How Organizations Deal With Change

Published Date: 02 Nov 2017

Chapter-1

1.1-Introduction

"To exist is to change, to change is to mature, to mature is to go on creating oneself endlessly" (Henry Bergson)

Adopting for change and managing it effectively is indeed one of the most crucial decisions in the life of an individual or any other business. Globalization has completely changed the way organizations were run; it has affected the major elements of a macro environment in which the business is carried out. The entry of a global competitor in any market poses a threat to the local business, and that organization is left with no other option but to adopt change in order to survive in the market and maintain its existence. The change is not easily accepted by the management of any organization and the uncertainties present in their minds along with the fear of losing, mostly acts as barriers in the change process. Surveys show that in any organization the commonly reported problem faced by management and staff is to deal with furious transition of change process along with surviving in the non-stable environment. Issues can be resolved and complexities might get reduced if the challenges and barriers for change are identified and reported before carrying out the change management process.

"People don’t resist change. They resist being changed" (Peter Senge)

This quotation is brought up in support of the above explanation regarding managers, about their insecurities and fear of losing as discussed above.

Change management has been chosen as a base of this dissertation because of authors general interest in the topic since beginning and besides that the author feels that the change management is essential in the business and the process can be adopted and carried out anywhere in the organization. The process cannot be overlooked by any means as it has significant influence in the overall operations of any business in both short and long terms. Title of this report also includes the terms of ERP, JD Edwards and SAP, so these topics will be covered in the literature review and later in the findings and analysis section of the research. Research has also been undertaken and mentioned in the literature review of what different scholars have said on the change topics like the types of change, Resistance on change, different strategies used for change and the author has also highlighted the concept of Business Process Re-engineering as this is very much related to the change management and the Case study of Shell which has been chosen for the research is an example of Business Process Re-engineering. Author will be using a case study in this dissertation which is an example of a change process. The case study is based on the Shell Pakistan Ltd, the company planned to transform its systems from JD Edwards to SAP globally and the idea behind this was to streamline the processes and the system enabled Shell to increase and improve on its operational performance and efficiency on the path to high performance. The transformation process was basically to serve the global purpose of Shell group and the idea was to remove the complexities and global differences in operations. The new system was available for access in 22 locations by around 17000 users around the globe. The new global SAP adopted by Shell is one of the major business infrastructure investments which has replaced the JD Edwards information systems and introduced substantial business benefits which are to be realized and sustained through the Downstream-One global, standardized business processes. The objective of Shell behind this was to align the many oil products and chemicals companies throughout the world around common principles, programs, and processes. (http://www.accenture.com/us-en/pages/success-shell-exploration-production-co-sap-solutions-summary.aspx) 17/09/2011

The aim of this research will be to generate understanding about the steps discussed in change management process and discussing and commenting on its theories, conducting a primary research using the journals on change management, books and various articles and explaining further why the specific theory on change is quoted in that way. The other part of the research will be on the system transformation in Shell Ltd from ERP to SAP, discussing why was it needed to have a changeover, what steps were taken during the process, author has also discussed the risks faced during the transformation in Shell Pakistan and finally how is the new system performing better than the previous one and to identify how effective it has been after the transformation has taken place and so on. One more objective of the research is to identify the reasons of why people are reluctant to go for change in the business; a survey has taken place in two major organizations Barclays and Reckitt Benckiser and the author has listed the reasons in the findings section of the report. Besides that author has discussed what models have being presented by different scholars to deal with resistance and to manage change and how are they used in the industry, discussion and comparison on various models will be found in the findings section which are meant to deal with resistance to change. The term organisational learning and organisational growth is closely related to the subject of change management, so it is one of the research objectives to understand the concept and theories on this and also discussed is the Greniers model used for organisational growth.

1.2-Research Questions

What models are usually used in an industry for managing resistance to change?

Has the transformation adopted by Shell Pakistan Ltd, in the change process from ERP to SAP been effective?

1.3-Research Objectives

Comparing models for resistance to change proposed by different scholars and understanding the concept of organisational learning and organisational growth

Identify the necessity of transformation from one system to another in Shell

Understand the process of change used by Shell Ltd, for its transformation, and identifying the risks faced.

To examine the effectiveness of SAP implementation and to identify the positive outcomes of the transformation

Chapter-2, Literature Review

2.1-The need for ERP systems

Organizations by far have found that enterprise wide resource planning systems have provided deep rooted benefits in terms of revenues and profitability. ERP systems are packaged systems that have been formulated by gathering knowledge from several business processes in a large number of organizations. The implementation of this system in each organization reveals features and benefits that can be incorporated in the ERP system allowing it to yield and evolve into a better, more business oriented software application for all types of industries and businesses.

When ERP systems are implemented within organizations, both the business side and the technology side of the organization are merged in order to develop better, operationally sound business software for the organization. It has been noted that over the past several years, a large number of organizations have implemented ERP systems spending more than hundred billion US dollars in the procurement of the software. This implies that organizations have found a significant need for ERP systems and have learnt to derive substantial benefits from them as well.

Shang and Seddon (2000) state in their research that there are five areas of benefits which organizations can derive when they implement and use ERP systems. The framework describes the benefits that each firm derives when they implement and ERP system. These five areas within the framework include operational, managerial, strategic, IT infrastructure and organizational benefits through any particular ERP system. Several researchers however, believe that true benefits of any ERP system cannot be classified in a single framework or measure that would help benchmark these advantages. Moreover, some researchers also argue that such benefits from an ERP system are different at each stage of the implementation of such a project.

Shang and Seddon (2000) state that operational benefits generally denote automation of tasks that can help cut costs and the time to learn and relearn a particular process. Automation of tasks can also help cut costs with respect to reducing the amount of manual labour required for the purpose of a particular task. Managerial benefits generally include benefits pertaining to information and its availability to the management for decision making and performance enhancement purposes. Strategic benefits generally include areas of competitive advantage that the organization can exploit through the usage of ERP systems. Infrastructural benefits from ERP systems include sharing and utilizing resources that can provide long term future benefits for the organization in terms of IT technology. This in turn also means flexibility in technology and cutting costs through long term usage of technology. The last dimension, organizational benefits, entails the integration between processes and systems allowing for a common vision that enhances learning within the organization.

2.2- Evolution of ERP systems

ERP systems have evolved over a number of years with implementation in all sort of industries and because they have been repackaged for small and medium industries as well. This has allowed specially the larger ERP solutions to have a strong history of positive change which has enabled these solutions to improve themselves over the years. With the unprecedented and unpredictable growth of electronics and information technology, software solutions have taken a leap allowing better and more improved versions to be presented to the market based on what customers want. For organizational customers, it is imperative that a software solution is presented that helps cater to and integrate all functional units and business processes together to form one information repository. This repository should also cater to business ideals such as low costs, better management and improved decision making. In the 1980’s and 90’s, enterprise resource planning systems came into being that helped in managing larger and more complex organizations. The systems were complex and costly and required longer durations of implementation coaxing organizations to meet reengineering objectives as well. With passing years, ERP systems have from simple inventory management systems, have extended and enhanced themselves to cater to all specifications within a business and to deal with all scenarios pertaining to service and product organizations.

2.3-Change Management and how Organizations Deal with Change

"Everybody has accepted by now that change is unavoidable. But that still implies that change is like death and taxes — it should be postponed as long as possible and no change would be vastly preferable. But in a period of upheaval, such as the one we are living in, change is the norm" Peter Drucker,(1999)

It has become a generally accepted view in businessthat organizational change is necessary to create a competitive advantage and remain successful—especially for complex organizations (Edmonds, 2011; Wilson, 1992).

However, "one of the most remarkable aspects of organizational change efforts is their low success rate. There is substantial evidence that some 70% of all change initiatives fail" (Burnes & Jackson,

2011, p. 133).

Failure can result in lost market position or credibility, decreased morale, and other negative outcomes (Edmonds, 2011).

Considering the resource-based view of organizational change the organizations are complex systems that risk disaster unless they are able to effectively distribute their resources and learn from the events that arise throughout a change initiative (Marcus & Nichols, 1999)

Change management has recently become a very important process in the industry and its various theories have been accepted and adopted more frequently by many organizations around the globe. Today the organizations are facing more pressure than ever, the continuously changing economic conditions, globalization effects, consumers having more knowledge and awareness about the industry and increase in the level of their expectations are the major factors which have built up the pressure on the organizations. This has made obligatory for the firms to adopt the process of change in terms of its organizational structure, operating activities, working environment, flexible employment contracts, technology, research and developments, marketing activities and so on.

Kurt Lewin (1940) was the first person to present the idea of "resistance" to changes taking place within an organization. His initial research focused on the elements of individual behavior that must be looked at to introduce an effective organizational change process. The theory presented on resistance was more focused on individuals, and he defined the human personality structure as a complex energy field in which all the actions and reactions could be assumed of as a change in some state of a field. His theory on resistance to change was more like a theory of a system.

Lewin presented a 3 stage model to carry out a change process and dealing with resistance, three steps were defined by Lewin in that model, first step was to unfreeze, second was to implement change and third was to re-freeze. I will discuss the model in more detail later in my research.

Alvin Zander (1950) was close to Lewin as a human being and both of them discussed often regarding their work. Most of Zanders concepts and theories are considered to be close to Levin’s work, however Zander presented a slightly different view on resistance to change, He defined resistance to change as a behavior which intends to oppose and protect a person from the effect of actual or a planned change Dent & Goldberg, (1999, p. 34).

Morgan (1997) challenged Lewin’s 3 stage model of Unfreeze, Change and Refreeze and said: According to Lewin there is a resistance found by opposite forces in any potential change taking place, but considering Lewin’s model the forces are usually external to the change, which holds a situation in state of a dynamic equilibrium. His solution was to reflect upon the fact that successful change always rests in "unfreezing" an established equilibrium by enhancing the forces driving change, or by reducing or removing resisting forces, and then "refreezing" in a new equilibrium state.

Schermerhorn, Hunt, and Osborn (2005) expressed that when employees resist change they are defending or protecting something they value and which seems threatened by the attempt at change.

Eight Reasons for Resisting Change (Schermerhorn, Hunt, & Osborn, 2005):

Fear of the unknown

Lack of good information

Fear of loss of security

No reasons to change

Fear of loss of power

Lack of resources

Bad timing

Habit

Coch & French (1948) in Virginia conducted their research in Harwood Manufacturing company, and the objective behind their research was to identify the reasons of why do people resist change so strongly. They concluded from their research that the individuals and the groups who took active participation in the design and development of changes, hold lower resistance compared to others.

Lawrance (1954) completely opposes the conclusions of Coch & French and thinks the results of Coch & French research were misleading. Lawrance suggested that according to Coch & French findings, the group which had the poorest result, (non-participating group) actually in Harwood manufacturing was more actually looking to introduce the change in a progressive way. Lawrance suggested that one of the most difficult problems faced by the business executives is the employee’s resistance to change.

One important point is that people resist change since they are more comfortable with what they know, but fear the unknown and the uncertainty. Here is a list because of which people fear change.

The nature and the reason for change is unknown to them

There is lack of trust in the people who are leading the change.

Organizational redesign can take place in the shape of change of job roles or possibly loss of jobs

There is a chance of technological challenges arising

The employees will be required to move out of their comfort zone

Reduction in stability arises, the continuity of products or services, processes and staff forms a stable operating environment. (Enterprise Strategy, 2008, P-399)

2.4- Implementation of ERP Systems within Organizations

Hammer (1999) presented his views on ERP by saying that the use of ERP software pushes an organization to become an integrated organization which requires a relatively strong understanding on the core business processes, its resource and competences.

Gale (2002) views ERP as a very useful tool for managing operations in an organization and said that the usage of ERP software will integrate information from various sources like, accounting, production, distribution etc., into a seamless computing system.

Duplagia and Astani (2003) conducted a survey on firms using ERP and their findings suggested that integration of function areas, information systems was the most important reason for organization’s going for ERP systems.

(Grabski et al, 2001), Grabski and Leech (2007) prepared a list of all the important control procedures that should be used by any organization during the ERP implementation, and their findings suggests that a single type of control measure was not used, in fact a series of multiple control techniques were used to manage various complexities and different stage. Their research identified five different control techniques which used be used accordingly during the ERP implementation, these were project management, change management, alignment of the business with the new information system, internal audit activities and consulting and planning techniques.

2.5- JD Edwards and SAP ERP Systems

ERP systems are used by several organizations across the globe. Shell Pakistan used to work on JD Edwards and then migrated to the SAP in all sister concerns world wide. SAP was customized specifically for Shell and was coined as Global SAP or GSAP. SAP success in the industry of chemical and pharmaceutical is not really impressive in terms of inventory management or operating income in the first four years after SAP implementation. However, over the course of the years, SAP has grown in terms of implementation in several organizations and has moved from a simple manufacturing concern management system to an innovative and critical inventory, manufacturing, selling and distribution and personal management software solution.

SAP is a sophisticated organizational based information system and also a process focused financial management software that was established by SAP AG, an organization based in Germany. SAP has been developed mainly for managing operations. This system is a useful technique for organizations managing their business purposes using the real time data. The main advantage of using real time date over the historical data is that it gives an opportunity to the organization for controlling the events at the very spot (Johnson et al., 2007)

Managing SAP is not a simple task and there is a huge potential of user making mistakes in the system, one approach of carrying out SAP successfully and reducing the negative results obtained from using SAP is to introduce the SAP alignment session for managing all the capital projects. This is a best practice approach which has given positive results in past. The benefits obtained from implementing such techniques can be huge; a study suggests that the data entry mistakes have been reduced to more than 75% by making the use of SAP alignment session. Experts suggest that there are key individuals who should be present and should be part of SAP alignment with business processes. These key individuals can ensure that the implementation of SAP focuses on all the critical processes that are important for the software solution (Gaut, 2004).

The major factors to be considered here are the roles and responsibilities, listing project expectation, reviewing the work breakdown structure, identifying gaps in reaching the objectives and fixing them out and training provided to the staff. Suzanne, Gaut (2004).

Implementation of SAP is not as easy in several organizations because each company has different process and cultural elements that need to be mapped into the system. In addition to that, change management process also has to be managed within the organization. A case has been evaluated further to indicate the nuances that are part of the organization and the software implementation particularly with respect to SAP.

The case study under consideration is a an organization known as Water Corporation which is a government organization providing water management and wastewater services to state within Australia. The implementation of SAP in Water Corporation was started in 1997 and the specific module under implementation was project system. The legacy system within the organization was a conglomerate of various information systems, termed as the General Corporate Systems. The GCS contained the general ledger for accounting; corporation costing system also known as the WORKS; SIMS or the stored management information system which was for inventory management; and CWP which was capital works planning system for project management and working through projects’ cash flows. Various other systems were also working within the organization such a human resource management system, several paper systems. Within these software systems, various integration modules had been run as well which helped keep information silos at bay and allowed for better management of information for decision making.

However, the need for a better and more robust system was quite strong and thus SAP was introduced within the organization. Before SAP was implemented, Water Corporation was primarily being run on mainframe systems with little integration, and with slow speeds making decision making extremely weak. Moreover, with inflexibility and increased requirements towards maintenance of the system it was difficult for the current information systems to continue running within the organizational environment. The age of the case study indicates that the systems running within Water Corporation were prior to implementation and usage of Windows thus resulting in severe inflexibility within the current information systems. Moreover, the organization realized that there were only two options that it had with respect to the current system, either to repair the existing information system or replace it with a better option. Implementation of Windows and Office Suite spurred the decision towards a better and more robust system as well. The decision therefore was taken to implement SAP within the organization and which included the project systems module as well; a relatively new module compared to the other robust ones already implemented in detail in other organizations. The following modules were then implemented within Water Corporation:

The case indicates various elements pertaining to the implementation of SAP modules that help replace legacy systems. It must be noted that each element relates to how business processes have been merged to help launch SAP and thus this has led to significant change within the organization. Any implementation of a new ERP system within an organization can lead to significant threat to the leadership within the company. The organization was primarily a telecommunication company within Australia which was running JD Edwards and was one of the largest telecommunication service providers within the country. The study of this case is critical for various reasons, one of them being the fact that it highlights how JD Edwards ERP system was phased out in favour of the SAP ERP system. This case study has similar implications to Shell and its integration and implementation of SAP while replacing JDE in all the sister concerns.

http://assets1.csc.com/au/downloads/0810_24_Watercorp_BW_to_BI_Upgrade_v1_B_web.pdf

2.6- J D Edwards

JD Edwards is a comprehensive, integrated application enterprise resource planning software that combines business value, standards-based technology, and deep industry experience into a business solution with a low total cost of ownership. JD Edwards offers a choice of databases, operating systems, and hardware so the organizations can establish and expand their IT solution to meet business requirements. JD Edwards solution could be used by organizations in various ways for instance, Asset lifecycle management, supply chain execution, manufacturing and engineering, customer relationship management, procurement, project management, financial management, tools and technology, human capital management, etc. Rowena Hawsley (2007)

2.7 Comparing JD Edwards and SAP

Based on a study about comparing both the ERP solutions, it has been found that both have certain features, advantages and disadvantages in comparison to each other, allowing organizations to derive certain benefits based on which software is implemented.

It has been noted that ERP vendors are now more focused on other elements of the organization as well such as supply chain and customer relationships as a result of which new modules and improved versions of existing modules have come into play. Both SAP and JDE have focused on these elements with the knowledge in hand that customer is the core focus within any business because this is how an organization runs.

2.8 Architecture Differences

It has been noted that environment of the systems can be broken down into databases as well as server platforms, where it has been observed that SAP has more platform options compared to JDE. Moreover, SAP supports more databases compared to JDE since JDE only supports oracle based databases. With respect to user interfaces, there is inconsistency with respect to SAP while JDE provides standardized interfaces in this scenario.

With respect to structure, there are four elements that can be studied, metadata, programming, web page development and web services. Both SAP and JDE have a long way to go with Meta data, while with web pages, Oracle or JDE fares better because it uses known languages to formulate them, while SAP uses a lesser known language called ABAP. In programming again, JDE fares better because it uses PL/SQL while SAP primarily utilizes ABAP. Both JDE and SAP have not worked on web services and will do so in the near future.

The ideology behind a core ERP system is that it should be able to provide excellent integration within the enterprise. Both SAP and JDE are excellent in their integration ideology allowing them to explore and exploit business processes to their advantage. As a result, both software systems are excellent choices for any organization for the purpose of implementing an enterprise wide software solution.

The next element pertaining to the two systems is the point related to education. Both software solutions are complex and require detailed instructions as well as training in order to implement and use the system. It has been noted that both these software have online facilities where people can learn about the software and its implementation. Moreover, there are a large number of certifications available as well that can help in certifying specific vendors and individuals for the purpose of implementing the software in a corporation.

In this context, studying both the software solutions gives the fact that there is no right or wrong option for the purpose of implementing an ERP solution within an organization. In addition to that, the context in most cases therefore turns out to be primarily costs and time towards implementation that may guide an organization towards one software and against another. Since both of these software offer similar benefits and have similar features, there is no right answer to which software should be purchased.

2.9 Business Process Re-engineering and its Importance for Information Technology

"Formalization, structuration, codification, standardization, and depersonalization of the rules of the game in the transnational space" (Djelic & Quack, 2003, p. 5)

To successfully achieve these aims, adapt to globalpressures, and create a sustainable competitive advantage, the multinational organization may launch extensive change programs (Wilson, 1992)

In the early 1900's, Henri Fayol presented the concept of re-engineering, to conduct the undertaking toward its objectives by seeking to derive optimum advantage from all available resources. Although the technological resources of our era have changed, the concept still holds. About the same time, another business engineer, Lyndall Urwick stated it is not enough to hold people accountable for certain activities, it is also essential to delegate to them the necessary authority to discharge that responsibility. Lloyd et al, (1994)

Chan and Peel (1998) conducted a survey of 37 companies in 17 different industries to investigate the causes and the impact of BPR. They concluded that the primary reasons for BPR are increasing efficiency (internal) and improving customer service (external). Francis and McIntosh (1997) identified

causes for the emergence of BPR such as consumers, competition (global), technological development, and IT. Most companies are function- or department-oriented, and not process-oriented. Often, many people are involved in order fulfilment, but no one tracks a product and reports the status of an order directly. Reengineering makes one individual responsible for the complete business process (Self 1995).

Business process reengineering is also quite often linked to the ERP implementation as the ERP systems embed business processes, thereby restricting and enforcing organizational routines. ERP implementation decisions determine the extent to which work processes will depart from past practices in favour of redesigned business processes or business processes (Huang et al .2004, Wenrich and Ahmad 2009), (Hammer and Champy, 1993), (Davenport and Stoddard 1994), (Boudreau and Robey 1996

Better techniques are required in order to identify hot business process design and ERP configuration decision will impact future business operations and management control. The business process re-engineering benefits of enterprise resource planning systems are often touted, however, the opportunities for continued process improvement after ERP implementation have rarely been explored. ERP systems embed and reinforce the execution of prescribed business routines. (Marting and Cheung 2005), (Severing V. Grabski et al, 2011

2.10 Case Background

Historically, Shell supported autonomy and entrepreneurship in operation and decision making in their local offices throughout the world (Sluyterman & Wubs, 2010)

In the early 1990s, the collapse of the Soviet Empire ushered in a new push toward privatization, deregulation, and economic liberalization and a move away from authoritarian political regimes and centrally planned economies (Sluyterman & Wubs, 2010)

Among the changes they made included eliminating Shell's organizational layers and the matrix structure and reorienting the organizational structure around five worldwide businesses: exploration and production, oil products, chemicals, gas, and coal. These changes were made in response to financial pressures and demands for greater efficiency and cost-effectiveness. To avoid the potential risks of these changes, the company introduced a "global business operating model in 2004 that standardized and simplified business procedures in order to facilitate learning and speed up action" (Sluyterman & Wubs, 2010, p. 811)

Chapter-3, Research Methodology and Design

Research Definition

Research Methodology and Research Design

Collection of Data

Source not used

3.1-Research Definition

Research in any organized or replicable process means "to know", the term research has its roots in Latin, it identifies and describes difficulties, within certain limits. It can also be described as performing a methodical study in order to prove a hypothesis or answer a specific question. There are two types of research, Primary and Secondary. Secondary research is to investigate and collect data that has already been collected for some other purpose and using that information to fulfil objectives. Primary research is also knows as field research, the collection of first-hand information directly from the available source. The main features of any research includes systematic problem solving which identifies variables and tests relationships between them, collecting, organizing and evaluating data. Logical, so procedures can be duplicated or understood by others. The data collected from investigation could be qualitative or quantitative. The quantitative methods are used to measure the numerical data. These can be presented using graphs. The method has its complexities and is kind of difficult to design initially but provides high standard detailed information. Few common quantitative methods used to present information includes ratio analysis, budgeting, forecasting, comparison of financial information and conducting surveys. On the other hand qualitative methods are more subjective in nature and examine the less tangible aspects of the research as compared to the quantitative analysis. The most common qualitative methods include focus groups, interviews, observations, sampling, questionnaires and case Studies (Water Corporation)

3.2-Research Objective and design

The objective of this research is to study and analyze the change management process conducted in Shell Pakistan. The expressive study also includes understanding the mind set of people involved in change and getting their feedback on it. To achieve the research objectives primary research has been done mainly to collect qualitative data which will be used in collection to give analysis on the transformation process. various techniques have been used for collection of qualitative data, the most prominent of all was completion of questionnaire by the staff involved during the change process few other methods used were extensive face to face and telephonic interviews, extracting information about the transformation process given online and extensive study of the internal reports of Shell Pakistan prepared for its system change process. The questionnaire was prepared consisting eighteen questions which focused on the system transformation process in Shell Pakistan from JD Edwards to GSAP. The objective for writing below questionnaire is to analyze the performance of JDE from the users i.e. whether the users are confident to use JDE as a preferred ERP & what in their view are the strengths & weaknesses of JDE. The below questionnaire also analysis the usage of SAP as a change & provides them a platform to mention whether the training being provided is adequate, the performance of the learning & development department,  their line managers support to implementation of SAP. The questionnaire also identifies their confidence in using SAP & shifting from JDE to SAP.

3.3-Data Collection

Data collection methods are essential and helpful for clustering material systematically, in a more organized way and if the data collection is done randomly, there will be difficulties in answering investigation queries in a decisive manner.

There are various methods which can be used for data collection few of them include

All the information available

Observation

Face to face interviews

Written Questionnaires

Focus Groups

Projective methods, scaling, planning

3.3.1-All the Information available

Mostly there is a vast amount of data which can be found, which already has previously been collected by others for some different purpose but this does mean that it has been analysed as well. Collecting such data is relatively inexpensive, there is a chance that such data or information is incorrect or misinterpreted so in order to reduce the chance of mistakes or misrepresentation authentic source must be known from where the data is being collected. In order to achieve the research objectives in this project, reports published on Shell and information available online on its transformation process will be used. Apart from that the internal reports which were used during the change process were requested from the staff working in Shell and the relevant information was extracted from it which has been mentioned in this report.

3.3.2-Observation

This method involves selected, viewing and recording behavior in an organized way and characters of living beings, objects or phenomena. One that is mostly-used data collection techniques is the observation of human behaviour. In the case study of Shell this method will not really be useful to accomplish the objective and complete the research as the research is based on a process which already has taken place so observation method is not possible and won’t help the cause. Therefore this method of data collection has not been used for this dissertation.

3.3.3-Face to Face Interviews

This is normally used for collecting qualitative data, in this the person is mostly questioned orally and this could be done individually or in a group. For this project in-depth interviews have been completed with people who hold expert knowledge and skills in this field. During the face to face interview session, few sensitive topics can be covered and the opinions of the interviewee can be recorded on different issues. For this project this method has been one of the most effective methods of research along with the questionnaire as the feedback was taken from the people who were actually part of the team and who experienced change, only people who experience it can define the best.

3.3.4-Written questionnaires

This method involves a written questionnaire which is usually presented to individuals involved (directly/indirectly) in that specific situation in order to get their feedback and record their experiences related to a particular event. The primary technique for data collection has been a self developed questionnaire which includes open ended questions demanding detailed explanations. The questionnaires were distributed to the people concerned with the authors topic and their feedback has been used to analyze the findings later in this project. Questions prepared in the questionnaire are interlinked to each other and have been organized them in such a sequence that they are leading to the next stage. Mostly subjective, along with few objective questions have been used to collect as much data as possible for the analysis to be done.

3.3.5-Focus Groups

This is another way in which qualitative information is collected. Usually this involves a group of individuals who gather together to provide their opinions on various topics. In regards to this report a combined view has been used of the group of people dealing with system transformation in Shell and that view will be used below in this report, for analysis.

3.3.6-Projective methods, scaling, planning

Making use of charts and graphs is useful in this method for displaying and explaining relations between variables. The findings from the questionnaire are explained by extensive use of these techniques in this project. For analyzing most of the questions answered, pie charts and bar charts are used to illustrate the results. This will be found in my findings section.

3.3.7-Collection of Data for the Project

Feedback of around more than 150 people both as individuals and in groups has been taken in this project, for different questions. Most of these people are part of the chain management team in Shell, besides that feeds are taken from the management of Shell Pakistan to accomplish the research objectives. Survey has been done in two different organizations to record their point of view on the resistance of change. The data collected to accomplish the research objectives, is divided into two sources:

Primary Source: The primary data consists of information collected through surveys, face to face interviews and interviews on telephone, a questionnaire was issues to be filled out from which the attitude of people was known on the change process. The questionnaire has been attached at the end of this report which was used in completing the research.

Secondary Source: The secondary data has been collected and recorded mainly from internet, and going through the reports on change management in Shell, the report on terminal operations on Shell was read from there a lot of information on the ERP and SAP implementation was taken and recorded for analysis.

3.4-Source not used

Quantitative data collection method normally involves data in numerical form such as statistics, percentages, etc. In layman's terms, this means that the quantitative researcher asks a specific, narrow question and collects numerical data from participants to answer the question. In this project the qualitative method was not really used as the questions in my interview list were very subjective and detailed in order to achieve my research objective.

3.5- Research Timeframe

Defined time limit was set for undertaking both primary and secondary research and data collection, a timeframe of 5 weeks was kept in which all kind of relevant information was to be extracted and collected. Most margin kept was for the written questionnaire, 3 weeks were provided to record the collect and record the response of the staff and it was achieved within the allocated time.

Chapter-4, Findings

4.1-Background

This chapter discusses the change management process implemented in Shell Pakistan. It also highlights the issues of necessity to change, the risks faced during the transformation and the effectiveness of change management. The behavioral responses and attitude of stakeholders towards change management in the industry have also been covered in the report with a comprehensive analysis on the features that have helped or hindered the changed process within Shell. The findings presented here are mostly based on the research conducted through 20 interviews includes both the face to face interviews and questions being asked through telephone and recording feedback. I tried to interview people who are closely related to the topic of change in the business. In addition, twenty five questionnaires are distributed amongst employees as well in order to understand the change process that took place from converting from JD Edwards to SAP within the organization.

4.2-Factors that resist change

One of the most common problems which business executives face during implementing plan is the employee resistance to change. Such resistance could be in different forms like persistent reduction in output, increase in the number of "quits" and requests for transfer, chorine quarrels, sullen hostility, wildcat or slowdown strikes, and, of course, the expression of a lot of pseudo logical reasons why the change will not work. All this actions can result in a negative outflow or a reduced net worth of any organization. A survey was conducted by the author in Shell Pakistan to identify the most common factors from the employees which act as a resistance while adopting change. The approach adopted for this research was more direct as one to one session of interview was held with the individuals. The feedback received was mixed. The most common reasons for the resistance were as follows

Lack of communication between the management and staff on change issue

Fear of losing the task after change is implemented is always there

Fear or losing their job status and job security is also a concern

Too much pressure and work load is tough to handle

Change of working environment and disruption in culture is a concern.

Conflicts of personalities

Benefits are not communicated

Others

Results are illustrated below by using a pie chart and followings are the findings

So according to the results illustrated by the pie chart, it is clearly understood that the fear of losing and the concerns regarding job status and job security are suppose to be the biggest barriers for managing change. After that the benefits of change not being communicated properly, act as a resistance to change. Rest of the reasons identified through the survey were more linked to the human behaviour, like mental stress, personal conflicts, culture disruption etc

4.3- Necessity of change in Shell

In any organization managing change process, asks for planning before implementing the change steps. Every organization has different circumstances and the change situation varies a lot but still there are few logical steps which could be used during change management process. The process of change normally starts with a change Trigger. The change trigger highlights the necessity of change in a specific organization. The change trigger included two types of events. These are the external and the internal events:

External Events:

Changes in economic conditions (Inflation, GDP, Interest rates, etc)

Changing laws and regulations, influencing the business cycle

Strong competitive strategies from competitor and threat from a new entrant in the industry

Technology introduced, changes in Research and Development

Internal Events

Changes in top level management giving rise to different operational strategies, changes in priorities, and new leadership styles.

Introduction of a new technology and having a changed working style and environment

Opening more branches of business both in the same country and overseas

Introducing new diversified products or services

These triggers will push management to opt for change. The questions which is to be answered by management is if they really think change is required to improve the situation, or if it could be handled without implementing change.

Shell being a global organization wanted to streamline & standardize its processes around the world. Prior to the use of SAP the organization had been using different ERP in different parts of the world like JD Edwards in Asia, Oracle in Australia etc. This made the operational & reconciliation processes different but since the organization has the vision of standardizing & simplifying its processes it prompted the top management to implement SAP

Also SAP had been customized for Shell & is being implemented with the name of GSAP i.e. Global SAP. It helps the organization in simplifying operations & standardizes its processes around the globe.

In short, the following are the factors which pushed Shell to opt for change to accomplish their goals more efficiently:

Simplification of the operational process by removal of a lot of redundant activities, and getting rid of activities which were not adding value to any product or service of shell.

Standardization of processes across the Globe, this helped Shell in removing complexities which arose from using different systems.

Cost Cutting & Saving with standardization of processes and removal of non value adding activities.

Adapting to the latest of technology in the ERP World i.e. Use of SAP.

Reducing the fixed overheads is helpful for any organization in terms of Cost Savings. In the case of Shell Pakistan, organizational restructuring resulting in reduced head count due to process simplification e.g. Prior to SAP implementation there used to be two General Managers for Supply & Distribution for operations in Pakistan but now there is only one General Manager for Supply & Distribution who covers India, Pakistan Oman & Dubai.

4.4-Models dealing with resistance to change

There have been many different approaches of managing the resistance to change. Below included are few models presented by different authors during their time which were used as a tool for managing the process of change. Kotter &Schlesinger;s (1979) Presented a 6 step model which is used to reduce, eliminate or minimize the resistance. The following steps were suggested in this model for managing resistance.

Education & Communication: The resistance is the result of ignorance, and in order to control this it was suggested that communicating the vision of change and the potential benefits will help the cause and control resistance

Participation & Involvement: The idea is to get people involved in the change process and their participation matters

Facilitation & Support: Offering counselling services to those feeling stress and difficulties is one major example of facilitate, support could involve training procedures, providing technical assistance etc.

Negotiation and agreement: According to (Economist, 2003) long before the economic slowdown of 2008-2009 the United Auto Workers Union some extraordinary pay rises and improved medical health care in response to agreeing for managements closure of plants. The General motors and Ford were in competition with non unionized Japanese subsidiaries, and needed to improve their productivity

Manipulation & Co-optation: The resistance is controlled by the way information is presented or by a political process

Coercion, Implicit & Explicit: This works best when the management is powerful, the change decision is enforced on the employees forcefully and they are left with no other option but to accept it. (BPP, 2008, P-402)

Another model used for carrying out the change process was introduced by Kurt Lewin (1951), He presented a 3 stage model to explain the important steps to be taken while implementing change. Lewin’s concept about organizational change was based on the perspective of the organism metaphor. His model is widely used by managers in the industry. According to him an organization can go through three different stages during the process of change. Theses stages are:

Unfreeze – Initiation Creation of the right Environment

Lewin has linked this process of change to the human behaviour and believes that motivation should be put before planning and implementing the change process. The unfreeze process defined by Lewin should start with breaking down of the existing status of organization and start building up a new environment. Unfreezing was the process which was used by Lewin to present a new approach in shape of force field analysis. A force – field analysis is suggested by Kurt Lewin presented which helps in considerate of change in an establishment. According to Force field analysis a process of change in any organization is stuck in between two types of influencing forces (1) Driving force which is the positive force for change. The other force is the Restraining force which is an obstacle to change, so according to Lewin before the change process the forces are in equilibrium. Lewin also suggested that whenever the driving force is stronger compared to the restraining force, the equilibrium or the status quo will change. Making Sense of Change Management (2004, p.110). The figure below illustrates the work of Lewin on Force field Analysis. This is and example of an operating organization. Thomas (1985) said regarding the force field analysis that the model has been widely used in very different contexts but there is not link of this model to the overall strategy. Maslen and Platts (1994) used force field analysis and applied this to the manufacturing strategy.

forceFieldAnalysis

Force Field Analysis Model

Change - Adoption, Supporting change to required state

Lewin knew that change was a process rather than a one off event. He termed this process as transition. According to Lewin at this stage the people are unfrozen and moving towards a new beginning. He also suggested that at this stage people are also uncertain and fearful so this is also the hardest stage of the model as it is tough to convince people for change John B Miner (2004, p.110).

Re-freeze – Acceptance strengthening to anchor the change

The refreezing stage is concerned with establishing and maintaining stability once the change process has been implemented. The top management support is required in during this process. Besides that those sources must be identified which supports change and also the barriers supporting the revolution must be identified). The figure below shows the 3 staged model presented by Lewin.

Refreeze

Unfreeze

Change

Lewin’s Model of Change: http://picsicio.us/image/58bf1359/

Lewin’s work has been widely accepted and is more frequently used in the industry by management during the change implementation process. However the 3 staged model is not the only one used for managing change and Gremini’s 4R’s is another approach used in the industry. Gouillart and Kelly were Management Consultants and they describe the process of business transformation (major change) in four different stages. The framework presented by them is known as Gremini’s 4 R’s

According to the framework a conversion process should establish a new corporate vision, bring in new opportunities for an organization and new ways of performing activities should be carried out. Gouillart and Kelly suggested that such a process will require four ‘Rs’ to be present if it is to be successful.

Gemini 4Rs is as follows:

Reframing

Restructuring

Revitalizing

Renewal

Reframing

Reframing will give rise to questions about the nature of the organization and what its reason for existence. Following elements should be present in reframing

Achieving Mobilization: Giving rise to the will and having desire to change

Creating a Vision: Current status of the organization must be reviewed in detail

Building a measurement system: Progress will be measured and compared against the set targets

Restructuring

This will start removing the non value adding activities from the organization. The fundamentals are to consider the organizational structure but it might also look at cultural change. The activities involved in Restructuring are

Building of an economic model: This is to look at how the assets are organized and is more focused on the financial aspects

Aligning the physical infrastructure with the long term plan.

Creating value: redesigning the overall work architecture in order to make processes interact to create value

Revitalizing: This portion is concerned with exploring the new products and markets, and making sure a good fit with competitive environment. Activities will include:

Focused on exploring new opportunities in marked.

Inventing in new businesses and products.

Using the knowledge to change the directions of rivalry

Renewal: This section talks about the procedure of developing individuals, to make sure that their skills are aligned with the organizational requirements. Activities should include:

Building a system for remuneration to focus on staff motivation

Introducing organizational learning to progress learning as competence within the organization

4.5-Change Management Process at Shell

A Project Based team was formed in all functions i.e. Supply, Distribution, Retail, Finance, HR etc. Each team was headed by a change manager with the general manager taking the direct responsibility of the success of its function to get smoothly transformed to GSAP.

The Project Based team after getting first hand knowledge & training of SAP provided training to every individual of the organization. The training was conducted on job based on training need analysis.

The job description & profile of each employee were redesigned to meet the SAP requirements.

After the on job training a training evaluation was done to check its effectiveness by providing the trainees with real time assessments to use SAP.

A learning department was set up headed by a learning manager & people from various organizations like Siemens, IBM etc were hired to support the shell employees in learning & grasping the new technology as soon as possible.

There was an overlapping period for 3 months in which both the old ERP (JD Edwards) & SAP were running together. These 3 months helped the organization to completely shift from JD Edwards to GSAP with protecting the old data.

A step by step process implemented in Shell could be described as follows.

Need identification - Various Shell Organizations around the globe using different ERP i.e. JDE, Oracle, MS for product reconciliations, terminal operation with no standardization. A lot of redundant activities were being done & chances of error were more.

Conducting User Survey - Interviewing various employees of Shell around the globe for their feedback on existing ERP & their readiness for a change.

Hiring of SAP consultants to review the existing set up & see of SAP can be customized to suit Shell operations globally.

Global Board of Director approval to implement SAP in all countries where Shell is operating.

Set up of a SAP team headed by a global programme director & country programme managers leading SAP in every country.

Formation of an SAP team in every country headed by country SAP programme manager with people from various departments like Supply, Distribution, Retail, Finance, HR etc part of the SAP team.

Announcement by country Shell Chairman that SAP will be launched in their country, introduction to SAP, SAP team & overview of the time line & various milestones.

The SAP implementation in PK was a 24 month programme constituting of various milestones, overlap period b/w JDE & SAP for six months.

Training & Development of the Shell PK employees for the new ERP, case studies for real time scenarios, organization & job redesign, removal of redundant processing, organization restructuring, and use of SAP.

Testing of SAP along with overlap of JDE.

4.6-Risks faced by Shell during the change process

Risk it the possibility that the result of the selected activity will be a negative one and will turn out to be an undesirable outcome. Implementing the change process in Shell was a huge project and the process brought risks along itself. Followings are some of the major risks which were found during and before the implementation stage by research

The cost of the project to implement SAP globally was more than Euros 100 Billion, and the risk attached with this was of matching that cost with the expected return, what if the project fails to deliver its objectives.

Shell is a huge name internationally in the oil and gas industry, and these big names have to take special care of their reputation. The reputation risk was also attached to this process, if the process fails then Shell would have spoiled its name in the industry.

Risk associated with the users of the new system, and the question to be answered was, will the users be able the grasp & use SAP as a new technology who have been using JDE for more than 10 years.

Changing individuals attitude and influencing his or her behaviour is not as easy as seen, another risk found in this process was of resistance to change by the employees who are currently in their comfort zone with the existing set up.

Maintaining data integrity was another risk and the query to be answered was how Safe & effective would SAP result in terms of confidentiality of the stored data.

Would SAP actually result in simplifying & streamlining the process rather than making it more complex was another risk linked to the transformation process.

Would SAP be able to provide flexibility to end user in case of any human errors while reconciling the products, price revisions of fuel, daily & monthly reporting etc.

What if the customized training program for end users is not effective & the people don’t feel confident using SAP after the training received.

Would SAP be able to run effectively & at a quicker pace on the existing operating systems & the existing industrial computers as the computers are not being upgraded?

Would SAP help more efficiently in traceability of the data in case of a product quality incident occurs & would the user be able to track it.

Will the existing preventive maintenance program of Plant equipment become more effective after implementation of SAP or will the plant breakdown increase.

4.7-JD Edwards as a flexible tool for carrying out daily activities for oil products reconciliations

Questionnaire was distributed amongst the JD Edwards twenty five user in Shell Pakistan, and their response was recorded, most of the users felt that JD Edwards was not the best tool for meeting their objectives, the reasoning behind their response was that, as the reconciliation involves a lot of processes i.e. receipt of product, storage & handling & dispatch in various forms like truck (road), rail, packed form & sea it is important that the oil products are reconciled without an error. Even a small difference can make a big impact on price so the ERP needs to be very flexible to incorporate even after the product leaves terminal as the shortage has to be booked after days it leaves the terminal & reach the end user in case of exports. Thus ERP flexibility is needed to carryout the reconciliation on daily, month & annual basis. JDE does not provide that flexibility for shortage booking for product & it is found to be pretty rigid. This question was asked to 18 users, 13 users said that they do not agree with the fact that JD Edwards is the best tool for their daily activities, 3 users were partially of agreed that they were happy with the performance of the software and faced no trouble in terms of flexibility, 2 users maintained a neutral approach and did not answer the question, the results are illustrated below by using a pie chart.

4.8-JD Edwards as a reporting tool & for analysis of data with respect to fuel products

This question was also part of the questionnaire distributed and the 21 user’s response was recorded here. 16 out of 21 people maintained that they were not satisfied with JD Edwards as a reporting tool and the reason provided by them was, since JD is not very flexible for data interpretation & analysis it only helps as a data base for data storage. It’s not really intelligent software & the individual using it needs to have a strong background, understanding, knowledge and skills to interpret & analyze the data provided by the software. JD Edwards can just present the results without any analysis what so ever, and in such a huge global organization like Shell, those systems are required for reporting which provides the maximum analysis for management and assist them in decision making.

4.9-JD Edwards in product traceability in terms of product quality

Product traceability can be tracked in JDE only if the batch number of the product is entered along with attachment of the certificate of analysis (COA) of the batch. This is however not a pre requisite in JDE thus it is only dependent on the individual who is entering the data. If the batch number & COA are missed the product cannot be tracked or traced. The employees at Shell Pakistan were open to use an ERP which makes batch number & COA as a compulsion to enter during product receipt & dispatch.

4.10-Attitude towards change if another ERP is implemented in Shell

These findings are based on the res