As many as 78% of all significant corporate transformations fail.1 Because enterprise resource planning (ERP) transformations require a unique blend of functional and technical diversity, ERP transformation can be particularly challenging for complex global organizations. Often, the core problem turns out to be a lack of intentional and effective organizational change management. Without robust organizational change management and a focused team to drive it, an expensive and strategically critical ERP transformation can be derailed.
To ensure a successful ERP transformation, companies must consider team dynamics from the very outset and maintain that focus throughout the project. An emphasis on building trust between the diverse and scattered team members is paramount, and one promising tool to create that foundation is a team charter.
Why ERP Teams Fail
An ERP team is defined by a blend of functional, technical, change and governance team members. The major stakeholders arrive at the project with different priorities, preferences and approaches. Team members may also be working across different countries and cultures, and the project typically blends employees, external consultants and other types of system integration contractors.
Because of these complex team dynamics, misalignments and power struggles can appear immediately. Lack of leadership vision, blurred governance, unanticipated scope changes, resource pressures, unmet deadlines and financial overruns can all contribute to a potentially toxic project and team environment. In one case, we found ourselves working with a change team that was riddled with competing sub-factions. There was no true accountability, and regular arguments focused on who was responsible for delivering key aspects of the program work.
The same ingredients that cause challenges, however, can also become the transformation’s greatest strength. With a clear team charter supporting proactive change management, the ERP transformation team’s rich diversity of viewpoints, even in conflict, can be unified into a high-performing transformation chorus.
High-Performing ERP Transformation Teams are Defined by Trust
Extensive research on high-performing teams has demonstrated the primacy of building trust. As neuroeconomist Paul J. Zak summarizes, “Employees in high-trust organizations are more productive, have more energy at work, collaborate better with their colleagues, and stay with their employers longer than people working at low-trust companies.”2
Trust is the foundation that allows teams to access their full range of strengths and creativity. Trust is generated by building an environment that encourages creative thinking, risk-taking, openness and collaboration. Establishing trust means developing an environment of resilience that learns from mistakes and manages the inevitable setbacks and constant pressures. It means connecting on a human level, whether virtually or in person, and moving from purely transactional discussions toward understanding and empathy.
Building a trusting environment means creating a space in which people feel confident and safe, and where they are willing to demonstrate honesty and vulnerability to form lasting cohesion. This is particularly true in a new cross-functional team. Seniority and decision-making authority might not yet be completely clear. Some parties may feel that their task is primarily to protect their own department or business unit’s agenda, rather than represent the broader goals of the business or the project. Trust is not likely to emerge on its own; it needs the right catalyst, a proactive approach and ongoing focus.
Building a Team Charter: How to Set Teams Up for High Performance
While an ERP change team has the shared goal of a successful ERP transformation, the team members may not be aligned on things like process, decision-making protocols, responsibilities and collaboration practices. At first, they may not even realize that they are not aligned.
A team charter (Figure 1) is designed to align the team around a unified purpose, define the supporting factors that will achieve that purpose, and create mechanisms to continually hold the team accountable not only for what it does, but also how it does it.
The goal of a team charter is to provide clarity on what a high-performing team looks like in context of the organization’s ERP transformation mission and vision. A team charter captures the key goals of the project, but then goes further to set behavioral expectations, define roles and responsibilities, and institute ways of working. The team charter might lay out preferred communication methods and even communication styles. It can document best practices for avoiding groupthink and encouraging respectful disagreement and debate. To drive change, colleagues on the change team must be rowing in the same direction, but they should also have recourse to healthy ways of challenging each other and providing constructive criticism.
The team charter process will initially require active promotion by one or more senior members of the team. But overall, it should endeavor to be a fully democratic process. Typically, the team charter’s ground rules can be developed over the course of two or three facilitated workshops focused on brainstorming and team discussion. The key is to define the principles that will guide the team and build out clear examples of what those practices look like in terms of day-to-day actions and behaviors.
Once a team charter has been established, its guidelines need to be periodically revisited. This can be accomplished with periodic meetings focused exclusively on team dynamics. A team charter leader or coach might take full responsibility for team dynamics, or that leadership position might rotate over the course of the transformation project. The team leader(s) should be able to observe behaviours, keep notes on team-related developments, and coach team members toward higher levels of performance with honest and direct feedback.
During an ERP transformation, some contributors may be involved only for small portions of the project, rolling in and out over a period of months. Because of the shifting nature of an ERP team, it is often necessary to periodically recalibrate during key inflection points, such as when moving from Design into Build and Testing. It is also important to remember that a team charter is not set in stone. It can and should adapt, if necessary, to reflect a changing context and sustain its value.
While a team charter and attention to the evolving nature of relationships, actions and behaviors might seem like a luxury, consider that an average ERP transformation program for a large company can cost anywhere from $1 million to $10 million.3 Those millions can evaporate quickly unless a high performing change team ensures the transformation program’s success by adhering to the governance structures of a clear team charter. With a proactive and sustained approach to change management, even the most massive and complex ERP transformation can defy the daunting statistics about corporate transformation failure.
1. The Secret Behind Successful Corporate Transformations, Harvard Business Review, 2021
2. The Neuroscience of Trust, Harvard Business Review, 2017
3. ERP Software Report, Software Path, 2022
Managing Consultant, Talent & Change, Europe, Wipro
Andrew is focused on managing the people-side of digital transformations delivering organizational change and people development programs for improved business performance. He has over 25 years of experience across many leading global businesses.
Partner, Talent & Change, Europe, Wipro
David has 20+ years Change Management, Organisation Design and HR Advisory experience, leading multiple end-to-end consulting engagements for many household brands.