Application 3 – Annotated Bibliography

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BUSINESS PROCESS REENGINEERING: ADDRESSING SOURCES OF

RESISTANCE AND SABOTAGE TACTICS

Nader Bin Taher and Vlad Krotov

ABSTRACT

Business process reengineering is often used by organizations to improve their competitiveness.

Unfortunately, these initiatives can be resisted by employees. This resistance is caused by lack of

organizational maturity, conflict in organizational traditions and ideologies, poor

communication, lack of technical skills among employees, lack of perceived benefits, fear of

losing power and weak project leadership. These factors can lead to outright sabotage of business

process reengineering initiatives. The typical sabotage tactics include deflecting goals, diverting

resources and dissipating energies. Leadership, proper governance, strategic management of

BPR, stakeholder impact analysis, establishing reward and deterrence mechanisms, scope

management and communication can be used to counter these sabotage tactics. The case study of

Natural Springs, a Russian start-up company, is used to illustrate these concepts.

Keywords: Business process reengineering, automation, resistance, sabotage

INTRODUCTION

Business process reengineering (BPR) and business process automation (BPA) are related

organizational initiatives that aim to enhance the speed, efficiency and quality of organizational

processes (Aler, Borrajo, Camacho, & Sierra-Alonso, 2002; Hammer, 1993; Hesson, 2007;

Taher, 2013; Taher, Krotov, & Dixon, 2012). BPR involves fundamental rethinking and

redesigning of organizational and operational processes to reduce cost, improve quality and

optimize time dimensions of organizational processes (Hammer, 1993). BPA typically involves

capturing business process workflows and using technology to automate and streamline these

workflows (Hesson, 2007; Samaranayake, 2009). The ultimate goal of BPR and BPA is to

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improve competitiveness of an organization by reducing costs or improving the quality of the

products or services offered by an organization. Today, large enterprise systems (such as ERPs)

are often used as the main platform for BPR and BPA.

Despite the fact that BPR and BPA can produce substantial benefits for an organization, these

initiatives often encounter fierce resistance from employees and can quickly become a political

battlefield (Krotov, Boukhonine, & Ives, 2011). This is especially likely to happen in young

organizations and especially if these organizations are operating in emerging markets. If BPR

turns into a political battlefield, the losses resulting from this infighting, both direct and indirect

ones, may outweigh the benefits of BPR. This may lead to an unfortunate yet rational decision to

halt BPR for the sake of “organizational peace.” Several individual and organizational factors

may lie behind user resistance to these initiatives. These factors include lack of organizational

maturity and stability, conflict of traditions and ideologies, weak project leadership, poor

communication, lack of technical skills among users, fear of losing power and lack of perceived

personal benefits. Most of the time, these factors manifest themselves in the form of a somewhat

passive opposition to a BPR. But they can also become “fruitful soil” for the outright sabotage of

a BPR project. The typical sabotage tactics include deflecting goals, diverting resources and

dissipating energies.

The main goal of this literature review article is to synthesize the literature on the sources of

organizational resistance to BPR and sabotage tactics that resistors may employ. Possible ways

of addressing the resistance factors and neutralizing the sabotage attempts are also proposed

based on the existing literature on leadership and change management. The focus of this article is

mostly on the human, organizational and political aspects of BPR and not on the project

management techniques that can be found in abundance in business literature. It is written

primarily for practitioners in charge of BPR and BPA initiatives in young organizations or

organizations operating in emerging markets. The case study of Natural Springs, a Russian start-

up company introduced below, is used to illustrate the theoretical concepts derived from the

literature (Krotov et al., 2011).

NATURAL SPRINGS

Early History

In 1992, a successful British entrepreneur (hereafter referred to as “the CEO”) sold one of his

start-up companies to a multinational company. He decided to celebrate the profitable deal by

treating himself and his family to an extended tour of Europe. One of the stops on that tour was

St. Petersburg, Russia. There the CEO and his family boarded a ship to go on a three day

leisurely cruise along the Neva River. While the CEO and his family enjoyed the river cruise,

one thing was bothering them – the ship’s tap water. It had a somewhat unpleasant taste. When

the CEO went to buy some water at the ship’s bar, he discovered that bottled still water was

unheard of in Russia.

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The cruise boat stopped at Krivogda - a small town approximately 100km North-East of St.

Petersburg. The CEO, together with other passengers, went to tour a notable historical building.

There he met the owner of the estate (“the Landlord”). The CEO asked the Landlord whether he

could get some drinking water in Krivogda to take with him on the boat. The Landlord took the

CEO to one of his plots of land nearby. The land had several natural springs that were a highly

regarded source of water for the locals. As soon as the CEO took a few sips, the idea of

establishing a still water bottling company in Russia was born. He shared the idea with the

Landlord. The Landlord was skeptical that anyone in Russia would want to pay for plain water -

something that had always been free. But the town and the local church community that the

Landlord was a devoted member of were in a dismal economic situation. He had little to lose. So,

the Landlord greeted the CEO’s idea with enthusiasm. The two became partners on the spot.

Construction of a bottling facility began in Krivogda in the same year. Most of 1993 was spent

constructing the factory, setting up a head office in St. Petersburg and creating a distribution

network. The work was supervised by the newly hired Chief Operating Officer (“the COO”). The

initial products offered by the company were 0.5 and 1.5 liter bottles of still water. The sales for

1994 were less than one million dollars. The CEO was quite disappointed. To increase sales and

build a good foundation for subsequent growth, the CEO hired two additional officers – a Chief

Marketing Officer (“the CMO”) and a Chief Financial Officer (“the CFO”). By 1996, the sales of

bottled water had exploded. The company also managed to attract private equity financing from

two British investment funds. While numerous competitors offering bottled still water sprung up

in Russia, Natural Springs was an undisputed market leader.

Project Initiation

Pleased with the results of the first years in operation, the CEO was already thinking ahead.

Knowing that sound administrative and financial controls would be essential for ensuring future

success of the company and securing an IPO in London, he sent his CFO to Krivogda to work on

strengthening controls there. After spending a few weeks in Krivogda, the CFO was dismayed by

the inefficient and archaic business processes at the factory. Customer order fulfillment process

was the most problematic area. In an attempt to improve these processes, the CFO pitched to the

CEO the idea of implementing an Enterprise Resource Planning (ERP) system at Natural

Springs. The objective of the ERP project was to streamline communication between the head

office in St. Petersburg and the factory in Krivogda. Improved communication could potentially

improve the customer order fulfillment process, especially when it came to reconciling shipment

and invoices between the factory in Krivogda and the head office in St. Petersburg. Moreover,

the system could strengthen administrative controls within the company, allowing the head office

in St. Petersburg to exercise financial and inventory controls over the factor. In addition, the

system could produce financial reports in compliance with international accounting standards.

All this was essential for the envisioned IPO. The CEO was convinced by the business case

outlined by the CFO and approved the project in early 1996.

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Sun Systems (distributed by Systems Union, a British software company) was chosen by the

CFO for implementation. The CFO had had a successful experience implementing the ERP

system at his prior place of employment – a well-known American consumer goods company.

The system was well-suited for automating inventory control, sales management and financial

controls in accordance with the International Accounting Standards (IAS) and Generally

Accepted Accounting Principles (GAAP). Moreover, the CFO had developed a good relationship

with a local partner of Systems Union. The partner was responsible for sales and support of Sun

Systems in Russia. For all these reasons, the system was an easy choice for the CFO.

Before the implementation, the CFO recruited a bright accountant from his previous employer

and an information systems consultant from the local partner of Sun Systems. The

implementation was first carried out at the St. Petersburg office. The modules that were

implemented were sales and financial controls. The implementation in the St. Petersburg office

was quick and relatively smooth, thanks to the help the CFO received from his newly hired

associates. Encouraged by the implementation success at the main office, the CFO and his

implementation team moved to Krivogda to carry out the ERP implementation there.

Organizational resistance to ERP implementation and BPR started at the factory even before the

team got there.

SOURCES OF ORGANIZATIONAL RESISTANCE

Lack of Organizational Maturity and Stability

Organizational maturity and stability are essential for minimizing the disruptions of a BPR

initiative and achieving its goals (Jurisch, 2012; Kudray & Kleiner, 1997). Organizational

maturity is a reflection of accumulated organizational resources and capabilities within the

specific business domain that the organization is functioning in (Taher et al., 2012). Stability is a

result of long-term collaboration and team building among employees and business units (Taher

et al., 2012). Lack of organizational maturity and stability often results in a lack of change

management capabilities and frequent conflicts among employees and business units (Nedovic-

Budic & Godschalk, 1996; Trkman, 2010). Because of that, BPR and BPA initiatives may

become a political battlefield rather than a vehicle for positive change in cases of constant

conflict among employees and business units (Krotov et al., 2011).

At the time of the ERP implementation project Natural Springs was still a young organization

functioning in the emerging Russian free-market. Because of that, the company was facing a

number of operational and strategic challenges. The Russian banking system was slow and

unreliable. Telecommunications, while tolerable in St. Petersburg, were slow and unreliable in

provincial towns like Krivogda. Qualified and motivated employees were hard to find. Crime,

corruption and a draconian tax system amplified the numerous internal problems that Natural

Springs was struggling with.

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Moreover, by 1996 the CEO of Natural Springs was tired and bored of running the company. A

visionary and entrepreneur at heart, the CEO was interested in conceiving and implementing new

ideas and investing in the financial markets. At the end of 1996, the CEO announced his

intention to resign from the CEO post and continue with the company in the more advisor-like

role of Chairman.

The COO saw himself as a natural “heir to the throne.” The COO was born in Brazil to the

family of Russian immigrants who fled the 1917 Russian Revolution. After obtaining an

engineering degree in Brazil, the COO worked in a number of engineering roles in Canada and

the United States. Soon after the dissolution of the Soviet Union in 1991, the COO moved to

Russia. There he met the CEO and joined Natural Springs. Despite being born and raised outside

of Russia, the COO spoke fluent Russian and was a devote Russian Orthodox Christian. His

traditional upbringing won him unconditional trust and support from the Landlord (who was also

a devoted Orthodox Christian) and the parochial factory workers. The CFO was another

candidate for the CEO post. The CFO was a young Russian national with an MBA degree from a

well-known American business school and several years of successful executive experience at

the Russian office of a prominent American consumer goods company. The CFO was credited

with instilling effective administrative and financial controls in St. Petersburg. This was essential

to attract the first round of financing from the British investors and lay the foundation for the

future IPO. The CMO was the third contender for the CEO title. The CMO was a young British

national. He graduated with a degree in Marketing and Russian from a top university in the

United Kingdom. Under his watch, the sales at Natural Springs skyrocketed. Moreover, he spoke

fluent Russian and, as a British national, enjoyed trust from the British investors.

Conflict in Traditions and Ideologies

A BPR initiative may involve not only radical changes of processes, but also a certain degree of

change in traditions and ideologies of employees (Barley, 1990; Hammer, 1993; Jurisch, 2012;

Lapointe & Rivard, 2005). Different traditions may lead to different views on how business

processes should be carried out and can become a source of conflict among employees (Jurisch,

2012; Kudray & Kleiner, 1997). For example, BPR projects can create a conflict among the old

and new generation employees (Taher et al., 2012). This can be traced back to different

traditions, backgrounds and worldviews that different generations of employees may have. The

older generation of employees may view BPR as a way to maintain and enhance existing

business practices. The new generation of employees, who are usually more “tech-savvy” and

receptive to new ways of doing things, may favor a more radical change in business processes

(Taher et al., 2012).

At Natural Springs there was a very clear contrast in traditions and ideologies between the head

office in St. Petersburg and the factory in Krivogda. The St. Petersburg office was comprised

primarily of young Russian professionals. Many of them were smart, ambitious and

unencumbered by the deeply ingrained Soviet way of management. The organizational culture at

the St. Petersburg’s office was “work hard, play hard.” The entire team, under the lead of the

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CFO, would often continue late nights at the office at nearby trendy bars and restaurants catering

to the local expatriate community.

The culture at the factory in Krivogda was quite different and very indicative of the

organizational culture in post-Soviet small Russian towns. The economic turmoil that Russia was

going through after the collapse of the planned economy of the Soviet Union lead to the

bankruptcy of many government-owned enterprises that were fueling life in small towns like

Krivogda. Young people, or anyone with skills and ambition, would leave small towns to try

their luck in big cities like St. Petersburg. Most of the people who stayed were the ones nearing

retirement. These people had spent most of their lives working under the Soviet administrative

system. The system rested largely on compliance with the numerous standards and regulations

imposed by the central government. Personal initiative did not lead to any tangible personal

rewards and was often discouraged. Obedience and meticulous compliance with the numerous

government rules and regulations were valued and rewarded. The factory employees, led by the

COO and the Landlord, would frequent Sunday morning masses at a local church.

Poor Communication

Different functional units and employees within these units may have different needs and

concerns in relation to a BPR project. Moreover, they may have different perspectives on how

business process reengineering and automation should be carried out (Barley, 1990; Bensaou &

Earl, 1998; Crowswell, 1991; Trkman, 2010). In the absence of effective communication across

the organization, functional units may fail to understand each other’s concerns and reach a

consensus on how to reengineer business processes. The longer the communication gap exists,

the more likely it is that functional units will start “demonizing” each other’s goals and

intentions. After some time, functional units may become very eager to meet and talk. Not to

make the project work, but to “settle things once and for all.”

The CFO did try to communicate to the factory workers the importance of installing and properly

maintaining the Sun Systems in light of the future IPO in London. The CFO and his team from

the head office organized several meeting with the factory’s bookkeeping staff where he would

try to educate them about various features of Sun Systems and how these features would benefit

the company. However, he failed to persuade them. The bookkeeping staff would refuse to

acknowledge the CFO’s concerns in relation to the IPO and would talk about their difficulties in

complying with the numerous complicated (and often contradictory) Russian accounting

standards. The CFO, in turn, was reluctant to listen to the concerns of the factory staff. In his

mind, the future IPO was Natural Spring’s ultimate goal. The COO, naturally, would listen to the

concerns of his staff and was reluctant to accept the CFO’s ideas.

Absence of Project Leadership

Proper leadership and support of a BPR project are essential for its success (Crowswell, 1991;

Kudray & Kleiner, 1997; Taher, 2013; Taleai, Mansourian, & Sharifi, 2009; Trkman, 2010).

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While a project manager is often assigned to a BPR project, his or her leadership of the project

may be lacking several important components (Davies, 2011). First, the person in charge of the

project should have enough authority and influence within the organization to make important

decisions and allocate the necessary resources to the project (Crowswell, 1991; Davies, 2011;

Silva & Backhouse, 2003; Taher et al., 2012). Second, the person in charge of the project should

have transformational leadership capabilities: the ability to use positive power and influence to

encourage people to change their beliefs, behaviors and invest time into acquiring new skills

(Burns, 1978; Crowswell, 1991; Ginzberg, 1981; Grover, Seung Ryul, Kettinger, & Teng, 1995;

Northouse, 2007, 2013; Taher et al., 2012). Third, an appropriate governance structure with a

formally appointed project manager, executive sponsor and project steering committee must be

created to cement and formalize executive support of a BPR project (Davies, 2011; Taher et al.,

2012). Absence of any of these components in BPR leadership can lead to the failure of the

entire project.

Lack of Technology Skills

Lack of technology skills among employees is often a major barrier for a successful transition to

new, technology-enabled business processes (Bensaou & Earl, 1998). Lack of technical skills

often leads to poor understanding of the role of technology in supporting organizational

processes and strategies (Crowswell, 1991; Trkman, 2010). This makes it hard for a user to

understand the importance of adopting the technology for one’s work. Moreover, an initial

attempt to try new technology often results in a state of “technological shock” – a situation where

the work of an employee is paralyzed as he or she feels simply incapable of mastering the new

way of doing things (Crowswell, 1991; Pacific Council, April 2002; Taher et al., 2012).

One of the main reasons behind the resistance of the factory bookkeeping staff to implement Sun

Systems was their fear that they lacked the necessary knowledge and skills to work with the

“Western” system. Many of the bookkeeping staff had spent, literally, decades doing accounting

manually with the help of an abacus and numerous physical books. They were familiar neither

with the International Accounting Standards nor computers in general. Transitioning to the ERP

system proposed by the CFO would entail not only learning computer skills, but also abandoning

their existing knowledge in accounting procedures and learning the new ones. Because of that,

the factory bookkeeping staff was very reluctant to adopt the new system.

Lack of Perceived Personal Benefits and Recognition

Difficulties that many “rank-and-file” employees have in adapting to new business processes and

technologies are often made worse by the fact that employees see no benefit in learning new

ways of doing things and mastering new technologies. While successful technology-driven BPR

can produce a number of benefits at the organizational level, some end users often feel that they

gain nothing from the technology except additional tasks and duties (Kudray & Kleiner, 1997;

Taher et al., 2012). This is often a result of a certain degree of shortsightedness of employees

(Hesson, 2007; Silva & Backhouse, 2003). Some employees are overly concentrated with their

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own duties and fail to see how their duties fit with broader organizational goals (Silva &

Backhouse, 2003; Taher et al., 2012). Failing to see that an additional workload resulting from

BPR and technology adoption translates to positive organizational results creates a feeling of

unfairness in the minds of employees.

A similar pattern could be observed at Natural Springs. The factory bookkeeping staff saw little

benefit in using the ERP system proposed by the CFO. Their immediate concern was compliance

with the regulations of local authorities. Generating financial statements in compliance with the

IAS and GAAP, while important for the British investors and the future IPO, was none of their

concern. It was the job of the CFO to prepare those financial statements in English.

Fear of Losing Power

Employees can be very reluctant to give up even a portion of their power and authority within an

organization (Hesson, 2007; Silva & Backhouse, 2003; Taher et al., 2012). In the context of

BPR, employees at all levels may feel that their power is threatened because some of their tasks

can be automated and, to some degree, replaced by technology (Dorthy & Kraus, 1985; Silva,

2007; Silva & Backhouse, 2003). Others may feel that the newly introduced technology will

diminish their legitimacy within an organization due to them not having any expertise in the

technology (Pacific Council, April 2002; Taher et al., 2012). Senior decision makers whose

decision-making authority is comprised by a redesign or automation of business processes may

form the most serious barrier to technology-enabled BPR (Hesson, 2007).

From the very beginning, the COO viewed the CFO’s move to the factory location in Krivogda

and the entire project as a “turf invasion.” One aspect of the system’s functionality involved real-

time access to inventory and financial data at the factory from the head office in St. Petersburg.

In a way, the COO was not against transparency in operations and tight controls at the company.

The problem was that in the chaos of the emerging market in Russia, the COO needed some

room for maneuvering to get things done at the factory. Putting the factory operations on the

“rails” of the ERP system would deprive him of some degree of freedom in running the factory

operations. His reluctance to relinquish some of the control that he had over the factory’s

operations was probably exacerbated by the race for the CEO post that everyone in the top

management team had somewhere at the back of their minds.

SABOTAGE TACTICS USED AT NATURAL SPRINGS

The factors of organizational resistance discussed above often give rise to deliberate attempts by

employees to sabotage technology-enabled BPR. These sabotage tactics include deflecting goals,

diverting resources and dissipating energies (Bardach, 1977; Chang, Lin, & Sheng, 2002; Keen,

1981). All three were carried out at Natural Springs to sabotage the ERP project lead by the

CFO.

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Deflecting Goals

Goal deflection involves expanding the scope of the BPR project by adding additional goals that

the project should accomplish (Bardach, 1977; Chang et al., 2002; Keen, 1981). Several types of

justifications are used to encourage the “scope creep.” First, additional goals can be “piled on” to

make sure that everyone’s objectives are included (Chang et al., 2002). The justification here is

that if we are doing the BPR anyway, we need to make sure we include everything that we need

in this project. Second, it can be argued that a particular goal is “up for grabs” – it can be easily

achieved. An organization may also be unsure what needs to be accomplished as a result of BPR

in a particular area. So a goal, often unnecessary, is invented to fill this void. Third, a manager in

charge of a BPR project may be encouraged to “keep the peace.” That is, to make sure everyone

impacted by the project is happy with the outcomes.

In the case of Natural Springs, there was a clear presence of the goal deflection tactic. The

project started with a goal of increasing administrative and financial controls in the company in

light of anticipated growth and the IPO. However, the factory staff, led by the COO, managed to

add two additional goals: automating some of the work of the bookkeeping staff at the factory

and assisting with compliance to the Russian reporting standards. Although these two new goals

were somewhat related to the original goal, they were not initially included in the scope of the

project. Adding these two goals to the project increased its complexity and contributed to the

eventual failure of the project.

Diverting Resources

Diverting resources involves channeling the resources devoted to a BPR project to other causes

(Bardach, 1977; Chang et al., 2002). This can starve the BPR project from the necessary capital

and labor and increase the chances of the project’s failure. Resources can be diverted from a

project in a number of ways. First, an organizational unit may agree to participate in a BPR

project (even if the unit does not view the project as being valuable) to use the budget devoted to

the BPR project for another cause that they think is valuable for them (Chang et al., 2002).

Second, employees may act “territorially” citing lack of trust towards outsiders or their lack of

competence as the main reason for wanting to implement the project using internal resources

(Chang et al., 2002). This effectively deprives the project of much needed resources that can be

brought in from the outside.

The COO and the factory staff were quite successful in diverting resources from the ERP

implementation project. First, the COO, backed by the concerns voiced by the factory

bookkeeping staff, managed to persuade the CEO to purchase the Russian ERP package (1C) for

the factory. This deprived the original project of some of the financial resources devoted to it.

Second, the COO told the factory employees, such as the factory IT manager, to concentrate on

supporting 1C and not on the support of the Sun Systems ERP system implemented by the CFO.

At some point the COO even told the factory staff not to synchronize the data with St. Petersburg

office. This deprived the CFO’s project from much needed labor resources.

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Dissipating Energies

Dissipating energies involves wasting the resources devoted to a BPR project by directing them

to areas of the project that are either secondary to the attainment of the overall goals of the

project or political (rather than practical) in nature (Bardach, 1977; Chang et al., 2002). First,

resistors may insist on “doing it right now matter what.” The unnecessary perfection will require

the manager to go through several unnecessary iterations with the project until the mythical

“right way” is attained. Second, resistors may initiate a territorial fight where energies are wasted

on deciding who is responsible for what and why (Chang et al., 2002). Third, someone high in

the hierarchy may insist on using “state-of-the-art” technologies or practices in the project. The

purpose behind this “innovativeness” is usually to improve one’s reputation within the company

and not to help the project accomplish its goals. Fourth, someone may support taking a particular

path with the project (knowing that the path will lead to nowhere) just to say “I told you so” at

the end.

The energies devoted to the ERP project at Natural Springs were effectively dissipated by the

CFO himself. Partially to create value for the company and partially to impress the CEO, the

CFO wanted to implement a real-time connection between the ERP system installed in the head

office in St. Petersburg and the factory’s information system. The original idea of the CFO was

to install a Wide Area Network (WAN) that would link the head office with the factory in real

time. After a lengthy feasibility study that involved pursuing several alternatives for

implementing the WAN, it was decided that the telecommunications infrastructure going in and

out of Krivogda was just too poor to have a real-time connection between the two systems.

Eventually, it was decided to run two systems in parallel. The two systems would be

synchronized using elaborate algorithms and a dial-up connection at the end of each day. These

feasibility studies and the integration of the two systems were the most time-consuming steps in

the project, depriving the CFO of much needed energies.

THE ERP PROJECT FAILS

In the beginning of the factory ERP implementation, the CFO spent most of his time at the

factory. Despite the numerous technical and human problems, the implementation went quite

well. A clerk hired specifically to maintain the ERP system at the factory and the factory’s IT

manager were quite competent with the system and worked very hard on implementing it.

Approximately two weeks into the implementation, the CFO went with his family on a two-week

vacation to California. The vacation was scheduled well in advance and the CFO was concerned

that his family would be quite unhappy if he postponed or cancelled the trip.

When the CFO returned to work, he found the St. Petersburg office in a state of disarray. The

factory did not follow the data synchronization protocol. Because of that, the head office could

not verify the accounts receivable and did not have access to up-to-date invoice information.

Sales representatives could not check whether a customer had paid for a particular order and

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could not estimate the delivery time for clients. The CMO was repeatedly threatened by some of

their biggest clients that they would stop working with Natural Springs.

The CFO “jumped in” to resolve the situation. He made hundreds of phone calls and paid several

visits to the factory. This produced little results. The ERP clerk and the IT manager at the factory

were not very helpful in reconciling data in the two systems and resuming the daily data

synchronization protocol. A variety of reasons were given by the duo, including the technical and

functional inadequacy of the Sun Systems ERP system and lack of time due to them being

preoccupied with their immediate job responsibilities. Unable to resolve the problem, the CFO

decided to “pull the plug.” The company retuned to the previously used manual process for

handling invoices. The factory continued running the Russian ERP system – 1C. The CFO would

periodically retrieve data from the system to prepare IAS and GAAP compliant reports on his

own.

The failed project permanently strained the relationship between the CFO and the factory team.

The CFO could not forget how incompetent and stubborn the factory employees turned out to be

and how little help and cooperation he received from them when he tried to resolve the data

synchronization problem. The COO was now being perceived as uncooperative and parochial by

the CEO, too. The CFO’s own stature within the company was severely damaged. Unable to win

cooperation and support from the factory’s staff, he was no longer viewed as someone who could

lead the company. The COO of Natural Springs left the company a few months after the failed

implementation, citing reasons unrelated to the project. The CMO was not touched by the crisis.

Moreover, he and his sales team demonstrated good crisis management and client relationship

skills in the chaos that ensued from the failed ERP project. The CMO was promoted to the CEO

post soon thereafter. While the CFO continued working for the company, his authority was being

gradually chipped away by the new CEO. The CFO was fired from the company in 1999. In

2002, Natural Springs was sold to a multinational consumer goods company.

COUNTER-SABOTAGE TACTICS

The following tactics are recommended to practitioners for undermining sources of

organizational resistance to BPR and neutralizing sabotage tactics: leadership, establishing

proper governance, strategic management of BPR, stakeholder impact analysis, establishing

reward and deterrence mechanisms, scope management and communication. These

recommended tactics evolve from the following three broad theoretical perspectives:

transformational leadership, project management and change management. Figure 1 below

provides a visualization of the interplay among organizational resistance factors, sabotage tactics

and recommended practices. The specifics of counter-sabotage tactics are discussed in more

details below.

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FIGURE 1

Organizational Resistance Factors, Sabotage Tactics and Counter-Sabotage Tactics

Transformational Leadership

Leadership is an essential part of introducing and managing change in an organization ( Bass,

1990; Bass & Riggio, 2006; Burns, 1978; Dorthy & Kraus, 1985; Northouse, 2007, 2013; Silva

& Backhouse, 2003; Taher et al., 2012; Trkman, 2010; Winston & Patterson, 2006). A person in

charge of a BPR initiative should have enough influence and authority within his or her

organization to allocate resources to a project, make tough decisions and neutralize resistance

and outright sabotage attempts in relation to BPR (Davies, 2011; Keen, 1981; Silva &

Backhouse, 2003; Taher, 2013; Taher et al., 2012). Most importantly, the person assigned for the

project should have transformational leadership capabilities (Antonakis, 2012; Bass, 1990;

Bass & Riggio, 2006; Northouse, 2013; Taher, 2013). A BPR project leader should use positive

force and influence to transform employees from resistors into champions of the project, elevate

the motivation of employees to improve their skills and effectiveness in relation to new processes

and take the entire organization to a new level of performance (Bai & Sarkis, 2013; Bass &

Riggio, 2006; Keen, 1981; Northouse, 2013; Silva & Backhouse, 2003; Taher, 2013; Trkman,

2010).

The inability to influence people’s opinions and behaviors was one of the most significant

deficiencies of the CFO. This lack of transformational leadership skills was evident in several

situations. First, the CFO failed to convince other C-suites of the importance of the proposed

ERP project for improving the company’s operations. Second, he failed to persuade the

accounting team at the factory to carry out their tasks using the new ERP system (something that

would also help him and the company to generate financial reports compliant with the

international standards). Third, he could not get the CEO on his side either – he was loathe to

support a particular system choice and decided to use two systems in parallel instead. The ability

to transform people’s attitudes and behaviors in a way that would support the new and, perhaps,

better ways of carrying out organizational tasks was an important and, unfortunately, missing

skill for the CFO.

Establishing Proper Governance

The role of the project leader should be formalized with appropriate governance mechanisms

(Davies, 2011; Keen, 1981; Taher et al., 2012). The project leader can be formally appointed to

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be a project executive sponsor and the head of a project steering committee. The project

executive sponsor and the project steering committee will ensure communication, collaboration

and participation of all concerned individuals and functional units in a BPR project.

Representatives from concerned functional units can be included in the project steering

committee. This inclusion allows for better communication within and among the functional

units in relation to the project (Bai & Sarkis, 2013; Davies, 2011; Taher et al., 2012; Trkman,

2010). Moreover, the committee will make sure that all the necessary resources are allocated to

the project (Davies, 2011; Keen, 1981; Taher et al., 2012).

From the very beginning, the CEO should have formally announced the appointment of the CFO

as the person in charge of the ERP project and declared his full support and sponsorship of the

project. The CFO should have formally delegated the necessary administrative power and grant

access to the necessary resources to substantiate the CFO’s authority in relation to the envisioned

project. To strengthen the political power of the CFO and ensure effective communication, the

CEO should have ensured that all functional units of the organization were included in the

steering committee for the ERP project. That had to be done no later than the planning stage of

the project. All this would strengthen the CEO’s authority and ensure cooperation of the staff

from various functional units of the organization.

Strategic Management of BPR

A BPR initiative should be integrated with the overall organizational strategy ( Keen, 1981). One

possible way of accomplishing this is to create a corporate strategy map involving BPR based on

the balanced scorecard (BSC) approach. Owners for all key performance indicators and

initiatives throughout the organization should be captured with the help of BSCs. According to

the BSC philosophy, owners of key performance indicators and initiatives are responsible for

ensuring that their respective business units are meeting individual targets that are meant to push

forward the entire organization towards implementing its strategies and achieving the overall

strategic vision. Regular performance meetings should be conducted to ensure effective

monitoring of business unit performance against suggested strategic initiatives (Kaplan &

Norton, 2008).

Since the ERP project was initiated to fulfill a strategic vision (paving the way for an IPO), the

ERP project had to be announced as a strategic initiative. In other words, the project should have

been formally included as a part of the organization’s overall strategy. Implementation of this

ERP component of the organizational strategy should have been monitored regularly via

corporate performance reviews. During the corporate performance review meetings, the CEO

and the other C-suites should have not only listened to formal progress reports, but also gotten an

intuitive feel of the “speed” and “velocity” in relation to BPR implementation. The latter would

help them sense emerging resistance factors or sabotage tactics before they grew into real

problems.

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Stakeholder Impact Analysis

A change, whether it is incremental or radical, may cascade down throughout the entire

organization and impact different stakeholders in both positive and negative ways (Bensaou &

Earl, 1998). To the extent to which it is possible, a leader in charge of a BPR initiative should

carry out a stakeholder impact analysis prior to commencing a BPR project. The main goal of

this analysis is to identify the specific stakeholders impacted by the BPR and understand the

nature of that impact (Bai & Sarkis, 2013; Keen, 1981). This analysis will help the person in

charge of a BPR initiative anticipate possible sources of organizational resistance (Silva &

Backhouse, 2003; Taher et al., 2012). Impacted stakeholders should be engaged at the planning

stage to have substantial input into the BPR project even before it is initiated. Functional

requirements documents should be approved by these stakeholders to avoid a situation where

certain functional points are resisted or actively sabotaged by the end users once the system

enters the implementation stage.

Before starting the ERP implementation process, the CFO could have called a meeting to explain

to the key stakeholders the main goals behind the project and, most importantly, how the system

would benefit each organizational unit. Organizing a meeting like that would have helped the

CFO sense how others perceive the system in terms of its impact on their work and sense

emerging resistance factors. These resistance factors should be addressed by ensuring that the

implementation results in a “fair deal” for each of the stakeholders.

Establishing Reward and Deterrence Mechanisms

Conflicting needs and goals in relation to a BPR can be dealt with by creating appropriate reward

and deterrence mechanisms (Silva & Backhouse, 2003). Introducing these mechanisms is critical

to achieving stakeholder buy-in of the proposed changes and institutionalizing this change.

Stakeholders are to be educated that established rewards and deterrence measures are a result of

broader organizational goals (Dorthy & Kraus, 1985; Silva & Backhouse, 2003). Attainment of

these goals is in the best interest of the entire organization. It is important for an organization to

extend the benefits gained from BPR and BPA to individuals in a fair way (Silva & Backhouse,

2003). In case “selfless” investments are necessary to benefit another functional unit, the

organization should acknowledge or reward contributing functional units and individuals. This

reward can be financial or may take the form of social recognition.

Since the system had a significant impact on operations of the factory in Krivogda without

providing any immediate benefits, the CFO could have introduced appropriate reward and

deterrence mechanisms for the factory staff. The reward and deterrence mechanisms had to be

formulated, approved and announced prior the start ERP implementation. A set of well-defined

reward and deterrence mechanisms could help the CFO to reduce resistance and prevent

sabotage by the factory employees due to them seeing no benefits in the system for them

personally.

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Scope Management

Defining the scope of a project in the form a scope definition document and establishing a proper

mechanism for adjusting a project scope in the form of a policy are not just technicalities of

project management (Davies, 2011; Project Management, 2013). They can be quite effective in

neutralizing the counter-implementation tactics discussed earlier. A change in the project scope

should be reviewed by the project steering committee. Moreover, any proposal for a change in

the scope of a project should be submitted together with a detailed analysis of the impact of this

change on organizational stakeholders, resources devoted to the project and the project

completion timeline (Davies, 2011; Project Management, 2013). While change in the scope of a

project is often unavoidable, especially when agile project management methodologies are used,

the steering committee should have a clear understanding of the impact of the proposed change

on the entire project (Carroll, 2012; Davies, 2011; Zhuoyuan, Benson, & Imriyas, 2013). This

can potentially help the person in charge of the BPR project stop scope change proposals that are

driven by politics, too far from the original project goals, have low returns associated with them

and, overall, are too risky. The overall strategy formulated in relation to the BPR and its links to

the overall organizational strategy should always be used as a starting point for all decisions

involving adjustments to the initial scope of the project. A formal scope management process

would allow the CFO to effectively protect the project against the fatal “energy dissipation”

proposals made by the factory staff.

Communication

A leader in charge of a BPR project should devote special attention to instilling proper

communication. The main goals of communication in relation to BPR and BPA are the

following: (1) cascading the vision of the top management for change management initiatives;

(2) addressing employee concerns and requirements; and (3) overcoming the natural divide

between functional units in relation to how processes should be changed and which technology

should be used to facilitate this change (Al-Mashari & Zairi, 1999; Bai & Sarkis, 2013; Dixon,

Arnold, Heineke, Kim, & Mulligan, 1994; Fondas, 1993; Rodney & John, 1999; Trkman, 2010).

A decision to choose a particular process or technology for implementation should be made

through discussions with all the relevant stakeholders (Bensaou & Earl, 1998; Taher, 2013).

The CFO could have used reoccurring user engagement sessions as a primary platform for

communicating with all the stakeholders in relation to the ERP project. During these engagement

sessions, the CFO could have shared major project goals, implementation tactics, timelines and

other decisions made in relation to the project. Functional units representatives attending these

engagement sessions could have provided their input on these items. Engagement sessions could

have become not only an effective platform for soliciting feedback, but also a political

mechanism for ensuring employee cooperation. Having their voices heard could have potentially

make the employees at Natural Springs feel empowered and appreciated – something that would

neutralize the resistance and sabotage factors faced by the CFO.

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CONCLUSION

BPR is both a technical and a political endeavor. Oftentimes, a person in charge of a BPR project

finds himself or herself “buried” in numerous technical details of the project and misses out on

the organizational and political factors. Similarly, management literature is full of studies and

practical advice on the technical, economic and rational side of BPR and associated issues:

change management and project management. The softer, subjective, and often “darker” side of

BPR is often captured only with organizational tales and anecdotes. There should be more

theorizing and empirical work in the area of politics and power relationships surrounding BPR or

any type of organizational change for that matter. As the failed case of ERP implementation at

Natural Springs illustrates, it is very risky to keep the political area of BPR in the “blind spot” –

in both a theoretical and practical sense. Lack of organizational maturity, conflict in

organizational traditions and ideologies, poor communication, lack of technical skills among

employees, lack of perceived benefits, fear of losing power and weak project leadership can

quickly give rise to powerful resistance factors within an organization. These factors often lead

to outright sabotage of BPR initiatives via such tactics as deflecting goals, diverting resources

and dissipating energies. Sometimes these sabotage tactics are often hidden and so subtle that a

manager in charge of a BPR may never fully understand what went wrong. Leadership, project

governance, scope management, stakeholder impact analysis, proper reward and deterrence

mechanism and communication can be used to counter these sabotage tactics, improve chances

of BPR success and contribute to the overall competitiveness of an organization.

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Nader Bin Taher ([email protected]) is a DBA Research Fellow, College of Business, Abu Dhabi

University, 108801 Abu Dhabi, United Arab Emirates.

Vlad Krotov ([email protected]) is an Assistant Professor of Management Information

Systems, College of Business, Abu Dhabi University, 59911 Abu Dhabi, United Arab Emirates.

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