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Culture or Communication?

May 21, 2008

Over on Supply Excellence, Jason Fogarty wrote a short report from the Ariba LIVE event, highlighting a presentation by Reema Alzoubi from Pfizer.

Reema spoke about the cultural challenges in driving application adoption across a global enterprise, both internally and – in this case – with external suppliers.

This reminded me of a similar situation we encountered at IACCM last year, when a member in the oil and gas sector contacted us for help. We did some diagnosis and finished up with the problem defined as follows:

“An e-sourcing application has been in place for 2 years and rolled out across the business – multiple geographies, multiple business units. There has been classroom training for all users and the system is multi-lingual. But adoption levels vary and many people still prefer to use manual methods. Although the most obvious divide is geographic – countries like the US, UK and South Africa have relatively high adoption levels, resistance in other parts of Europe is especially high – there are also variations across business areas. For example, some of the more mature businesses, with older age profiles for procurement staff, also show lower utilization rates.”

It was this point about segmenting the problem that proved key. When we brought together a roundtable of similar large, international companies, we found everyone had the same issues. Most had adopted similar solutions and met with mixed success. They had expended a lot of time and expense in training; they had often absorbed the efforts of many of their top performers in becoming application experts; and they had frequently failed to break down resistance in certain locations or divisions.

As Reema suggests, communications is key. We must recognize the value of picking up phones, of meeting with those who are reported to be ‘the resistance’. But we should also do this intelligently. For example, younger people will mostly be enthusiasts for technology; they do not want to do boring manual tasks. So set them free on the system and let them be your champions. Research the profile of different business groups – do not assume a ‘one size fits all’ roll-out program.

Our roundtable participants provided a wide range of additional hints and tips, among them:

Participants agreed that a module-by-module roll-out typically makes more sense, in terms of facilitating training, driving use and gaining wider acceptance.

Management has an active role in ensuring success. They need to communicate that the system is important and has their backing. The project ‘owner’ should visibly report on progress to a senior level (e.g. CPO). It must be clear that management receives regular reports on progress, the value of savings etc.

Supplier resistance is an important factor in delaying or frustrating roll-out. In some cases, this may be an excuse used by internal staff, but there is certainly evidence that suppliers do push back, often because of their own lack of the required technology or associated skills. One common reason for resistance was concern over data protection and the ‘storage’ of supplier inputs in the system. Another – especially among larger suppliers – is the effect that e-sourcing has on ‘commoditization’. In creating a more level playing field, they fear it reduces their ability to justify price differentials. This is a legitimate concern and it is important that implementations take account of the need to allow suppliers opportunities to describe sources of value or differentiation.

Make sure the system is applied appropriately. For example, if it is an e-sourcing application, do not allow blanket implementation. The system might be used for a Business Process Outsourcing bid, but in that case might only be suitable for the RFI element. In other complex relationships, it might be used just to drive acceptance of ‘core’ terms and conditions.

Metrics are important, but care is needed in setting objectives, to ensure they do not result in negative behavior. For example, again drawing on e-sourcing, a simple quota or system based on growth in use can result in bids being broken into several contracts to reach the quota. Also, too much detail can create conflict with managers.

Driving the adoption of new applications is a change management program – and as with any change management, it is going to be more successful if it takes account of the varying perspectives of those who will be impacted. It isn’t culture, it isn’t communication, it isn’t training – it is in the end sensitivity to the range of emotions that change creates. And in our networked world, those who drive such implementations have many tools at their disposal to gain insight to the affected community and adjust their approach accordingly.

3 Comments
  1. Hi Tim,
    Thanks for the link. Glad you enjoyed the post and LIVE. Your mainstage roundtable was also very interesting – I only wish it could have been longer since you guys were diving into some very important issues.
    Justin

  2. Hi Tim

    Good post. I’m sure many of your readers will identify with your analysis of how “When we brought together a roundtable of similar large, international companies, we found everyone had the same issues. Most had adopted similar solutions and met with mixed success.”

    But it’s not clear from your post to what degree these companies were able to really achieve success (however defined) by following the suggestions in your post. And if they did, what levels of cost/time did it take to achieve success, compared to the cost/time expectations at the outset of the project. This would be very interesting to hear.

  3. Alan,
    You raise an excellent point.

    It was clear that some of those companies had overcome the issues – but generally through trial and error, though hopefully they have captured the experience for future implementations. However, my suspicion is that organizations like yours have been key in supporting ‘best practice’ and speeding the time to ROI. From our conversations, I know you offer some great ideas for any company that is embarking on a multi-country – or even multi-division – software implementation.

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