Corporate America has officially been “projectized.” The mantra of “aligning IT with the rest of the business” has elevated Project Management’s standing within organizations. Forward-looking organizations have invested heavily in Enterprise Project Management seeking the controlled and manageable environment needed to tackle high-risk, high-profile projects, such as ecommerce and ERP implementations, the Euro-currency initiative, and the already infamous Y2K conversion effort, to name a few. Yet, according to the latest figures from the Standish Group’s CHAOS Report (a five-year study of application development projects), only 26% of projects are successful. WHY?
The Problem—26% Success in PM
Twenty-six percent. That means that roughly one out of every four IT projects will be successful. To put that into greater context, take the above four mentioned projects, each of which are considered mission-critical. Now decide which three your business can live without because according to the Standish Group, only one of them will be successfully completed. In today’s competitive marketplace, that’s simply unacceptable. Now, that’s not to say that there haven’t been improvements. In 1994, Standish quoted successful IT project figures at about 18%, indicating that there has been some progress. Much of this progress has been attributed to the evolution of Enterprise Project Management (EPM). EPM takes a more holistic approach to project management, addressing the entire portfolio of IT projects as well as the stakeholders who are involved in and impacted by their implementation. So, again, why the 26% success figure and not the inverse, 74%?
The Solution is IT Change Management
Much has been written about how to increase project success rates. We look at issues like stakeholder communication, expectation setting and resource allocation but what about the impact of midstream change to a project? Granted, the holistic view of IT projects provided by EPM provides a more strategic approach to managing the project portfolio, however, it’s only part of the solution. What has been overlooked is how to mitigate the risk caused by change. Not convinced? Ask yourself this question— What was the last project, of let’s say three months or more in duration, that you were involved with that went exactly to plan? In other words, no unexpected problems arose, no cause to shuffle resources or assets or no need to broaden the scope of the original initiative. If you’re like most of us, the answer is never. IT projects, by their very nature, bring change and during project implementation, success or failure often depends on how we can handle the curveballs that will inevitably be thrown our way. The missing ingredient, the key for successful project management, is how well we are prepared to manage the changes that will inevitably occur in all projects.
Any time an organization introduces change to its IT environment, the chances for error increase dramatically. We only need to look at this past holiday shopping season when many traditional brick and mortar companies tried online e-commerce for the first time. When their servers failed to handle the volume of business that came with the holiday rush, not only were their IT problems highly visible to both customers and shareholders alike, but also their competition was just a mouse click away.
Not my company, you say? That only happens to the “new economy” companies? Think again. Even the most traditional companies are not immune from the public effects of IT failure. Last October, the largest candy maker in the U.S. was beset by problems with their newly installed order-and-distribution systems, and was unable to fulfill its orders during Halloween, its most productive season. The result? A drop of more than 25% in the companies stock, lost shelf space to competitors and a highly publicized black eye that even made the Wall Street Journal. These project failures only serve to underscore the importance of managing IT change.
Change Management means many things to many people. To software engineers it means software code control, to HR folks it means organizational change. For the purposes of this paper we talk about Change Management in terms of IT change. According to the Aberdeen Group, IT Change Management can be defined as a series of interrelated processes and tasks, which effectively manage change before, during and after it is implemented. IT Change Management encompasses much more than the actual, physical manifestations of change. IT Change Management deals with all activities relating to implementing change, including planning, impact analysis, actual implementation, verification, stakeholder communication and last but not least process improvement. It provides IT control over project changes as systems evolve, as well as an audit trail for historical reference.
How does it work? Change Management works in compliment with EPM to increase the probability of successful projects and further align IT with business objectives. We can use the same “before, during and after” analogy to look at how Change Management mitigates project risk.
Preparing for Change
Pre-project planning is an inexact science at best. The longer the term, or the greater the complexity of a project, the less likely it is that a project will run according to plan, and nothing shakes the confidence of stakeholders more than the unexpected. By providing contingencies for the unexpected we can better handle exceptions and manage expectations. Pre-project Change Management, the “before” part of the equation, involves outlining how midterm project changes will be addressed. Some of the questions answered here are: What caused the change? Who can formally request a change? How will this change be communicated to stakeholders? What will the impact of this change be on resources and the overall project? Who can authorize this change? How will this change be recorded? In other words—What processes will I put in place to handle changes to my original plan to ensure that change is as least disruptive as possible? Pre-project Change Management helps eliminate the midterm “firefighting” mentality, which can be both costly in terms of resource use and of stakeholder confidence. Most importantly it establishes a baseline for continual improvement.
No matter how diligently we prepare, midterm project changes are the norm rather than the exception. With change contingencies in place we have a mechanism to record and handle midterm changes. “During” the project lifecycle, effective midterm Change Management channels exceptions down the path proscribed in pre-project planning to provide structure, efficiency and control to project changes. Following defined Change structures helps keep projects within budget and on time by ensuring effective exception resolution while establishing a baseline for change process improvement.
Reaping Rewards From Change
So far we’ve examined Change Management’s role before and during a project, but perhaps one of the most significant benefits of Change Management can be seen after a project’s or even a particular change’s completion. IT Change Management is less about rigid structures than it is about creating a fluid environment that can take on change without bringing a project to its knees. While structures are important for recording, they must be constantly examined and improved. Change procedures, like all processes, will themselves be subject to change overtime. If we’ve diligently defined and recoded change procedures, we should have a wealth of historical information by which we can mitigate risk. What necessitated a change? Were there bottlenecks in our change procedures that caused unnecessary delays? Why did a particular change cause so many other problems? Change Management, like Project Management, is an evolutionary process—Plan, control, record and improve.
Getting Everyone in the Game
Change Management, as with Project Management, can only be effective if everybody follows the plan. You can have reams of change policies and procedures which will be rendered entirely ineffective if they are difficult to understand or hard to access. Change Management is most effective when it is least obtrusive, and this is where automated Change Management comes in to play.
Until recently, few viable alternatives have been available for automated change management. On one hand some organizations have attempted to manage change with paper-based Request for Change forms, e-mail forms or even incident tracking systems like help desk software. Unfortunately, these manual tools mean relying on someone’s knowledge of the entire change process to ensure that it is followed correctly. Even worse, they only record certain aspects of change, rendering post-change analysis ineffective. Take the e-mail change form for example, this can help record change approvals but cannot ensure that the right people have approved the change. Nor can it provide insight into the impact a change will have on people, process or assets. Lastly, because manual systems only address part of the change lifecycle, they are incapable of establishing a baseline for process improvement.
On the other end of the spectrum are workflow engines, which while more than capable of controlling change, can be prohibitively expensive and require lengthy implementations. These systems also prove to be largely inflexible when it comes to handling the evolution of change procedures.
Because of the increasing recognition of the role Change Management plays in project success, vendors are now offering specialized IT change management solutions appropriate for large and small IT organizations alike. These systems allow you to map in change procedures and then work seamlessly in the background to enforce change rules, deliver and solicit information from stakeholders at appropriate times and record change events. Think of these systems as “assembly lines” in an auto factory, moving change through a proscribed path—from inception to completion. By working unobtrusively, these systems are more likely to encourage participation from all stakeholders, thus providing for the most accurate post change analysis.
In looking at automated solutions you always need to keep your end-goals in mind—reduce risk, improve change processes and ensure project success. With this in mind, remember that whatever system you choose, it should fulfill the following criteria:
1. Provides a mechanism for recording your pre-project change processes
2. Provides an environment that easily allows you to modify change procedures as needed
3. Automates the entire change process
4. Records every aspect of the change process
5. Delivers the right information to the right people at the right time.
Change Management Myths
Increasing revenue by strategically leveraging IT is a hot button for CIOs. No longer content to use IT merely to cut costs, CIOs are building and deploying mission-critical applications in the interests of generating revenue. As organizations undertake e-commerce projects and ERP implementations, the need for automated IT change controls has never been more implicit. IT Change Management facilitates the successful deployment of new and upgraded systems by predicting and responding to every aspect of that change across the enterprise. A really effective Change Management solution will make change repeatable, so organizations can develop best practices and reduce the risk factor in deploying these applications across the IT infrastructure.
As logical as this may sound, the market research I and my company, royalblue technologies, have conducted over the past few years, shows three persistent misconceptions that keep many organizations from pursuing Change Management. The first is a cost issue; the second is what we call a readiness or maturity issue and the third is an issue with the encumbrances that might accompany Change Management.
Misconception # 1—Automated Change Management Is Too Expensive
The first objection we often hear is one of cost. An automated Change Management system might typically cost anywhere from $25,000 to $100,000 including software and implementation costs. Now put these costs in contrast with the money, time and competitive advantage lost due to project failures. The Standish Group estimates that the combination of project failures and cost overruns due to late projects cost U.S. corporations almost $100 billion in 1998. If implementing an automated change management solution could improve IT efficiency by just 10%, an admittedly conservative estimate, this translates into $10 billion in savings.
Organizations are spending hundreds of billions of dollars on strategic projects to improve productivity within some facet of the business and leverage a competitive advantage through the deployment of cutting-edge technology. Take a quick inventory of your own organization. Does it use SFA to maximize sales and help keep track of prospective customers? Does it sell products or services through an e-commerce site? Does it use a CRM solution to manage customer relationships? Maybe you have an ERP solution managing back-office functions like Purchasing, HR, Finance, or distribution. The critical nature of IT has made IT Change Management a business imperative—not an option.
“When IT is viewed as critical to the success of modern business—and few would dispute that it is—then effective management of the processes associated with deployment, upgrade, and enhancement of critical IT assets are easily recognized as important components to a successful business,” said Chris Martins, Senior Research Analyst with the Aberdeen Group. “In a world where change is a daily event, managing change is a strategic imperative. Effective change management strategies do not create barriers to change, rather they increase the likelihood that those changes will be successful.”
Misconception # 2—My Organization Isn’t Ready for Change Management
This misconception stems from the fact that most people look at Change Management solely as business process reengineering. It doesn’t have to be that way, and after all, everyone has to start somewhere.
While every organization should strive toward full Change Management, in practice it may be impractical for organizations to try and take it all head-on. Many organizations tell us that they wouldn’t know where to start, having no experience in Change Management and having no formally defined procedures. We often start by going for a quick “win”—one that provides not only a starting point for Change Management but one that shows how painlessly it can be achieved. A quick win, starts by documenting an often de facto change procedure. We start by asking what happens when an unplanned change occurs and usually end up with a process flow chart. This flow chart then becomes the baseline by which to record actual change events, providing the foundations for process improvements.
Of course, full Change Management involves authorizations, impact analysis on people, resources and assets, conflict avoidance, change tasking, QA and retrospective analysis, but these are simply goals to work towards at a pace to which your environment allows. If your organization has fully documented change procedures in place, all that may be left to do is to automate and improve. However, if your organization is not that mature yet, understand that you can achieve results simply by starting with a “quick win” and repeating and refining that process.
Misconception #3—When We Encounter Change, We Don’t Have Time to go Through Formalized Change Management Procedures
Unfortunately, some people view Change Management as simply another set of hoops to jump through in order to get something done. No one is ever fond of procedures and process, and filling out paperwork is simply another roadblock to efficiency. When change management is working effectively, it should be invisible to most people. One of the huge benefits of automated change management is how it acts behind the scenes. Automated Change Management will increase change efficiency and resolution times by conducting, coordinating, managing and recording events—offering “just-in-time” information to stakeholders when required and “laying low” when not needed.
When you think about the financial implications of system failure on an organization, how in this e-business climate failed or late projects can determine market leaders—the argument for IT Change Management becomes much more compelling and irrefutable. IT is at the heart of an organization. No longer a tool for the other lines of business, IT has become the driving force behind a company’s strategy for growth. Establishing an Enterprise Project Management culture without implementing an IT Change Management solution represents a high-profile gamble. CIOs are dealing with enough variables that are out their hands to not exert controls where they can. Change Management will give them that control and the means to promote IT as the #1 revenue-generating arm of the business.
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Proceedings of the Project Management Institute Annual Seminars & Symposium
September 7–16, 2000 • Houston, Texas, USA