technological shock"--a situation where the work of an employee is paralyzed as he or she feels simply incapable of mastering the new way of doing things (Crowswell, 1991; Pacific Council, April 2002; Taher et al., 2012).
One of the main reasons behind the resistance of the factory bookkeeping staff to implement Sun Systems was their fear that they lacked the necessary knowledge and skills to work with the "Western" system. Many of the bookkeeping staff had spent, literally, decades doing accounting manually with the help of an abacus and numerous physical books. They were familiar neither with the International Accounting Standards nor computers in general. Transitioning to the ERP system proposed by the CFO would entail not only learning computer skills, but also abandoning their existing knowledge in accounting procedures and learning the new ones. Because of that, the factory bookkeeping staff was very reluctant to adopt the new system.
Lack of Perceived Personal Benefits and Recognition
Difficulties that many "rank-and-file" employees have in adapting to new business processes and technologies are often made worse by the fact that employees see no benefit in learning new ways of doing things and mastering new technologies. While successful technology-driven BPR can produce a number of benefits at the organizational level, some end users often feel that they gain nothing from the technology except additional tasks and duties (Kudray & Kleiner, 1997; Taher et al., 2012). This is often a result of a certain degree of shortsightedness of employees (Hesson, 2007; Silva & Backhouse, 2003). Some employees are overly concentrated with their own duties and fail to see how their duties fit with broader organizational goals (Silva & Backhouse, 2003; Taher et al., 2012). Failing to see that an additional workload resulting from BPR and technology adoption translates to positive organizational results creates a feeling of unfairness in the minds of employees.
A similar pattern could be observed at Natural Springs. The factory bookkeeping staff saw little benefit in using the ERP system proposed by the CFO. Their immediate concern was compliance with the regulations of local authorities. Generating financial statements in compliance with the IAS and GAAP, while important for the British investors and the future IPO, was none of their concern. It was the job of the CFO to prepare those financial statements in English.
Fear of Losing Power
Employees can be very reluctant to give up even a portion of their power and authority within an organization (Hesson, 2007; Silva & Backhouse, 2003; Taher et al., 2012). In the context of BPR, employees at all levels may feel that their power is threatened because some of their tasks can be automated and, to some degree, replaced by technology (Dorthy & Kraus, 1985; Silva, 2007; Silva & Backhouse, 2003). Others may feel that the newly introduced technology will diminish their legitimacy within an organization due to them not having any expertise in the technology (Pacific Council, April 2002; Taher et al., 2012). Senior decision makers whose decision-making authority is comprised by a redesign or automation of business processes may form the most serious barrier to technology-enabled BPR (Hesson, 2007).
From the very beginning, the COO viewed the CFO's move to the factory location in Krivogda and the entire project as a "turf invasion." One aspect of the system's functionality involved real-time access to inventory and financial data at the factory from the head office in St. Petersburg. In a way, the COO was not against transparency in operations and tight controls at the company. The problem was that in the chaos of the emerging market in Russia, the COO needed some room for maneuvering to get things done at the factory. Putting the factory operations on the "rails" of the ERP system would deprive him of some degree of freedom in running the factory operations. His reluctance to relinquish some of the control that he had over the factory's operations was probably exacerbated by the race for the CEO post that everyone in the top management team had somewhere at the back of their minds.
SABOTAGE TACTICS USED AT NATURAL SPRINGS
The factors of organizational resistance discussed above often give rise to deliberate attempts by employees to sabotage technology-enabled BPR. These sabotage tactics include deflecting goals, diverting resources and dissipating energies (Bardach, 1977; Chang, Lin, & Sheng, 2002; Keen, 1981). All three were carried out at Natural Springs to sabotage the ERP project lead by the CFO.
Goal deflection involves expanding the scope of the BPR project by adding additional goals that the project should accomplish (Bardach, 1977; Chang et al., 2002; Keen, 1981). Several types of justifications are used to encourage the "scope creep." First, additional goals can be "piled on" to make sure that everyone's objectives are included (Chang et al., 2002). The justification here is that if we are doing the BPR anyway, we need to make sure we include everything that we need in this project. Second, it can be argued that a particular goal is "up for grabs"--it can be easily achieved. An organization may also be unsure what needs to be accomplished as a result of BPR in a particular area. So a goal, often unnecessary, is invented to fill this void. Third, a manager in charge of a BPR project may be encouraged to "keep the peace." That is, to make sure everyone impacted by the project is happy with the outcomes.
In the case of Natural Springs, there was a clear presence of the goal deflection tactic. The project started with a goal of increasing administrative and financial controls in the company in light of anticipated growth and the IPO. However, the factory staff, led by the COO, managed to add two additional goals: automating some of the work of the bookkeeping staff at the factory and assisting with compliance to the Russian reporting standards. Although these two new goals were somewhat related to the original goal, they were not initially included in the scope of the project. Adding these two goals to the project increased its complexity and contributed to the eventual failure of the project.
Diverting resources involves channeling the resources devoted to a BPR project to other causes (Bardach, 1977; Chang et al., 2002). This can starve the BPR project from the necessary capital and labor and increase the chances of the project's failure. Resources can be diverted from a project in a number of ways. First, an organizational unit may agree to participate in a BPR project (even if the unit does not view the project as being valuable) to use the budget devoted to the BPR project for another cause that they think is valuable for them (Chang et al., 2002). Second, employees may act "territorially" citing lack of trust towards outsiders or their lack of competence as the main reason for wanting to implement the project using internal resources (Chang et al., 2002). This effectively deprives the project of much needed resources that can be brought in from the outside.
The COO and the factory staff were quite successful in diverting resources from the ERP implementation project. First, the COO, backed by the concerns voiced by the factory bookkeeping staff, managed to persuade the CEO to purchase the Russian ERP package (1C) for the factory. This deprived the original project of some of the financial resources devoted to it. Second, the COO told the factory employees, such as the factory IT manager, to concentrate on supporting 1C and not on the support of the Sun Systems ERP system implemented by the CFO. At some point the COO even told the factory staff not to synchronize the data with St. Petersburg office. This deprived the CFO's project from much needed labor resources.
Dissipating energies involves wasting the resources devoted to a BPR project by directing them to areas of the project that are either secondary to the attainment of the overall goals of the project or political (rather than practical) in nature (Bardach, 1977; Chang et al., 2002). First, resistors may insist on "doing it right now matter what." The unnecessary perfection will require the manager to go through several unnecessary iterations with the project until the mythical "right way" is attained. Second, resistors may initiate a territorial fight where energies are wasted on deciding who is responsible for what and why (Chang et al., 2002). Third, someone high in the hierarchy may insist on using "state-of-the-art" technologies or practices in the project. The purpose behind this "innovativeness" is usually to improve one's reputation within the company and not to help the project accomplish its goals. Fourth, someone may support taking a particular path with the project (knowing that the path will lead to nowhere) just to say "I told you so" at the end.
The energies devoted to the ERP project at Natural Springs were effectively dissipated by the CFO himself. Partially to create value for the company and partially to impress the CEO, the CFO wanted to implement a real-time connection between the ERP system installed in the head office in St. Petersburg and the factory's information system. The original idea of the CFO was to install a Wide Area Network (WAN) that would link the head office with the factory in real time. After a lengthy feasibility study that involved pursuing several alternatives for implementing the WAN, it was decided that the telecommunications infrastructure going in and out of Krivogda was just too poor to have a real-time connection between the two systems. Eventually, it was decided to run two systems in parallel. The two systems would be synchronized using elaborate algorithms and a dial-up connection at the end of each day. These feasibility studies and the integration of the two systems were the most time-consuming steps in the project, depriving the CFO of much needed energies.
THE ERP PROJECT FAILS
In the beginning of the factory ERP implementation, the CFO spent most of his time at the factory. Despite the numerous technical and human problems, the implementation went quite well. A clerk hired specifically to maintain the ERP system at the factory and the factory's IT manager were quite competent with the system and worked very hard on implementing it. Approximately two weeks into the implementation, the CFO went with his family on a two-week vacation to California. The vacation was scheduled well in advance and the CFO was concerned that his family would be quite unhappy if he postponed or cancelled the trip.
When the CFO returned to work, he found the St. Petersburg office in a state of disarray. The factory did not follow the data synchronization protocol. Because of that, the head office could not verify the accounts receivable and did not have access to up-to-date invoice information. Sales representatives could not check whether a customer had paid for a particular order and could not estimate the delivery time for clients. The CMO was repeatedly threatened by some of their biggest clients that they would stop working with Natural Springs.
The CFO "jumped in" to resolve the situation. He made hundreds of phone calls and paid several visits to the factory. This produced little results. The ERP clerk and the IT manager at the factory were not very helpful in reconciling data in the two systems and resuming the daily data synchronization protocol. A variety of reasons were given by the duo, including the technical and functional inadequacy of the Sun Systems ERP system and lack of time due to them being preoccupied with their immediate job responsibilities. Unable to resolve the problem, the CFO decided to "pull the plug." The company retuned to the previously used manual process for handling invoices. The factory continued running the Russian ERP system--1C. The CFO would periodically retrieve data from the system to prepare IAS and GAAP compliant reports on his own.
The failed project permanently strained the relationship between the CFO and the factory team. The CFO could not forget how incompetent and stubborn the factory employees turned out to be and how little help and cooperation he received from them when he tried to resolve the data synchronization problem. The COO was now being perceived as uncooperative and parochial by the CEO, too. The CFO's own stature within the company was severely damaged. Unable to win cooperation and support from the factory's staff, he was no longer viewed as someone who could lead the company. The COO of Natural Springs left the company a few months after the failed implementation, citing reasons unrelated to the project. The CMO was not touched by the crisis. Moreover, he and his sales team demonstrated good crisis management and client relationship skills in the chaos that ensued from the failed ERP project. The CMO was promoted to the CEO post soon thereafter. While the CFO continued working for the company, his authority was being gradually chipped away by the new CEO. The CFO was fired from the company in 1999. In 2002, Natural Springs was sold to a multinational consumer goods company.
The following tactics are recommended to practitioners for undermining sources of organizational resistance to BPR and neutralizing sabotage tactics: leadership, establishing proper governance, strategic management of BPR, stakeholder impact analysis, establishing reward and deterrence mechanisms, scope management and communication. These recommended tactics evolve from the following three broad theoretical perspectives: transformational leadership, project management and change management. Figure 1 below provides a visualization of the interplay among organizational resistance factors, sabotage tactics and recommended practices. The specifics of counter-sabotage tactics are discussed in more details below.
[FIGURE 1 OMITTED]
Leadership is an essential part of introducing and managing change in an organization (Bass, 1990; Bass & Riggio, 2006; Burns, 1978; Dorthy & Kraus, 1985; Northouse, 2007, 2013; Silva & Backhouse, 2003; Taher et al., 2012; Trkman, 2010; Winston & Patterson, 2006). A person in charge of a BPR initiative should have enough influence and authority within his or her organization to allocate resources to a project, make tough decisions and neutralize resistance and outright sabotage attempts in relation to BPR (Davies, 2011; Keen, 1981; Silva & Backhouse, 2003; Taher, 2013; Taher et al., 2012). Most importantly, the person assigned for the project should have transformational leadership capabilities (Antonakis, 2012; Bass, 1990; Bass & Riggio, 2006; Northouse, 2013; Taher, 2013). A BPR project leader should use positive force and influence to transform employees from resistors into champions of the project, elevate the motivation of employees to improve their skills and effectiveness in relation to new processes and take the entire organization to a new level of performance (Bai & Sarkis, 2013; Bass & Riggio, 2006; Keen, 1981; Northouse, 2013; Silva & Backhouse, 2003; Taher, 2013; Trkman, 2010).
The inability to influence people's opinions and behaviors was one of the most significant deficiencies of the CFO. This lack of transformational leadership skills was evident in several situations. First, the CFO failed to convince other C-suites of the importance of the proposed ERP project for improving the company's operations. Second, he failed to persuade the accounting team at the factory to carry out their tasks using the new ERP system (something that would also help him and the company to generate financial reports compliant with the international standards). Third, he could not get the CEO on his side either--he was loathe to support a particular system choice and decided to use two systems in parallel instead. The ability to transform people's attitudes and behaviors in a way that would support the new and, perhaps, better ways of carrying out organizational tasks was an important and, unfortunately, missing skill for the CFO.
Establishing Proper Governance
The role of the project leader should be formalized with appropriate governance mechanisms (Davies, 2011; Keen, 1981; Taher et al., 2012). The project leader can be formally appointed to be a project executive sponsor and the head of a project steering committee. The project executive sponsor and the project steering committee will ensure communication, collaboration and participation of all concerned individuals and functional units in a BPR project. Representatives from concerned functional units can be included in the project steering committee. This inclusion allows for better communication within and among the functional units in relation to the project (Bai & Sarkis, 2013; Davies, 2011; Taher et al., 2012; Trkman, 2010). Moreover, the committee will make sure that all the necessary resources are allocated to the project (Davies, 2011; Keen, 1981; Taher et al., 2012).
From the very beginning, the CEO should have formally announced the appointment of the CFO as the person in charge of the ERP project and declared his full support and sponsorship of the project. The CFO should have formally delegated the necessary administrative power and grant access to the necessary resources to substantiate the CFO's authority in relation to the envisioned project. To strengthen the political power of the CFO and ensure effective communication, the CEO should have ensured that all functional units of the organization were included in the steering committee for the ERP project. That had to be done no later than the planning stage of the project. All this would strengthen the CEO's authority and ensure cooperation of the staff from various functional units of the organization.
Strategic Management of BPR
A BPR initiative should be integrated with the overall organizational strategy (Keen, 1981). One possible way of accomplishing this is to create a corporate strategy map involving BPR based on the balanced scorecard (BSC) approach. Owners for all key performance indicators and initiatives throughout the organization should be captured with the help of BSCs. According to the BSC philosophy, owners of key performance indicators and initiatives are responsible for ensuring that their respective business units are meeting individual targets that are meant to push forward the entire organization towards implementing its strategies and achieving the overall strategic vision. Regular performance meetings should be conducted to ensure effective monitoring of business unit performance against suggested strategic initiatives (Kaplan & Norton, 2008).
Since the ERP project was initiated to fulfill a strategic vision (paving the way for an IPO), the ERP project had to be announced as a strategic initiative. In other words, the project should have been formally included as a part of the organization's overall strategy. Implementation of this ERP component of the organizational strategy should have been monitored regularly via corporate performance reviews. During the corporate performance review meetings, the CEO and the other C-suites should have not only listened to formal progress reports, but also gotten an intuitive feel of the "speed" and "velocity" in relation to BPR implementation. The latter would help them sense emerging resistance factors or sabotage tactics before they grew into real problems.
Stakeholder Impact Analysis
A change, whether it is incremental or radical, may cascade down throughout the entire organization and impact different stakeholders in both positive and negative ways (Bensaou & Earl, 1998). To the extent to which it is possible, a leader in charge of a BPR initiative should carry out a stakeholder impact analysis prior to commencing a BPR project. The main goal of this analysis is to identify the specific stakeholders impacted by the BPR and understand the nature of that impact (Bai & Sarkis, 2013; Keen, 1981). This analysis will help the person in charge of a BPR initiative anticipate possible sources of organizational resistance (Silva & Backhouse, 2003; Taher et al., 2012). Impacted stakeholders should be engaged at the planning stage to have substantial input into the BPR project even before it is initiated. Functional requirements documents should be approved by these stakeholders to avoid a situation where certain functional points are resisted or actively sabotaged by the end users once the system enters the implementation stage.
Before starting the ERP implementation process, the CFO could have called a meeting to explain to the key stakeholders the main goals behind the project and, most importantly, how the system would benefit each organizational unit. Organizing a meeting like that would have helped the CFO sense how others perceive the system in terms of its impact on their work and sense emerging resistance factors. These resistance factors should be addressed by ensuring that the implementation results in a "fair deal" for each of the stakeholders.
Establishing Reward and Deterrence Mechanisms
Conflicting needs and goals in relation to a BPR can be dealt with by creating appropriate reward and deterrence mechanisms (Silva & Backhouse, 2003). Introducing these mechanisms is critical to achieving stakeholder buy-in of the proposed changes and institutionalizing this change. Stakeholders are to be educated that established rewards and deterrence measures are a result of broader organizational goals (Dorthy & Kraus, 1985; Silva & Backhouse, 2003). Attainment of these goals is in the best interest of the entire organization. It is important for an organization to extend the benefits gained from BPR and BPA to individuals in a fair way (Silva & Backhouse, 2003). In case "selfless" investments are necessary to benefit another functional unit, the organization should acknowledge or reward contributing functional units and individuals. This reward can be financial or may take the form of social recognition.
Since the system had a significant impact on operations of the factory in Krivogda without providing any immediate benefits, the CFO could have introduced appropriate reward and deterrence mechanisms for the factory staff. The reward and deterrence mechanisms had to be formulated, approved and announced prior the start ERP implementation. A set of well-defined reward and deterrence mechanisms could help the CFO to reduce resistance and prevent sabotage by the factory employees due to them seeing no benefits in the system for them personally.
Defining the scope of a project in the form a scope definition document and establishing a proper mechanism for adjusting a project scope in the form of a policy are not just technicalities of project management (Davies, 2011; Project Management, 2013). They can be quite effective in neutralizing the counter-implementation tactics discussed earlier. A change in the project scope should be reviewed by the project steering committee. Moreover, any proposal for a change in the scope of a project should be submitted together with a detailed analysis of the impact of this change on organizational stakeholders, resources devoted to the project and the project completion timeline (Davies, 2011; Project Management, 2013). While change in the scope of a project is often unavoidable, especially when agile project management methodologies are used, the steering committee should have a clear understanding of the impact of the proposed change on the entire project (Carroll, 2012; Davies, 2011; Zhuoyuan, Benson, & Imriyas, 2013). This can potentially help the person in charge of the BPR project stop scope change proposals that are driven by politics, too far from the original project goals, have low returns associated with them and, overall, are too risky. The overall strategy formulated in relation to the BPR and its links to the overall organizational strategy should always be used as a starting point for all decisions involving adjustments to the initial scope of the project. A formal scope management process would allow the CFO to effectively protect the project against the fatal "energy dissipation" proposals made by the factory staff.
A leader in charge of a BPR project should devote special attention to instilling proper communication. The main goals of communication in relation to BPR and BPA are the following: (1) cascading the vision of the top management for change management initiatives; (2) addressing employee concerns and requirements; and (3) overcoming the natural divide between functional units in relation to how processes should be changed and which technology should be used to facilitate this change (Al-Mashari & Zairi, 1999; Bai & Sarkis, 2013; Dixon, Arnold, Heineke, Kim, & Mulligan, 1994; Fondas, 1993; Rodney & John, 1999; Trkman, 2010). A decision to choose a particular process or technology for implementation should be made through discussions with all the relevant stakeholders (Bensaou & Earl, 1998; Taher, 2013).
The CFO could have used reoccurring user engagement sessions as a primary platform for communicating with all the stakeholders in relation to the ERP project. During these engagement sessions, the CFO could have shared major project goals, implementation tactics, timelines and other decisions made in relation to the project. Functional units representatives attending these engagement sessions could have provided their input on these items. Engagement sessions could have become not only an effective platform for soliciting feedback, but also a political mechanism for ensuring employee cooperation. Having their voices heard could have potentially make the employees at Natural Springs feel empowered and appreciated--something that would neutralize the resistance and sabotage factors faced by the CFO.
BPR is both a technical and a political endeavor. Oftentimes, a person in charge of a BPR project finds himself or herself "buried" in numerous technical details of the project and misses out on the organizational and political factors. Similarly, management literature is full of studies and practical advice on the technical, economic and rational side of BPR and associated issues: change management and project management. The softer, subjective, and often "darker" side of BPR is often captured only with organizational tales and anecdotes. There should be more theorizing and empirical work in the area of politics and power relationships surrounding BPR or any type of organizational change for that matter. As the failed case of ERP implementation at Natural Springs illustrates, it is very risky to keep the political area of BPR in the "blind spot"--in both a theoretical and practical sense. Lack of organizational maturity, conflict in organizational traditions and ideologies, poor communication, lack of technical skills among employees, lack of perceived benefits, fear of losing power and weak project leadership can quickly give rise to powerful resistance factors within an organization. These factors often lead to outright sabotage of BPR initiatives via such tactics as deflecting goals, diverting resources and dissipating energies. Sometimes these sabotage tactics are often hidden and so subtle that a manager in charge of a BPR may never fully understand what went wrong. Leadership, project governance, scope management, stakeholder impact analysis, proper reward and deterrence mechanism and communication can be used to counter these sabotage tactics, improve chances of BPR success and contribute to the overall competitiveness of an organization.
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Nader Bin Taher (email@example.com) is a DBA Research Fellow, College of Business, Abu Dhabi University, 108801 Abu Dhabi, United Arab Emirates.
Vlad Krotov (firstname.lastname@example.org) is an Assistant Professor of Management Information Systems, College of Business, Abu Dhabi University, 59911 Abu Dhabi, United Arab Emirates.
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|Author:||Taher, Nader Bin; Krotov, Vlad|
|Publication:||Journal of Competitiveness Studies|
|Article Type:||Case study|
|Date:||Sep 14, 2016|
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