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Today’s Business Change Process and Culture
is in urgent need of renewal
"Cost overruns of government computer projects in the year 2007 cost £150 for every person in Britain" (Note: UK Pop. is 61M)
In the current economic downturn, businesses and public sector organizations are under increasing pressure to constantly reduce costs, and at the same time improve efficiency. Such improvements often call for significant redesign of business processes together with large investments in IT. These two aspects of business change swallow up a significant proportion of business costs, and businesses simply cannot live with the large IT cost-overruns and project failures that continue to occur all too often. There is an urgent need for a new more cost effective business change management process.
It is unfortunately the case that process redesign by the business and the specialist IT elements of business change call for skills that often reside in different areas. Business managers have also often tended to overly depend on the IT specialists to initiate, and even drive, IT-enabled business change. The great weakness of this situation is that business managers and IT specialists are driven by often very different management dynamics and cultural imperatives.
"18% of all IT projects were cancelled before completion, 53% were over budget and ran over targeted timescale and many were introduced with reduced functionality"
A recent report by the Standish Institute
This situation has resulted in a significant business/IT culture gap, which often causes a serious shortfall in mutual understanding between the two sides. A lack of adequate and thorough understanding of deep-seated issues by both sides of the divide, together with inappropriate project management and consultative practices, has routinely resulted in huge avoidable costs and much management time-wasting.
As a result, many costly consultancy assignments have been commissioned over the years to identify the various causes of failure. These assignments generally produced excellent best practices and guidelines for the application of IT within business, but these were easily over-ridden by pressurised business people who did not fully understand their relevance or importance.
Despite these repeated IT programme post mortems, IT project performance has not generally improved to any great extent. The clear implication is that the business change model itself is flawed and is in urgent need of renewal and the substantial improvements that are needed cannot therefore be brought about by fiddling at the edges of yesterday’s flawed model, when today’s challenges are so fundamental to business success.
Several independent studies in 2002/03 confirmed that the IT project failure rate was still continuing to get steadily worse rather than better. The rate of total project failure, with developments having to be abandoned, was said in one study to have grown from 25% to 40% between 1994 and 2002. Gartner Group were said to have estimated that the cost incurred in Europe alone was $140bn every year.
Many of today's business changes are transformational rather than simply procedural, and they often call for radical change across whole business sectors. Senior executives and business mangers are also increasingly aware that their world is changing quickly, with personal consequences that were previously undreamed of.
New change management ground rules that are better suited to today’s and tomorrow’s business change challenges are therefore needed. Those rules need to actively encourage collaboration and personal involvement at every level in business, thereby ensuring more effective unity of purpose between all parties to the business change process. In particular, a renewed change environment needs to signal a clear and decisive shift in emphasis away from the technology drivers of change, and towards business process fundamentals as the principal driving force.
Focus, culture and management process all need to be visited, to ensure that there is a much closer marriage between business process redesign and its enabling IT infrastructure and applications. This requires a shift in business culture and in the business’s attitude to IT enabled business change which can only be instigated and driven forward by more proactive and technology-savvy input by the CEO and board members.
However, CEOs and board members are often ill-equipped to play a proactive and better-informed role in directing IT-enabled business change. Perhaps more importantly, they generally do not see the need to take on such a role themselves when there are many very capable specialists available to advise them.
"A half of those surveyed experienced a significant project failure and 86% reported losses of up to 25% of promised project benefits."
A recent KPMG Survey
The biggest challenge therefore is to change the firmly established traditional business mindset of what management’s responsibilities are for IT enabled business change. Everyone in business is currently conditioned to a greater or lesser degree to pigeonhole the management of IT related change into an ‘IT management’ slot, rather than seeing it as the thoroughly business issue that it undoubtedly now is.
The mechanism through which this essential transition can be driven is a new board level forum. This is called the Process Change Management Board, as discussed in the UNITY change management framework described in The Drowning Director.
This book is aimed at business people, rather than technologists, with the purpose of opening up their minds to many of the management issues that lie at the heart of successfully exploiting IT in business. It prescribes how businesses can adopt a new culture and change management structure to address those issues in a much more cost effective manner, whilst also laying the foundation for dealing effectively with tomorrow’s e-business challenges.
"You cannot solve a problem by applying the same thinking that got you
into the problem in the first place"