Business application consultants working with small and medium businesses are often in a unique position: they implement a system while navigating the client’s operational and cultural landscape.
During an ERP or CRM analysis phase, where the consultant gathers requirements and conducts fit-gap analysis with the clients' teams, organisational culture and resistance to change can create roadblocks, either because clients don’t see the need for cultural shifts early on or because unaddressed cultural constraints derail progress later. This is a classic challenge for most consultants and solution architects: they see the need for change management, but it's simply too early to address these challenges with the client. The typical approach to address change management is to treat it as an add-on or a nice-to-have accessory, a separate task from the ERP project, often carried out by a different team.
What if, instead of positioning change management or cultural shifts as separate tasks, we could embed them into the delivery process in a way that feels organic and tied to the ERP goals? The key is to make it less about changing culture, which sounds daunting for most organisations, and more about ensuring success, which aligns with the client's priorities.
In this post, I explore a different approach for ERP functional consultants to address organisational culture, siloed teams, and dominating departments during the analysis and implementation phases of an ERP project.
Why some organisations need a culture shift before they can start a business application project
Siloed teams and data are the core culprits of this lack of alignment between features and processes. This makes the analysis phase of a Dynamics 365 implementation more challenging, which is the norm in the SMB world. Consultants must work with finance teams that could be blind to procurement cost drivers, often mixing up landed costs with overheads, or shop floor teams that have no awareness of how their runtimes affect the company's P&L.
In small to medium businesses, consultants must often face departments that see their data and processes as isolated areas rather than part of a bigger picture. Furthermore, teams approaching a new ERP implementation are less data-driven and more focused on keeping daily operations smooth. The focus on speed, efficiency, and siloed data creates a perfect storm of misalignment, turning the analysis phase into a long list of requirements that are unlikely to turn into a comprehensive solution design.
We can identify the main challenges into three main categories:
Cultural Resistance: Clients focus on system functionality and cost, often driven by the partner's pre-sales effort, which conveys the new application's benefits in terms of process efficiency. Organisational culture or change management are not considered elements of the project, making it hard for consultants to address these needs during the analysis phase.
Siloed Teams and Data: Departments such as finance, operations and sales often operate in isolation, primarily using dedicated software with only simple connectivity. They are unaware of how their processes and data affect others.
Dominating Department: In most SMBs, some departments can overshadow others, typically because of the industry in which they operate or because of the manager's personality. The tendency is to keep the dominance of one department in the new application, but this approach causes problems, too. For example, finance-dominated companies tend to overengineer operations to meet reporting needs. At the same time, when operations or supply chain dominates, financial data tends to be inaccurate, leading to delays in month-end and financial reporting.
Ignoring these issues during the analysis phase leads to adoption problems, rework, and delays later. However, pushing broad cultural change too early risks resistance from process-driven clients who prioritise the ability to operate the new ERP and complete daily tasks over abstract concepts like cultural changes that are not seen as necessary improvements.
These challenges create the need for a new approach that embeds alignment into fit-gap.
A New Approach: Embedding Organisational Culture into the Analysis Phase
Rather than treating culture, silos, and dominance as separate challenges, consultants can weave them into the analysis phase and the implementation process. The consulting team can frame the solutions as practical, process-driven enhancements tied to the ERP’s success, not as change management or cultural overhaul as a bonus set of activities complementary to the ERP project.
The key principles of this new approach are the following:
Meet client requirements and expectations: The focus is still on process efficiency, requirement gathering, and end-users' expectations regarding features and capabilities.
Data and Technology First Approach: Position the application as the solution to culture and data hurdles, not the consultant as the change agent.
Adopt an MVP mindset: Use quick wins and phase the effort to build trust and get buy-in from users and decision-makers. Using a Minimum Viable Product approach means focusing on progressive value creation rather than a significant change effort that the client is likely to reject.
By incorporating organisational change into the analysis phase, consultants can anticipate project blockers and create strategies to remove obstacles during the first phase of the implementation.
Step-by-Step Strategy
Incorporating change management into an ERP analysis phase is not easy; there are simply too many moving parts, and things can get complicated. My strategy when working on new projects starts with expanding the scope of the analysis.
Expand Fit-Gap to Include “People and Process Flow”
The first step is to identify culture, silo and department dominance elements without labelling them as such. Some consulting firms try to identify these elements in the pre-sales phase before the project is handed over to the delivery team, and they start the analysis or requirement-gathering phase.
For more insights about pre-sales, check my other article: https://www.d365training.com/post/the-role-of-pre-sales-in-enterprise-applications-consulting-balancing-accuracy-and-efficiency
The requirement must include a Team or Persona and a People-Readiness element; for example, a requirement about accruing transport costs must consist of Finance as the team and a score for people readiness that rates the current process to a capability maturity model. If the process is manual and siloed, for example, if the finance team accrues transport costs based on historic data and not on released purchase orders, the people's readiness score is low. Low readiness almost always results in a gap or challenge that will slow down the implementation.
Conversely, if the transport costs accruals happen on the release of purchase orders and are calculated based on the product dimensions, transport rates and Incoterms in the ERP, the readiness score is higher.
The last step is to frame the low readiness score as a benefit if the team is open to change. Using the same example, a proposed change to enable automatic accruals of transport costs when items are received can be framed as less document chasing and fewer surprises when the transport invoices are received.
Leverage Storytelling and Pain Points
The second step is to build trust and shift mindsets using relatable examples and case studies. Consulting firms such as Microsoft Dynamics partners carry a wealth of case studies and lessons learned from previous projects. Still, only a few maintain a library of use cases for the entire team.
While case studies are widely used as marketing material and in the pre-sales phase, most organisations ignore how lessons from past projects can remove resistance during project implementation.
Mentioning use cases and quick wins achieved on past projects can showcase the consulting team's experience while making a strong case for adopting best practices.
Introduce Quick Wins to Break Silos
The next step is to identify and share with the team the benefits of breaking silos. Mention tangible and measurable benefits or quick wins the team will realise if they adopt different attitudes.
Examples of quick wins are time saved, improved accuracy, and reduced risks. In the example I made before, a quick win that results from enabling auto-accruals of transport costs on purchase orders results in the finance team having to spend less time on accruals. Likewise, the procurement team can monitor transport costs in real-time, giving them the ability to see the breakdown of landed costs per purchase order, vendors and items. Both teams win with a simple process change.
Balance Dominating Departments with Configuration
With the correct configuration, business applications like Microsoft Dynamics 365 can balance dominant departments. A typical example is to configure supply chain management features to eliminate the complexity of processes created by the need to generate financial reports.
In 2023, I worked on a project for a wholesaler of sports equipment in the south of England, where the finance team was the dominant department. Because of the team reporting requirements regarding inventory costing, the supply chain team had to use a multitude of virtual locations that did not correspond to real sites or warehouses. Inventory was continually moved from one virtual location to another, even if there was no actual physical movement of stock.
The new configuration I designed for their new version of Business Central included using posting groups, reservations and financial dimensions, and new data models for their financial reports. This gave the finance team the accuracy they needed for their reports while eliminating virtual inventory movements, which streamlined their supply chain.
Shift Focus to Adoption and Daily Flow
During ERP or CRM implementations, users focus on improvements, not changes.
If the team does not see how the new technology will help them go through their day, they will likely seek a copy of their legacy software in the new application.
The push for like-for-like implementation is a typical symptom of teams whose focus is on their ability to maintain their processes and minimise disruptions to their daily flows.
To minimise resistance, consultants must reduce uncertainty by clarifying objectives and outcomes earlier during the implementation.
A common mistake consultants make when clarifying objectives and outcomes is focusing on abstract outcomes with the end-users and key stakeholders alike. In reality, the team working on requirement gathering and design has different needs and priorities than the C-suites. The executives who oversee the project focus on long-term benefits like return on investment (ROI), scalability, and compliance, while the end-users focus on features and efficiency.
Uncertainty causes resistance; try to clarify objectives and outcomes earlier on during the implementation to reduce resistance.
By focusing on the adoption of the new technology and the ability to complete daily flows rather than on long-term and more abstract benefits, the consultants can get the team on board and encourage them to adopt the new technology.
Risks and Mitigations
Like with any strategy, there are risks associated with adopting this new approach to manage organisational culture, siloed teams and dominant departments during the analysis phase of a business application implementation project. Let's examine the most common:
Resistance: If the client resists the proposed design and suggested changes, log it as a project risk and share the concerns with the project manager and sponsor.
Defensiveness: If the team gets defensive about their requests, focus on the ERP features and architecture and highlight the limitations of trying to adopt processes that are not supported.
Overload: Limit the quick wins and challenges to one or two per session to avoid overwhelming the users with too many changes.
Scope creep: If the client's team shows resistance to best practices, keep referring to the project scope. Most ERP or CRM implementations are limited in scope and budget, and failing to embrace change often leads to scope creep and higher costs.
Summary
Business application projects are rarely only about technology. Organisational culture, teams working in isolation and dominance of one department over others can create roadblocks and turn simple projects into costly and lengthy challenges.
When these obstacles are identified, the common tendency is to treat them as separate tasks that are related to the ERP or CRM project but not the same.
A new approach to such challenges is to embed change management into the business analysis phase and work on these as part of the functional and technical requirements.
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