Organizational Change Management (OCM) is a ubiquitous term at best for many people involved in technology implementations. A lot of Analysts, Project Managers, and even some Executives are a little fuzzy about what OCM actually is or how it can benefit their project. In a nutshell, Organizational Change Management is a framework for managing the effect of new technology, new business processes, shifting economic settings, and changes in organizational structure within a business. OCM addresses the people side of change through a systematic approach when change requires people to learn new behaviors and skills. We all know that people don’t like change – but a project has a higher risk of failure and you’re actually losing a lot of business value without OCM.

 Almost every technology implementation involves business process improvements/optimizations (think workflows) that must be embraced by actual humans. These changes can’t happen without considering the users that will actually be using the technology. This is where organizational change management can help you close the loop between technical requirements and functional business requirements. Since I have been in the utility industry for over 20 years, I like to think of it as closing an electrical circuit. If you don’t have OCM (the wires) in the middle to connect the energy flow between technology improvements (the energy source) and business requirements (the device consuming the energy), the circuit isn’t going to work.

Change management can be hard to quantify but understanding the costs and benefits will help us see the return on investment (ROI) in funding change management when scoping a project. OCM as a strategic investment is a very real benefit and it’s important to be able to effectively communicate this to executive leadership. Unfortunately, quite often by the time you see the impact of NOT investing in change management, it’s already too late.

An organization that does not consider people-side soft costs as actual hard costs, is putting the organization at a huge financial risk because the project’s scope, timeline, and budget increase as a result of delays due to culture, politics, lack of planning, poor communication, and other reasons. This creates a situation where the time to implement the project goes beyond the original estimate and then we see an increase in cost as any potential benefit is incrementally chipped away.

Prosci, the leader in Organization Change Management, has been studying change management for more than 20 years (www.prosci.com). Their research includes trends, case studies, and best practices across multiple industries. In fact, 80% of Fortune 100 companies partner with Prosci for OCM. A recent Prosci study showed that a project’s greatest success factors are the following:

1. Effective and strong executive sponsorship
2. Buy-in from front line managers and employees
3. Exceptional teams
4. Continuous and targeted communication
5. Planned and organized approach

Notice technology is not listed here – these are all ‘soft’ factors.

The Prosci study also showed that a project’s greatest obstacle factors are:

1. Employee resistance at all levels (Surprisingly, the effectiveness or correctness of the actual business solution, process, or system changes was cited only 5 times in over 200 responses.)
2. Middle-management resistance
3. Poor executive sponsorship
4. Limited time, budget, and resources
5. Corporate inertia and politics

Again – these are all ‘soft’ aspects of a project, not the hardware, software, or technical infrastructure.

In another study by AMR Research, a firm that focuses on independent research that bridges the gap between business and technology, revealed that companies who had successful software implementations usually spent 10 to 15 percent of their project budget on OCM – this has now become the recommended benchmark that Prosci suggests for the OCM component of a project.

All of the success criteria found in these studies are the high-level components that an effective OCM strategy considers to increase a project’s ROI. However, we have to ask a fundamental question first: “What amount of the project benefits (ROI) depends on employee adoption and usage?” Developing metrics for an ROI will clarify the answer to this basic question and identify the additional value created through a strategic OCM framework that ensures the people in an organization fully embrace a project’s objective and associated implementation.

If you really want to understand what the ROI would be for a project using OCM, we first need to drill down to look at specific benefits and costs. Parts I and II of this blog series will assist in scoping the benefits of OCM, Part III will help you scope the costs, and Part IV will assist in determining the ROI.

The Benefits of OCM

In scoping a project that would benefit from investing in OCM, a cost-benefit analysis that looks at five perspectives on the benefits based on a Prosci methodology can be helpful for an organization. Since the benefits side of the equation for OCM can be hard to measure, analyzing the following benefits help make the case for change management to ensure that OCM is viewed as a value-added component on the projects you support.

• Benefit Perspective 1: Benefits Realization ‘Insurance’ – This considers how much of the value of the project ultimately depends on people doing their jobs differently.
• Benefit Perspective 2: Three ‘People-Side’ ROI Factors – These include faster speed of adoption, higher ultimate utilization, and higher proficiency.
• Benefit Perspective 3: Risk Mitigation – Individuals, the project, and the organization are all put at risk when change is poorly managed.
• Benefit Perspective 4: Project Objectives – Data shows that projects with effective change management are much more likely to meet objectives, stay on schedule and stay on budget.
• Benefit Perspective 5: Cost Avoidance – Poorly managing change is costly to the project and the organization.

This blog article will cover the first 3 Benefit Perspectives, so stay tuned for the follow-up article that will discuss the last 2 benefits.

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:

1. 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.
2. 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 ROI of change management model focuses on 3 people factors that affect the value a change delivers to an organization.

• Speed of adoption – How fast can people adopt the new processes or behaviors?
• Ultimate utilization – How many impacted employees are affected by the change?
• Proficiency – How effective can employees follow the new processes?

Speed of adoption measures how quickly employees adopt a change in how they do their work introduced by a new project. When the new processes or technologies “go 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 an Esri Utility Network (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. When the 3 factors are quantified and added to the business case and ROI calculations, you can highlight the importance of change management.

These 3 people-side ROI factors can help:

• Define the individual changes required by a project at initiation
• Calculate the impact of a slow speed of adoption, low ultimate utilization, and low proficiency
• Elevate the discussion and document assumptions early on in the process related to the people side of change

 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.

Since one of the purposes of OCM is to mitigate the “people-side risks” of a project along with financial, technology, schedule, and dependency risks, working to position the people risk as one of the risks that is considered will  facilitate greater economic value faster by more effectively developing, deploying, and aligning the company’s resources for a project.

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, as in the example below.

In this example, the red dot would indicate that an entity has high change resistant organizational risk and moderate-high disruptive risk in the change characteristics that relate to the specific project. Alternately, the green dot would indicate an organization has low organizational risk (they are change-ready) and moderate project-specific risk. The orange dot reflects high risk due to a project being large or disruptive and moderate-low risk from an organizational perspective (they are somewhat change-ready).

Hopefully, discussing these 3 benefit perspectives in detail has shed some light on how Organizational Change Management can assist you in implementing a successful project. In Part II of this series, I will explain the benefits of using OCM to help you achieve project objectives and avoid unnecessary costs in your technology implementation.