Why ERP Implementations Fail Without Active Executive Sponsorship

Most ERP implementations don't fail because of the technology. They fail in the gap between approving the change and actively leading it.

In the first episode of Built to Change, Prosci's Emma de-la-Haye talks with Kelli Smith about executive sponsorship in ERP transformations, and why active, visible sponsorship is the single biggest predictor of whether an ERP delivers value. Drawing on years of work alongside executives, Kelli explains what sponsorship failure looks like in practice, why leaders so often underestimate their own role, and how the best sponsors build a coalition that carries the change across the whole organization.

In this episode:

• Why approval and active sponsorship are not the same thing
• The behavioral warning signs that sponsorship is slipping
• How much time sponsorship really takes across the ERP lifecycle
• Why coalition building is the most overlooked move in ERP change
• A practical first step for any sponsor

Built to Change is Prosci's video and podcast series on the real challenges behind change. Season 1 takes on ERP, with new episodes monthly. Subscribe to follow along.

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Transcript

0:07

Hello and welcome to the first part of our series Built to Change, where we are examining what it takes to achieve successful ERP implementation. I'm Emma de-la-Haye, I'm Engagement Director for Prosci Europe, joining you from London. I work with organizations to increase the success of transformation and to accelerate adoption through a combination of change management, consultancy, leadership engagement and practical capability building. And it is. People always say this, don't they? It's genuinely an honor and a privilege to be hosting this series of podcasts. Most ERP implementations don't fail because of technology's wrong. They fail because the people sponsoring them, you, us, people like us think they're done once they approve the budget. Signed off the scope today. In this initial episode in our series, we're exploring the gap that's there between approval for the change, the ERP transformation and active sponsorship and leadership of that transformation. It is in and of itself, the single biggest indicator of whether your organization's ERP is likely to be successful. I'm joined today by Kelli Smith, who has spent years working alongside executives in a range of organizations on a range of enterprise transformations. Kelli is joining us from Columbus in Georgia. And as we go through our question and answer and our conversation today. She will be helping us as she has helped so many of her customers to understand what this executive sponsorship role actually means, what it requires, and what happens when those things are absent, when leaders executive sponsors don't show up. Welcome, Kelli. Welcome, welcome. Thank you. Emma, it's nice to be with you today. Looking forward to the conversation. Me too, me too. And with that in mind, I'm going to launch straight into a question from your years of experience. Walk me through this. Paint the picture for us. What does it look like when executive sponsorship fails? Pauses halfway partway through an ERP implementation. And what are the signs that we should be watching for that that's happening? Of course, Emma, at first just let me say I've rarely met an executive who wants to fail as a sponsor, but failures. The pattern is behavioral and it is visible. The moment it really starts to break down, you can see it. And generally what we see is just they stop showing up. I recently was working with one ERP where the sponsor stopped coming to those key forums and started sending a delegate instead. Now, on paper, this doesn't sound like a really big deal, but in practice, everything slowed down, decisions didn't get made, cross-functional issues sat there and the organization started reading into that, that this was a signal that maybe this wasn't a priority from this particular sponsor. And of course, our research reinforces that that active invisible sponsorship is the number one key to success. And lack of engagement is one of the top reasons that projects start to underperform. Once that visibility drops. Momentum drops with it, the project team starts working around the sponsor instead of through them. Timeline. Stretch and outcomes. Stall. So it's. It's not intent. Um, it is behavior and that signals success or risk. Do you know what is most in what you have just said for me and my experience is that it's done without intent, but that signal that I have other priorities. This isn't my number one priority, even though the sponsor may not have been thinking that, but actually you put it so beautifully, they've probably taken a very good priority decision in the moment to delegate to somebody else for that particular meeting. But the signal that is sending to everybody else. There are other priorities as well as the actuality. Again, you very eloquently explain it slows decision making down. We now have to take so many more decisions outside of this meeting, which is slowing everything down. Let's just tease out for a moment because you touched on it there. You talked about endeavoring to work around in your experience when the sponsor has delegated step back or that's the perception. What have you seen the project teams trying to do to counterbalance that? Again, I mentioned they work around the sponsor, so they spend a lot of time going cross-functionally and trying to get decisions made when ERP can be very global. So they're trying to do the outreach to other groups to get their insight. That can only get so far because ultimately, when we have to make those higher level corporate decisions around some of the data, some of the processes where they should be owned, how they should be followed, we need that most senior level decision and somebody to really weigh in and provide that guidance and that structure. And so when they're working around that sponsor, ultimately, decisions are not in the best interests of the organization. They may be in the best interests of a certain segment or a certain region. And we do see it. It can lend to rework on the back end or not achieving the expected value in the benefits, because we have created inconsistencies in how the processes are going to work across the organization. And that's the whole point of bringing in the ERP, is to really have that standardization, consistency in how we report data and how we use data and how we do our processes so that we can have those efficiencies. And often without that leader in place, we find that we don't we don't recognize those value, that value of the benefits. And it's the project teams doing the best they can. Um, but ultimately it, it does not help with the success of the overall project. There is, of course, a rather wonderful irony just in there that inadvertently, the behavior of the sponsor might be exhibiting is running counter to the objectives we are trying to achieve through an ERP transformation in and of itself. Exactly what makes this sponsor executive sponsorship so hard, though? Because on paper, you know, these are senior leaders. They've been trained for this stuff. Why is it so difficult? I think most executives are really surprised that this is not just a technology decision. In so many of the changes that have happened before your technology comes in, you let your technology folks drive it. This is really business transformation, and bringing this in enables the business and it reshapes how work gets done in an organization. And what I'm finding in many, many of these companies, they're going from very rudimentary Excel spreadsheets or very custom ERPs, to something that is much more structured, with a lot more governance. And the sponsors really, if they want those efficiency gains, they have to be prepared for that level of transparency that's going to happen in terms of how the work is getting done, where it's getting done in an organization, and the additional level of governance that's really introduced for that data reliability to happen. Access often gets limited. Reports get there's no more custom reports. They're all very standard. And that really can create resistance even within a leadership team, even among peers and how they operate. So we do know from our research that executive resistance can be higher than any other group. And that's often because leaders do underestimate both the scale of the change and the role they personally need to play. I also see sponsors Underestimate how much early involvement really matters. If they don't engage early in the prioritization decisions, the wrong things get deprioritized. I worked on one program, um, where some critical financial reporting was pushed way down the backlog and post go live leaders did not have the reports they needed to make decisions about the organization and the efficiency. So I think that's where it gets hard. They begin to feel friction sometimes from their peers and from their immediate managers, and they want to take a step back. That's really at the moment where they need to lean in and make those hard decisions. And the shift is really realizing that it isn't about approving a system, it's actively shaping how the business will operate moving forward. And that's a critical point. It's powerful. Kelly. Really powerful. We know this. We work with our methodology. We work with our research day in, day out. We know the criticality to successful change outcomes of active and visible sponsorship. You've just referenced that piece of deep dive research we did into ERP implementations. From our research, somewhere in the region, just shy of 30% of ERP success coming from active executive sponsorship. And the juxtaposition of that data point you've just given us, however, and sponsors executive leadership role coming through as one of the most resistant, if not the most resistant, hierarchical layer around ERP implementations. It is a conundrum. It absolutely is. Give us a sense that it can work well. Can you share from from your experience some examples, some ideas of where the executive Sponsorship around an ERP transformation has been there, been there consistently, and the sorts of results that it enables and engenders. I really see the biggest difference is that you can really see the impact and you can feel the impact, even down to the front line folks. I'm currently working on a higher ed ERP implementation and this sponsor is amazing. He's working cross-functionally with peers across the organization to ensure that they're part of the decision making process. They're part of that coalition. But even more importantly, we've built a change ecosystem and he's working with Change champions across the regions. He's listening to what's happening on the ground and adjusting how he shows up. He's really attuned to the challenges and the potential resistance areas, and working with us and the change team and the project team to determine the best ways to support the people and the front line teams. So he's working across, but he's also working down and very deep. And we know they don't that sponsors to be effective. It's not just about communication. They're really building coalitions and actively reinforcing the change with leaders at all levels, right. Not just their peer levels. So this sponsor comes in and asks, where do you need me? And it's very intentional about showing up where it matters most. This visibility builds that alignment and credibility across the organization. And I think what surprises executives most, it's not about more meetings. Success is not more meetings. It's about targeted, visible engagement that is really moving the business forward. What's the most impactful way? So we spend a lot of time coaching the sponsors, building out their sponsor plan, partnering with the change team and the project team to look at those impactful moments of where we really need them to show up. And it adds the most value, high value work and high value activities. I think something else that has just come through what you what you've said. And for our executive sponsors watching today, that sense of when you have your change champions, your change practitioners, your change managers, your change coaches, allow us to guide you. We have a mantra we use when when we're doing our work with sponsors, which is almost like, allow us to help you because so powerful, it doesn't have to be hours and hours and hours of additional work in an already overbusy senior executives agenda and work day and allow us to help you. We use a wonderful quote within Prosci, the most effective change practitioner I ever worked with, the one that told me exactly what I needed to do and when. Allow us into that space and help you do it. Here's a wicked question. I apologize in advance. How much time would you suggest an executive sponsor needs to spend on their executive active and visible work around an ERP solution? And I know because you're a consultant, I know the answer is it depends. Emma, I know that. Let's park that way. What would be your best estimate we could give our watchers, our listeners? Yeah. I tell the sponsors that it ebbs and flows. I think you have to be, especially at the beginning, when key decisions are being made, when you're looking at those, what they call fit to standard sessions, really understanding the impact to the organization and how it's going to enable those core business processes are key as we get more into the configuration piece of this, some of that may calm down a little bit, and it's just more about staying visible to let people know what the status is, how we're doing, what decisions we are making. And a lot of that the change team can really create for them. So early on, it may be weekly involvement and engagement. And then as we get more into the configuration, it may be bi weekly. And as we get closer to go live, it really is a lot more time because we do have to make sure that we have SMEs involved in the testing and doing the UAT testing, and we try to pull in the sponsors for those activities. So if it's global, it's a lot more involved. They're there to kick off meetings. They're there to thank them for their participation. Again, those activities don't have to be really time consuming, but it is peppered throughout the process and it does ramp up as we get closer to those high impact, go live activities and then being around as the training begins, making sure your leaders are sending people, the training is taking place and people are going. Those are critical pieces where we need sponsors to say it's not negotiable. You don't get to say, ah, we're not going to go to training or we're too busy. We don't have time for this. So that's where the sponsor really does have to lean in and help people understand that it is a priority. So it does ebb and flow, and it depends on how strong your change management team is as to how much time it's going to take. Again, we spend a lot of time telling them what to say, where to be, how to show up, creating their materials. And if you let us do that, that time can be minimized, but be at the right place. It's a pay me now, pay me later so you can spend time up front doing what you need to do so that at go live, we're ready or there's a lot of time on the back end rework that has to happen. So that's how I position it. Thank you. I'm going to build on something that you mentioned a couple of moments ago that can feel like a heavy burden, and we both understand that. So let's explore this notion of a coalition of sponsors, because what you're absolutely not saying, I know this, let's air it. All of that engagement does not sit with one person. It doesn't sit with the person. Actually, that might have signed the charter or the check. There is an ecosystem, a network, a coalition of sponsorship. So I think really starting to think about that difference between a single sponsor sponsorship. We talk about sponsorship coalitions, but it's quite often the part of active and visible sponsorship that is least understood, Overlooked and actually not utilized within our big transformations. What does building a sponsor coalition look like in practice and in your experience? Why do so many sponsors skip it? Actually, coalition building is where a lot of our ERP efforts struggle. I'm actually working on a global program right now where initially, all the steering committee members who were making decisions for the implementation were US based. While much of the impacted population was in Europe and Asia, those regions really felt like the change was being done to them and not with them. So we do know that it is one of the most underdeveloped yet critical sponsor behaviors is that coalition building. So once we work with the sponsor to expand the coalition, the steer to include those regional leaders, engagement shifted dramatically. They felt heard. They contributed to the decisions that were driving the direction of the implementation of the ERP. Those leaders became owners of the change for the region, not resistors, and it became a priority for them. And interestingly enough, it we had much better engagement from those needed project resources in those regions. As we went forward, we were having a hard time getting SMEs. We were having a hard time getting project team members. But once we got those coalition members engaged and in part of it and really understanding the impact to their business, they were much more open to getting us the resources needed, getting them the resources and allocating the right resources to help it be successful for their particular regions. And sponsors often skip this step because it does feel a little bit slower upfront to get it established. But without it, we do find that resistance shows up later and it's much more significant at that time and cost a lot more to address it as we move forward, because it does slow implementation. So I often help coach them to say, you know, it really does. It is really the right thing to do to slow down if you want to move faster. And that's hard. I think for oftentimes people in these roles where they're so ready just to get it done and to implement. But there is a big difference between implementation and installation, and we want them to understand that. And we want them to get the value and the benefit out of it. And it will take time to pull in the right resources. And that includes your coalition. You speak so powerfully there of the transfer of ownership that's actually happening in those moments. My very first ERP implementation work that I was engaged in many, many moons ago, we had a fantastic and very senior executive sponsor who did many things very well, including giving intention and pace to the transformation, but did find, frankly, the communication, the negotiation, the relationship building with a number of his peers and direct reports. Tiresome, not value added. So he just drove through the change, which meant we went live on time. But the remedial work, the anger, the irritation, the and the profound lack of ownership by any other exec in that organization afterwards took months and months of expensive catch up. Kelly that was a slight story of woe. From my experience. We all carry these war stories, don't we? Give us some counter that for me. Where have you seen the coalition building done well and the tangible results we get? Yeah. You know, it's interesting that you call out where it did not go well. I'm working with a client right now, and interestingly enough, they're doing things differently with this ERP because they recently implemented a CRM, a customer relationship tool, and it didn't go well because they didn't have that sponsorship, that coalition that was needed. So this leader is very hungry for what do I do differently? How do I make this better for all? And so even before selecting which ERP system they were going with or bringing in a system implementation partner, we've been working with them to build that coalition early and to engage the right resources across the organization to help with the thinking and the mindset behind that ERP. About how big this is going to be. So that early engagement has really created that transparency and trust at all levels of the organization. Employees are responding differently. They're more open. They're more engaged. They're less resistance. They're actually these leaders. This particular sponsor is acknowledging we didn't do the last one well. And we're going to do this differently. So he's owning that and it's really building that trust because when we have something that doesn't go well, the rest of the organization, the employees, the other leaders think, why bother? This one's not going to work either. So the difference really is that sponsor drives that belief in the change, not just the awareness. And he's building that with the peers across all of the partners across the organization, as well as with the employees. And like I said, this was even done before they brought in the system implementation partner. So really learning from past lessons is a huge, huge opportunity. And it was a great maturity effort on the sponsor, and it's just a delight to work with him right now. I bet those moments where sponsors will do that public, semi public. We didn't get this right last time. It was painful. Here's. Thank you for your feedback. Here's what we've learned. Here's what we're proposing to do differently. It, it just buys them so much good faith as well. It is that maturity, that acknowledgment. I've seen that once or twice done authentically, credibly. And it was transformational actually. Yeah. So let's say I am an executive sponsor. I am watching today. I am sponsoring a major ERP initiative. You have no idea how busy I am. I delegated Quite a lot of these meetings I'm making what I think are reasonable delegation decisions. I'm giving you good people I've delegated to you. But I am starting to wonder, am I doing enough? Am I doing the right things? What would be your one piece of advice for me? I would say if there's one action, I would say reach out to those that are focused on the change activities and really find out from them what are we doing to support the people side. If you recognize how important this is, then understand what's needed and say, what can I do to help? I would also say is assess the resources that you have supporting the work. Often we're finding that, and especially in these lean times when people are trying to, you know, do multitask and be focused on multiple things, we're finding that, oh, the PM and also the CM work or I've got to change person on this, but they've also got a full time job. When you are implementing an ERP, the people side of change can't be done off the side of the desk. And so I would say really assess the resources you have and understand really how big of an impact this is going to have on the organization and say, what do you need from me? We know that projects with dedicated change resources and engaged sponsors are far, far more likely to meet those objectives. And when that change and that sponsor and that project manager or program manager are all in alignment, it is a key indicator, a leading indicator of project success. So making sure the three are aligned moving forward together, milestones are integrated. If this is where we're supposed to be from a project standpoint, where do we need to be from a people side, we need to be integrated and moving forward together, and then just put time on the calendar this week to engage with your change lead. Ask where your visibility and influence would make a big difference and act on it. What are the resources do you need? Should I free you up? Is there a way for me to free you up so that you're able to give this and make this a priority? Your actions really do make a difference and that you'll know when it's working because decisions are going to move faster. Resistance is going to surface earlier, and leaders are going to be really aligned around these shared priorities. You'll see a difference, I promise. I've been scribbling notes as we've been going, and I'm going to endeavor to read my own handwriting, which isn't always easy. You for me today have had both underscored, but also shifted my thinking about sponsorship around ERP transformations. And I'm sure for many of our watchers as well. Here's what I've taken away. First things first approval and active sponsorship are not the same thing, and it's in the gap between them that we see so many outcomes, benefits, return on investment, fall, die away. I'm probably not even germinate, frankly. Second, executives own resistance to ERP transformation can challenge how they think about themselves status, ego, their own sense of self, which can drive resistance, as well as the fact that of all the sorts of changes and transformations, we're doing potentially great executive sponsorship on ERP is the most important one. So it's almost a double whammy sit in there. That came through to me quite profoundly today. The third, and I think is the one that you've just been touching on. Again, that real sponsorship is observable. It is a set of Observable behaviors. And sometimes they're actually quite straightforward. It's not rocket science because it's about communication and consistency and authenticity. And going back out the following week and saying in a slightly different way, but being there and demonstrably steering the ship or my bit of the ship through this. I love that resounding very clearly with me, what you said a couple of moments ago. When you're implementing an ERP, it's really tough to be doing it off the side of the desk. Yeah. Our need for sponsorship engagement will ebb and flow, but it is consistently there throughout that life cycle of that that transformation. Before we wrap, let me squeeze let me squeeze one more in. Any advice for executives partway through a rollout right now today. And those executives are starting to see some of those warning flags that you talked about right at the top of our session today. What's what's your gen, your wisdom in terms of advice to them? I would just say ask for help. Look at your team who's there to support and help this be successful. And then have open, honest conversations about what do you need from me? What can I do differently? If you're leveraging somebody who is using the Prosci methodology, we have sponsor checklist, we have sponsor assessments. We have all kinds of things to set you up and help you be successful. I know that's where I spend most of my time is with the sponsors. And we come, we come together and create action plans that will fit to their schedule, but also make the most sense for the organization in terms of leveraging them in the best way to get the most value. So I would say just be honest. Check in with the team. How are we doing? This is what I'm seeing. How can I support? What do you need from me? And they'll be more than happy and willing to offer that support for you. I love that. What a way to think, to finish just with that. None of us want this to be less than successful, including critically, as you said, right at the beginning, we have never worked with a sponsor that wants to be sponsoring a failure, particularly around expensive and potentially transformational ERP. Kelly, thank you so much for your time and your wisdom today. Such thought provoking answers. And I just want to wish you and the clients you are working with at the moment, every success with their ERP transformation. Thank you. Thank you. Thank you for tuning in to this episode of Built to Change. Be sure to subscribe to our channel to stay up to date with our newest episodes. Drop in monthly.