Managing Technology Risks…Using Industrial-Strength Change Management
Often, an IT group will be chastised because a new technology inserted into the company did not provide the business benefits that were promised.
When this happens, the IT group is confused because the technology technically works just as advertised. However, upon further examination, we often discover that the user groups are not using the technology correctly (and sometimes not at all!).
An Industrial-Strength Change Management initiative can prevent this by providing the integrated, organization-wide action that is required for the technology to succeed.
While the benefits of big technological systems like ERPs have proven to be substantial for many companies, the implementation of such systems has proven to be a risky proposition.
The size of the risk, which can run into the tens of millions of dollars for the new systems, or into hundreds of millions for potential disruption to the organization or to its customers, calls for aggressive and systematic risk management to ensure success. Risk management must address the three kinds of risks associated with big systems implementation: technical, organizational, and business risk.
Companies and technical vendors have been doing high quality risk management for a couple of decades. Most of the risks that have been managed are what we call the technical risks of the implementation project.
The best layman’s definition of the technical risk is associated with the critical questions – will the system work, will it work on time, and will it come in on budget?
This kind of technical risk, while poorly managed occasionally, is usually handled reasonably well by a combination of the company’s professionals and the vendors. To be sure of realizing full business value, companies must go beyond technical risk management. However, for really big, comprehensive technology insertions (like ERP’s, CRM or Supply Chain), other kinds of risks must be equally well-managed for the implementing company to receive the business vale they are looking for.
By “Organizational Risk,” we mean the chance the organization will not use all the planned functionality of the new system or, in some documented cases, use the new system at all. Failure to use the new system could be caused by a number of factors – two of the most commonly-found and deadly factors are “inadequate user preparation / readiness” and “workforce resistance.”
By “Business Risk,” we mean the chance the costly-to-implement system will not pay off in “dollars and cents” for the implementing company. Failure to gain the full business outcome could be caused by a number of factors. One of the most commonly-found failure factors is lack of alignment between the work processes imbedded in the system and company business strategies and priorities.
*We use Technical Risk Management to ensure ERP System works technically.
*We use Organizational Risk Management to ensure organization will use the new system.
*We use Business Risk Management to ensure organization will get the projected benefits from its use.
Change Management is the primary weapon to manage organization and business risk. Unfortunately, we typically see low-strength change management used in many system implementations. Low-strength change management seems focused only on communication and system training, barely making the user ready to accept the new system but hardly capable of using it for its business purpose.
The change management that is needed, on the other hand, must take the organization and its many users much farther to ensure that the new system can and will be fully integrated into the day-to-day operations of all affected parts of the company by the target date. We have called this extra-strength version of change management “Operations Integration.”
Operations Integration is the body of knowledge / practices that is used to ensure that a complex change, like that associated with a big technology insertion, gets the right results, in the right timeframe, at the right costs.
Operations Integration is a disciplined approach applied in all organizational units that will operate the new system to ensure acceptance and readiness to use the new system fully and proficiently at “go live.” Operations integration includes:
*Clear communication of a vision of the system being fully used in the organization
*Direct communication of expectation requirement of full and complete use by every affected worker
*Work processes altered and aligned to match the processes embedded in the system
*Work processes documented and worker instructions placed in the company’s official Policies and Work Procedures
*Roles / goal /objectives of workers modified to fit aligned processes and use of new system
*Users / workers trained on the aligned work processes incorporating the new system
*Performance management system in place to incentivize performance and to dis-incentize failure to use
*All affected workers “under contract” to be ready, willing, and able to use the new system fully at “go live.”
Operations Integration is a formidable initiative that must be aggressively managed along side the technical implementation project. The goal is to have the users ready for full use of the system just as technical implementation is complete.
Formidable or not, operations integration must be given the highest possible priority by the organization’s executives or the organization will fail to realize the full benefits of the inserted technology.
New technology can promise and often delivers important business results in today’s highly competitive business environment. But delivery of those results is highly dependent on disciplined Operations Integration that handles all three major risk categories – technical, organizational, and business risks.
Unfortunately, that kind of comprehensive change management is a tall order for many of today’s IT groups that focus only on the technical issue resolution while organizational and business risks are left to chance.
Today’s message is very clear: use Operations Integration to plan and manage all three kinds of risks effectively or keep what you have in the way of systems and business processes. Moving ahead without managing all three risks is a certain recipe for organizational disruption and even disaster.
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Dutch Holland is principal and founder of Holland & Davis, specializing in helping clients implement change.