Just this week, two clients have shared a common and very challenging change management situation. They are about to re-launch ERP systems even though they have attempted to implement the system multiple times in the past without success. These organizations are beginning to see that there is a need for doing something different, although they may not be totally sure what that really means! When implementations fail, there are long-term and short-term costs, and direct and in-direct implications. All of this points to a business case for a change management methodology that will reduce risk.
The Costs of Implementation Failure
When organizations experience implementation failures like ERP systems that are attempted and then withdrawn, the direct, short-term costs are fairly obvious:
- Wasted money
- Wasted time
- Wasted resources in people who spent time without producing the intended results
- Business objectives that aren't achieved; strategies are not accomplished
While in-direct costs are not as obvious, there is a short-term impact on morale and engagement.
But the most significant costs are long-term and perhaps not as blatantly clear:
1. Confidence in leadership decreases: This is not a soft and fuzzy issue for senior management. When confidence and trust go down, speed goes down as well. Your organization will not be able to implement requisite changes as quickly when past implementations have failed or sub-optimized!
2. Resistance to change increases: We can't eliminate resistance, but we do have to manage it if we are to achieve aggressive time frames for implementation. In most organizations today, timelines are extremely aggressive!
3. Future changes are more likely to slow down or fail: Here's the real kicker. The impact is not just for the next change, but can have impacts years down the road. The institutional memory for past failures is long and deep.
The Business Case
If we can reduce the risks for failed or sub-optimized projects by applying a repeatable implementation process, we can impact business results in multiple ways. When approaching Sponsors, it's important that we speak in the Sponsor's language. Simply put, Sponsors want projects delivered faster, better, and cheaper. But leaders often don't realize that once they have made the decisions on strategy, there is still more than 85% of the work left to do to implement that strategy. The need to do a better job of delivering faster, better, and cheaper has never been greater, but that does require a commitment to do things differently and apply a purposeful process for implementing changes:
1. Delivering projects on time: In today's competitive marketplace, faster is better. The organization that can be first to market can equate to 4 to 10 times more profit. Making decisions and implementing quickly is critical.
2. Delivering projects within budget: Change is a ferocious, resource consuming activity. No software provider, for example, is going to tell you that if the cost of the software is "x", the real cost is at least 4 times that amount when you consider the implementation expense. The more quickly and efficiently an organization can implement change, the more resources it has available for other strategic initiatives. Given the scarcity of resources in organizations today, using those limited resources to greater efficiency makes good business sense.
3. Meeting strategic objectives (business, technical, and human): Most strategic changes fail to deliver the intended value on a sustained basis. The success rate statistics remain in the 25-30% range--meaning of course that about 70% do not achieve to spec all that was promised in the initial business case. When it comes to systems changes, for example, failure rates are rarely caused by a problem with technological integrity. Mergers don't deliver value because of cultural issues that go unresolved. The examples go on and on.
The need to take a purposeful approach to managing the human and cultural elements is clear, but it needs to be expressed in business terms. While we would hope that every individual is treated with dignity and respect, the business case for change management is not around the individual journey of change, but around the management of business risk.