Thursday, February 25, 2010

Managing change

The briefings in this section of the toolkit explain how to implement plans - translating strategic direction and high level plans into services and assets that meet business need and achieve value for money. It outlines the key considerations for managing successful business change and describes the processes of implementing plans:

· development of a business case (Business case)

· programme management (Programme management)

· project management (Project management)

· acquisition of services (Procurement)

· requirements definition (Requirements definition).

Why does change need to be managed?

You must address the whole business change, not just the individual components. Business change is complex because of the interdependencies between the business environment, the organisation, its people and supporting technologies; any change in one aspect will affect one or more of the others. Cultural change is the most important consideration. For example, about 80% of the effort and resources required for successful IT-related change are - or should be - deployed on the 'soft' aspects of business change, such as changing behaviours and providing training at the right time; only 20% is required for the IT. Similarly, the cost of a new building is only a small part of the total cost of change required for new ways of working.

Factors for success

Recent experience has shown that these factors are essential for successful change:

· focus on the whole business change, not just individual components such as the IT aspects or HR

· good leadership and clear responsibility for business change

· adequate resourcing for the 'soft' aspects of change

· excellence in programme and project management skills

· robust risk management, taking a business-wide view rather than the immediate view of the project

· effective measurement and management of benefits

· effective communication and interaction with providers, including a good understanding of the implications of provider plans for implementation

· learning from experience and sharing the lessons learned.

The key steps in managing change are:

1. understanding: gaining a thorough understanding of the business environment, the organisation and its culture - knowing the organisation's capability to respond is a critical factor in deciding whether the changes can be coped with and how they might be handled

2. planning: setting the strategic direction; communicating at all levels - both the organisation and its people need to have a clear idea of where it is going and why

3. implementing: establishing a Change Programme, led by a manager empowered as change champion to make things happen. Support the people through training and development

4. controlling the change process: expecting the unexpected; keeping track of progress; continuing to improve and learn from experience.

You should manage change through a formal process of Programme Management.

Different degrees of change

Figure 2 shows different degrees of transformation and the range of potential benefits in relation to IT-enabled change; Table 1 provides an expanded summary of the levels of business transformation, with notes on strengths, potential weaknesses and the management actions required for transformation. Although the example illustrated is for IT-enabled change, the same principles apply for any change programme to achieve new ways of working. Other examples might include a new hospital or school, a call centre or a radical change following the merger of two or more organisations. You should consider the level of transformation required for your programme or project. For example, you may have an e-presence project to provide information for the citizen. You should think about the following:

§ the level of change: how much do you need to redesign business processes, processes of partners or redefine corporate scope?

§ strategic fit and integration: there may be a number of discrete change programmes underway in your organisation; should they be integrated? Is your project localised or part of a wider programme of change? How does it fit with the overall strategy?

§ readiness for change: taking a realistic view of the organisation's ability to cope with change, can this degree of change be achieved? Radical change need not be carried out as a 'big bang'; it can be implemented in incremental steps or broken up into modules. You should identify the approach that best matches your organisation's capability and priorities.

Figure 2: Levels of transformation (source: MIT in the 90s Sloan School of Management)

Level of transformation



Potential weaknesses

Management transformation

Localised exploitation (automation)

Use existing IT functionality

to reengineer individual, high-value areas of business operation.

Easy to identify potential capability, minimum resistance to change, addresses localised weaknesses in capability.

Duplication of effort: nothing new is learned; attractive relative to past practices, but fail 'best of breed' comparisons.

Identify high value areas. Bench-mark results against best practice. Redesign performance assessment criteria to reflect exploitation.

Internal integration

Use the capabilities inherent in IT to integrate business operations: reflects a seamless process

Addresses weaknesses in capability throughout the business: supports TQM: improves customer services.

Competitors may have moved on from this traditional concept to more radical concepts of reorganisation.

Focus on business inter-dependence and technical interconnectivity. Ensure that performance criteria are reassessed. Benchmark new capabilities.

Business process reengineering

Redesign key processes to provide business capabilities for the future: use IT as an enabler.

Move from outdated practices: opportunities to lead the market.

Benefits will be limited if too narrow a view is adopted (addressing current weaknesses, or historical issues): redesign of obsolescent processes.

Communicate the vision (are you eradicating weaknesses or designing for the future? Are you responding to competitors or leading the way?) Recognise that organisational issues are more important than selecting technology architectures to support the redesign.

Business network redesign

Strategic logic used to provide products and services from partners: exploitation of IT for learning.

Elimination of activities outside competence: streamlining business scope for responsiveness and flexibility: exploitation of competence of partners.

Lack of co-ordination may not identify required levels of differentiation: lack of streamlined internal IT infrastructure will hinder ability to learn.

Selected partners rather than extended array. Elevation of importance of partnerships in strategy. Radically new performance criteria. Definition of efficiency gains.

Business scope redefinition

Selected partners rather than extended array. Redefinition of corporate scope: what you do, what partners do, and what is enabled by IT.

Opportunity to use business processes to create a more flexible business: substitution of inter-company business relationships as an effective alternative to vertical integration.

Failure to develop a consistent area of competence for the future: enterprise may create gaps Articulation of business vision through internal activities, external relations and business arrangements. Shift from assessing success on return on assets (internal) to measures such as return on value added or return per employee.


What is business transformation in practice?
Business transformation is the process of translating a high level vision for the business into new services. It involves developing a 'blueprint', translating it into programmes of business change and implementation of new services.

The blueprint sets out:

· new ways of working

· how components fit together to deliver strategic objectives

· how customer needs will be met

· how IS and IT will be used to support the business.

It documents what needs to change: structure; processes; people/skills and the supporting technology.

Key aspects of business transformation are:

· identifying the organisation's core products and services (seeking the scope for innovation)

· designing new processes to deliver new services and/or do things better

· managing new relationships with customers and providers, and probably with partners in the public sector

· managing the policy interface with your parent department, where applicable

· directing the ongoing strategy of your organisation.

Process design is about coming up with a new, streamlined, possibly radical way of doing things. The really difficult task is converting design into reality: transforming innovative ideas into the new operational environment. You prepare for the future with a model of what the business does - and could do - together with a specification of how the business could work. A Business Activity Model explicitly models what goes on in the business independently of how it will be supported by an information system. Its main purpose is to enable you to identify and document requirements directly from the needs of business activities. This helps to ensure that:

· the degree of subjectivity is reduced such that new services will meet the objectives of the business and not simply replace current services or be constrained by specific perspectives of certain users

· the design of the service will be user-centred. A Business Activity Model describes the activities which are essential for the business to be able to meet a particular objective, or set of objectives. These activities are independent of the organisational structure and the allocation of tasks to individuals.

The design is captured as a blueprint, developed incrementally, and not too detailed. You are capturing requirements about people and attitudes as well as systems and technology and searching for the optimum:

· the mechanisms (people, organisation and manual capabilities) responsible for each process step

· how the various mechanisms work together.

The objective is to move from a high level vision to:

· performance measures

· a high level description of new business architecture

· a detailed specification of new processes

· plans for change: people; IT; new/updated workspace; processes and procedures

· rollout of new products and services

· dismantling of the old ways of doing things

· ongoing feedback on performance and opportunities for further improvement.

The Programme Management Workbook contains a relevant step by step through change management issues.

Further Information

See the checklist for managaing change.

OGC supports, co-ordinates and monitors the public sector in delivering the Government's target of achieving £21.5 billion efficiency gains a year by 2007/08, see the main  OGC website for further details.

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