Implementing matrix management – wave three: aligning systems
The third article in the series of blogs that we are running this week on the four waves of change in implementing matrix management by Global integration CEO and management author, Kevan Hall. (This article is in two parts.)
A tendency of managing the change associated with implementing matrix management is to focus on the third ‘S’ – systems. Most large organizations moving to a matrix structure put a lot of effort into aligning their business systems to support the new structure.
- Finance systems and P&Ls need to be aligned.
- Major organizational systems, such as Enterprise Resource Planning (ERP), customer relationship management etc, are rolled out to enable consistency of process and approach across the business.
- Old local systems have to be dismantled and replaced, often over the objections of the local owners who see little value in changing.
It is common for large organizations who have moved to matrix management to launch a major systems implementation like SAP, Oracle or Microsoft Business to support this change.
Most of the organizations we work with have found the process of moving to these systems difficult and time-consuming. Wikipedia alone takes 4,000 words just to describe an overview of the SAP implementation process. The process can take several years and involve almost everyone in the organization.
These are not just hardware and software implementation projects. They usually involve a fundamental redesign of business processes. They require identification of best practice and standardization of approach in the operation of processes. It always makes sense to consider re-engineering processes before you automate them rather than just automating what exists.
At the time of writing, SAP modules or components include:
- transaction processing,
- business information warehouse,
- customer relationship management,
- knowledge warehouse,
- product life-cycle management,
- supply chain management,
- strategic enterprise management,
- supplier relationship management
- human capital management.
These reach into every area of the business. They need input from functional and SAP specialists and require a great deal of change management activity.
In its 2011 ERP report, the Panorama Consulting group found that the typical ERP project in a sample of 185 companies from 57 countries, cost $5.48 million in external costs, took 14.3 months and achieved payback in 2.5 years. 61% took longer than expected and in 74% of instances the cost exceeded the budget.
In a large, global organization a full SAP implementation may take five years or more. (The German company Robert Bosch reportedly took 10 years to complete their implementation). Depending on scale, and building in company employee costs, such an implementation could cost tens or even hundreds of millions of dollars.
I am not trying to discourage companies from going down this route. The process can be painful but most of our clients seem convinced of the benefits once it is completed.
Instead, I use this example to illustrate the amount of time, effort and investment required to align business processes and systems to matrix working. People need to develop the matrix management and matrix working skills to operate in the more complex matrix organization environment. Yet organizations often invest much more in the IT systems than in matrix management skills.
We will return to the theme of skills building when we talk about the fourth ‘S’. But in the meantime, you can find out more: about building matrix management skills.