The purpose of Organizational Change Management (OCM) is to mitigate the risks of a project, including costs, schedule, and performance. OCM does this by facilitating greater business and financial value faster by effectively defining, organizing, and applying the utility’s resources during a transformation project like a Utility Network implementation.
In scoping a project that would benefit from investing in OCM, a cost-benefit analysis that looks at five perspectives regarding the benefits (based on an OCM approach like Prosci’s methodology) can be extremely helpful for an organization. Since the benefits side of the equation for OCM can be hard to measure, analyzing the following 5 benefits that Prosci has identified can help make the case for change management to ensure that OCM is viewed as a value-added component on project involving significant technology, organizational, and workflow process related changes.
I. Benefits Realization ‘Insurance’
Applying a structured OCM strategy is like taking out an insurance policy against the goals and objectives of the project. In this respect, the value of change management is tied to the overall value the project is working to achieve. The objectives of the project per the scope of work or project plan can be evaluated with 2 significant questions:
- For each objective, we need to ask, “Is meeting this objective dependent on people doing their job differently?” Regarding GIS technology, some of the answers might be “no” based on lower maintenance contract costs for a new piece of hardware. However, most of the objectives will be tied directly to the users.
- For these objectives, we need to find out “What percentage of these benefits result from people doing their jobs differently?” This is the amount of benefit you can “insure” by applying a solid change management approach and conversely, the amount of the benefit you are leaving uninsured by not investing in change management.
II. Three ‘people-side’ ROI Factors
We all know that change occurs at the individual level. Prosci’s Return-On-Investment of Change Management (CMROI) model focuses on 3 people factors that affect the value a change delivers to an organization.
- Speed of adoption measures how quickly employees adopt a change in how they do their work introduced by a new project. When a Esri Utility Network (UN) implementation or other GIS solution “goes live”, how long does it take employees to embrace the change? In some instances, a project team might assume an instantaneous adoption by all impacted employees, but experience would suggest some sort of staggered adoption over time.
- Utilization measures how many employees eventually adopt the changes to how they do their jobs. Utilization can be affected by individuals who decided to just not apply the new ways of working or find a “work-around”. Each employee who doesn’t make the required work changes chips away at the potential value that can be realized by the project. This has a direct measurable impact on creating project value.
- Proficiency measures how effective employees are once they’ve adopted the change. The proficiency of employees who adopted the change has a direct and measurable impact on the outcomes of a project since employees doing their jobs differently is what creates the final results.
These factors are universal in terms of impact but are also unique for every project. For example, a team supporting a UN implementation might erroneously assume that 100% of users will begin using the new tools with extremely high proficiency immediately the day that the system goes live. I am sure that we can all agree that this hardly ever happens. A disciplined OCM program, focused on enabling, encouraging, and empowering employees to embrace, adopt and utilize the changes in the way they work, will directly contribute to higher ROI through faster adoption, greater utilization, and higher proficiency.
III. Risk Mitigation
Another perspective is to outline the potential risks to the project. Risk management on projects is a well-developed discipline and most organizations conduct some level of risk assessments on projects. There are significant costs associated with each potential risk, and organizational change management can mitigate those risks. Using a Prosci-based Risk Assessment methodology to assess the people-side component of the changes related to GIS technology implementations builds a solid foundation when considering the people-side risk of a project. The risk assessment evaluates the change and organizational readiness of an organization for a given project based on a tailored questionnaire answered by a defined set of project stakeholders.
The assessment can contain anywhere from 10-20 questions in each of the following categories, depending on your organization and project:
- Organizational Attributes – assessment factors specific to the organization
- Change Characteristics – assessment factors specific to the project
The scores from the questionnaire are compiled and graphed into risk quadrants as shown here with dots showing low, medium, and high risk.
IV. Meeting Project Objectives
Based on data published in Prosci’s 2020 benchmarking report, project outcomes are clearly tied to how well we manage the people side of change towards achieving project, financial and strategic success.
- Meeting Project-Specific Objectives –According to Prosci’s 2020 benchmarking report, project outcomes are clearly tied to how well we manage the people side of change towards achieving project, financial and strategic success.
- Faster Implementation –Prosci’s 2020 benchmarking report shows a direct correlation: the more effectively the people side of change is managed, the more likely you are to finish on time.
- Staying on Budget – Prosci’s report shows that projects with effective OCM are in fact more likely to remain on budget than those with poor OCM, showing there is clearly a definite correlation between the effectiveness of OCM and the ability to keep a project on budget.
Additionally, if a project is not obtaining the anticipated level of success (on-budget, on-time, objectives met), there is a higher potential for the project to have required rework. Addressing the people side of change too late results in numerous RE costs that are avoidable.
These RE costs result in inefficiencies and limits value. By proactively developing and deploying an effective OCM strategy, the rework costs can be avoided or mitigated. For example, not collaboratively mapping current or future state workflows with appropriate stakeholders (those who actually do the work) could create a situation where user acceptance testing fails, which in turn would require some of the technical architecture to be redesigned. This drives up project costs and affects the overall timeline.
This brings us to the final benefit perspective of OCM, avoiding undue costs.
V. Cost Avoidance
Projects incur significant and quantifiable costs when changes are not managed properly. In addition to the extra costs of fixing the people-side issues that creep up without OCM, the organization also fails to achieve the anticipated value from the project. Change management is an effective cost-avoidance technique we can apply on our projects. Below are just some of the costs that need to be quantified in order to be avoided.
Clearly, when the project does not deliver expected results (it’s usually a spectrum of failed delivery), the organization loses a lot or all of the investment made in the project. If you can’t map assets, reconcile as-builts in the field, or get the information you need to run your utility, there’s a huge amount of value that’s lost. Continuing to deploy projects without an OCM strategy is not a profitable way to do business and in order to deliver loyalty-creating customer experiences in today’s environment, organizations need to change the way they do business.
What do you think?