As the enterprise resource planning (ERP) organizational change field advances, so does private equity. Research shows that organizations who emphasize critical ERP success factors are more likely to complete successful ERP implementations (Sawah et. al., 2008). In short, as digital transformation efforts advance, so does operational effectiveness.  

In this podcast, Blue Margin consultant Greg Brown hosts Dr. Jack Nestell, Partner and Founder of Nestell & Associates. With three decades of business and IT leadership across multiple industries, Jack has served as Global CIO, Board Member and Advisor, Executive Director of IT, Vice President of IT, and IT Security Officer. As Managing Partner at Nestell & Associates, Jack is an ERP practitioner, speaker, and academic. He received his doctorate with a dissertation in ERP Organizational Change from USC and regularly contributes to ERP research, books, and articles. He also hosts the popular ERP Organizational Change Journal Podcast. 

An IT and change management consultancy, Nestell & Associates partners with PE firms to drive ERP optimization and digital transformation projects. Their mission is to offer experience-based solutions and highly qualified professionals to ensure project success.

“There is a consistency in private equity pain points. One is the significant need for timely, accurate, and reliable business information improvements.” – Jack Nestell, Nestell & Associates 

Principal Interview Themes: 

How to Assess Data and ERP Gaps During Diligence 

“Private equity firms are focused on creating vibrant, healthy, sustaining organizations. And of course, one of the tools for that is IT and business information.” – Jack Nestell, Nestell & Associates 

During the diligence stage, PE deal teams start calculating the cost of digital transformation – full ERP organization change initiatives, ERP upgrades, staff augmentation, and BI improvements. While solution design matters, so does a deep understanding of the problems. Jack uses this pre-sale stage to learn as much as possible about the business by asking these three questions: 

  • Is there anything quite unusual, or anything that would appear to be a significant IT or ERP risk or gap (people, processes, and technology)? This could include systems, infrastructure, and applications. 
  • Are there any concerns that need to be addressed immediately post-close? These factors may not stand in the way of an investment, but they will require caution or priority. 
  • What is the current business intelligence (BI) status – maturity level and temperature? If a potential acquisition underappreciates BI, PE investors may need to make unplanned and significant improvement efforts post-close. 

Six Steps to Execute a Successful Digital Transformation Project 

“Determine: who are we today and where do we want to go? Especially with implementation or migration, that’s a critical conversation. That needs to be very much a part of your general process.” – Jack Nestell, Nestell & Associates 

To execute a successful ERP or other digital transformation project, Jack evangelizes six core steps, which he explains in the video below. 

  1. Understand the business mission, vision, and values. 
  2. Plan the project.  
  3. Clearly determine how project success will be defined. 
  4. Conduct a Business Operations Analysis.  
  5. Assess organizational culture. 
  6. Plan and execute learning and development.  

Choosing the Right Tools and Methodologies for ERP Projects 

In addition to structuring a digital transformation project along these six steps, leaders should also have the right tools in hand. Project management tools and methodologies pave the path for successful ERP project optimizations, migrations, and implementations.  

Project leaders should be skilled in project initiation, planning, controlling, execution, closing, budget allocation, team communication, and monitoring. In addition to project management proficiency, successful projects rely on best known methodologies, such as work and value stream mapping, Gantt charts, critical path methods, CPM, waterfall, agile, Kanban, and Scrum.

How to Prepare Employees for Organizational Change 

“…Attributes of culture have direct impact on organizational performance. If you can measure these cultural attributes, why wouldn’t you want to know that information so you can create operational improvements?”- Jack Nestell, Nestell & Associates  

For value-add integrations, platform company management teams and their PE sponsors should address the human side of the organizational change. Having successfully defended a dissertation in ERP Organizational Change, Jack is enthusiastic about integrating academic theory into practice. He recommends that leaders put their focus during this transitional period into communicating, getting the right leaders in place, and boosting organizational culture.  

Communicate 

Among successful PE firms, communication is a shared best practice. Jack says, “One of the things that I see the most successful PE firms do is hyper-focus on communication – sharing goals, holding town halls, setting shared organizational KPIs right out of the gates. They focus on stakeholder feedback and communication.” 

Choose the Right Leadership 

Jack’s formal and informal research elevates the importance of selecting the right leadership for the right organization. Leader-culture fit matters, and research studies empirically establish a positive correlation between leadership styles and culture (Brown and Nestell, 2023). Leadership may be the primary reason for ERP and organizational change success or failure (Nestell, 2023). 

Boost Organizational Culture 

Associated with raised long-term performance, healthy culture is an asset and competitive advantage (Financial Reporting Council, 2016). Tools such as the Dennison model (Denison Consultancy, 2023) quantitatively link organizational attributes to performance metrics, identifying cultural drivers for operational improvements.  

(Source: Denison Consulting, 2023) 

How to Evaluate and Improve Change Success Factors  

“Organizations that have awareness, implement, and appropriately emphasize the vast array of these critical success factors will be better prepared and positioned with the organizational skills that they need to increase the likeliness of success.” – Jack Nestell, Nestell & Associates 

When evaluating an IT project’s success, Jack considers the full triad – people, processes, and technology. He’ll see the degree to which the people and the organization (culture) are assimilating to the change, and the degree to which they are responding to challenges that arise. Because, as Peter Drucker famously pens, “Culture eats strategy for breakfast.” 

In addition to these broader cultural considerations, a plethora of more specific project success markers indicate whether a digital transformation project is likely to succeed or fail.  

Some factors include:  

  • Choice of technology stack and architecture  
  • Executive leadership style and support 
  • Organizational diversity  
  • Emotional intelligence  
  • Political dynamics 
  • Invested interests  
  • Project methodology  
  • Organizational management  
  • Data testing and migration  
  • User training 
  • Stakeholder relationships  

Every company experiences these organizational influences differently, and according to Jack, it’s important to honestly assess the level of influence these factors are having on an organization. Nestell & Associates has a variety of tools, surveys, and processes to support companies as they do so.   

Connect with Jack 

Interested in connecting with Jack? You can find him via Nestell & Associates, his podcast, or at Jack Nestell – Linked In.   

Blue Margin increases enterprise value for PE-backed, mid-market companies by building and managing their data platforms. Our strategy, proven with over 250 companies to-date, expands multiples through data transformation, as presented in our book, The Dashboard Effect. Download your copy here and get weekly insights on our podcast.