Master Organizational Change Management Practices

PMOs, if you don't know who is responsible for org change, it's you.

Analyst Perspective

Don’t leave change up to chance.

"Organizational change management has been a huge weakness for IT departments and business units, putting projects and programs at risk – especially large, complex, transformational projects.

During workshops with clients, I find that the root of this problem is twofold: project planning tends to fixate on technology and neglects the behavioral and cultural factors that inhibit user adoption; further, accountabilities for managing change and helping to realize the intended business outcomes post-project are not properly defined.

It makes sense for the PMO to be the org-change leader. In project ecosystems where no one seems willing to seize this opportunity, the PMO can take action and realize the benefits and accolades that will come from coordinating and consistently driving successful project outcomes."

Matt Burton,

Senior Manager, Project Portfolio Management

Info-Tech Research Group

Our understanding of the problem

This Research is Designed For:

• PMO Directors who need to improve user adoption rates and maximize benefits on project and program activity.
• CIOs who are accountable for IT’s project spend and need to ensure an appropriate ROI on project investments.

This Research Will Help You:

• Define change management roles and accountabilities among project stakeholders.
• Prepare end users for change impacts in order to improve adoption rates.
• Ensure that the intended business outcomes of projects are more effectively realized.
• Develop an organizational change management toolkit and best practices playbook.

This Research Will Also Assist:

• Project managers and change managers who need to plan and execute changes affecting people and processes.
• Project sponsors who want to improve benefits attainment.
• Business analysts who need to analyze the impact of change.

This Research Will Help Them:

• Develop communications and training plans tailored to specific audiences.
  • Identify strategies to manage cultural and behavioral change.
• Maximize project benefits by ensuring changes are adopted.
• Capitalize upon opportunities and mitigate risks.

Drive organizational change from the PMO

Situation

• As project management office (PMO) leader, you oversee a portfolio of projects that depend heavily on users and stakeholders adopting new tools, complying with new policies, following new processes, and learning new skills.
• You need to facilitate the organizational change resulting from these projects, ensuring that the intended business outcomes are realized.

Complication

• While IT takes accountability to deliver the change, accountability for the business outcomes is opaque with little or no allocated resourcing.
• Project management practices focus more on the timely implementation of projects than on the achievement of the desired outcomes thereafter or on the behavioral and cultural factors that inhibit change from taking hold in the long term.

Resolution

• Plan for human nature. To ensure project success and maximize benefits, plan and facilitate the non-technical aspects of organizational change by addressing the emotional, behavioral, and cultural factors that foster stakeholder resistance and inhibit user adoption.
• Make change management as ubiquitous as change itself. Foster a project culture that is proactive about OCM. Create a process where OCM considerations are factored in as early as project ideation and change is actively managed throughout the project lifecycle, including after the project has closed.
• Equip project leaders with the right tools to foster adoption. Effective OCM requires an actionable toolkit that will help plant the seeds for organizational change. With the right tools and templates, the PMO can function as a hub for change, helping business units and project teams to consistently achieve project and post-project success.

Info-Tech Insight

Make your PMO the change leader it’s already expected to be. Unless accountabilities for organizational change management (OCM) have been otherwise explicitly defined, you should accept that, to the rest of the organization – including its chief officers – the PMO is already assumed to be the change leader.

Don’t shy away from or neglect this role. It’s not just the business outcomes of the organization’s projects that will benefit; the long-term sustainability of the PMO itself will be significantly strengthened by making OCM a core competency.

Completed projects aren’t necessarily successful projects

The constraints that drive project management (time, scope, and budget) are insufficient for driving the overall success of project efforts.

For instance, a project may come in on time, on budget, and in scope, but…

• …if users and stakeholders fail to adopt…
• …and the intended benefits are not achieved…

…then that “successful project” represents a massive waste of the organization’s time and resources.

A supplement to project management is needed to ensure that the intended value is realized.

Mission (Not) Accomplished

50% Fifty percent of respondents in a KPMG survey indicated that projects fail to achieve what they originally intended. (Source: NZ Project management survey)

56% Only fifty-six percent of strategic projects meet their original business goals. (Source: PMI)

70% Lack of user adoption is the main cause for seventy percent of failed projects. (Source: Collins, 2013)

Improve project outcomes with organizational change management

Make “completed” synonymous with “successfully completed” by implementing an organizational change management strategy through the PMO.

Organizational change management is the practice through which the PMO can improve user adoption rates and maximize project benefits.

Why OCM effectiveness correlates to project success:

• IT projects are justified because they will make money, save money, or make people happier.
• Project benefits can only be realized when changes are successfully adopted or accommodated by the organization.

Without OCM, IT might finish the project but fail to realize the intended outcomes.

In the long term, a lack of OCM could erode IT’s ability to work with the business.

What is organizational change management?

OCM is a framework for managing the introduction of new business processes and technologies to ensure stakeholder adoption.

OCM involves tools, templates, and processes that are intended to help project leaders analyze the impacts of a change during the planning phase, engage stakeholders throughout the project lifecycle, as well as train and transition users towards the new technologies and processes being implemented.

OCM is a separate body of knowledge, but as a practice it is inseparable from both project management or business analysis.

WHEN IS OCM NEEDED?

Anytime you are starting a project or program that will depend on users and stakeholders to give up their old way of doing things, change will force people to become novices again, leading to lost productivity and added stress.

CM can help improve project outcomes on any project where you need people to adopt new tools and procedures, comply with new policies, learn new skills and behaviors, or understand and support new processes.

"What is the goal of change management? Getting people to adopt a new way of doing business." – BA, Natural Resources Company

The benefits of OCM range from more effective project execution to improved benefits attainment

82% of CEOs identify organizational change management as a priority. (D&B Consulting) But Only 18% of organizations characterize themselves as “Highly Effective” at OCM. (PMI)

On average, 95% percent of projects with excellent OCM meet or exceed their objectives. (Prosci) VS For projects with poor OCM, the number of projects that meet objectives drops to 15%. (Prosci)

82% of projects with excellent OCM practices are completed on budget. (Prosci) VS For projects with poor OCM, the number of projects that stay on budget drops to 51%. (Prosci)

71% of projects with excellent OCM practices stay on schedule. (Prosci) VS For projects with poor OCM practices, only 16% stay on schedule. (Prosci)

While critical to project success, OCM remains one of IT’s biggest weaknesses and process improvement gaps

IT Processes Ranked by Effectiveness:

27. Risk Management
28. Knowledge Management
29. Release Management
30. Innovation
31. IT Governance
32. Enterprise Architecture
33. Quality Management
34. Data Architecture
35. Application Development Quality
36. Data Quality
37. Portfolio Management
38. Configuration Management
39. Application Portfolio Management
40. Business Process Controls Internal Audit
41. Organizational Change Management
42. Application Development Throughput
43. Business Intelligence Reporting
44. Performance Measurement
45. Manage Service Catalog

IT Processes Ranked by Importance:

27. Enterprise Application Selection & Implementation
28. Organizational Change Management
29. Data Architecture
30. Quality Management
31. Enterprise Architecture
32. Business Intelligence Reporting
33. Release Management
34. Portfolio Management
35. Application Maintenance
36. Asset Management
37. Vendor Management
38. Application Portfolio Management
39. Innovation
40. Business Process Controls Internal Audit
41. Configuration Management
42. Performance Measurement
43. Application Development Quality
44. Application Development Throughput
45. Manage Service Catalog

Based on 3,884 responses to Info-Tech’s Management and Governance Diagnostic, June 2016

There’s no getting around it: change is hard

While the importance of change management is widely recognized across organizations, the statistics around change remain dismal.

Indeed, it’s an understatement to say that change is difficult.

People are generally – in the near-term at least – resistant to change, especially large, transformational changes that will impact the day-to-day way of doing things, or that involve changing personal values, social norms, and other deep-seated assumptions.

"There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things." – Niccolo Machiavelli

70% - Change failure rates are extremely high. It is estimated that up to seventy percent of all change initiatives fail – a figure that has held steady since the 1990s. (McKinsey & Company)

25% - In a recent survey of 276 large and midsize organizations, only twenty-five percent of respondents felt that the gains from projects were sustained over time. (Towers Watson)

22% - While eighty-seven percent of survey respondents trained their managers to “manage change,” only 22% felt the training was truly effective. (Towers Watson)

While change is inherently difficult, the biggest obstacle to OCM success is a lack of accountability

Who is accountable for change success? …anyone?...

To its peril, OCM commonly falls into a grey area, somewhere in between project management and portfolio management, and somewhere in between being a concern of IT and a concern of the business.

While OCM is a separate discipline from project management, it is commonly thought that OCM is something that project managers and project teams do. While in some cases this might be true, it is far from a universal truth.

The end result: without a centralized approach, accountabilities for key OCM tasks are opaque at best – and the ball for these tasks is, more often than not, dropped altogether.

29% - Twenty-nine percent of change initiatives are launched without any formal OCM plan whatsoever.

"That’s 29 percent of leaders with blind faith in the power of prayer to Saint Jude, the patron saint of desperate cases and lost causes." – Torben Rick

Bring accountability to org-change by facilitating the winds of change through the PMO

Lasting organizational change requires a leader. Make it the PMO.

#1 Organizational resistance to change is cited as the #1 challenge to project success that PMOs face. (Source: PM Solutions)

90% Companies with mature PMOs that effectively manage change meet expectations 90% of the time. (Source: Jacobs-Long)

Why the PMO?

A centralized approach to OCM is most effective, and the PMO is already a centralized project office and is already accountable for project outcomes.

What’s more, in organizations where accountabilities for OCM are not explicitly defined, the PMO will likely already be assumed to be the default change leader by the wider organization.

It makes sense for the PMO to accept this accountability – in the short term at least – and claim the benefits that will come from coordinating and consistently driving successful project outcomes.

In the long term, OCM leadership will help the PMO to become a strategic partner with the executive layer and the business side.

Short-term gains made by the PMO can be used to spark dialogues with those who authorize project spending and have the implicit fiduciary obligation to drive project benefits.

Ultimately, it’s their job to explicitly transfer that obligation, along with the commensurate resourcing and authority for OCM activities.

More than a value-added service, OCM competencies will soon determine the success of the PMO itself

Given the increasingly dynamic nature of market conditions, the need for PMOs to provide change leadership on projects large and small is becoming a necessity.

"With organizations demanding increasing value, PMOs will need to focus more and more on strategy, innovation, agility, and stakeholder engagement. And, in particular, developing expertise in organizational change management will be essential to their success." – PM Solutions, 2014

28% PMOs that are highly agile and able to respond quickly to changing conditions are 28% more likely to successfully complete strategic initiatives (69% vs. 41%). (PMI)

In other words, without heightened competencies around org-change, the PMO of tomorrow will surely sink like a stone in the face of increasingly unstable external factors and accelerated project demands.

Use Info-Tech’s road-tested OCM toolkit to transform your PMO into a hub of change management leadership

With the advice and tools in Info-Tech’s Drive Organizational Change from the PMO blueprint, the PMO can provide the right OCM expertise at each phase of a project.

Info-Tech’s approach to OCM is a practical/tactical adaptation of several successful models

Business strategy-oriented OCM models such as John Kotter’s 8-Step model assume the change agent is in a position of senior leadership, able to shape corporate vision, culture, and values.

• PMO leaders can work with business leaders, but ultimately can’t decide where to take the organization.
• Work with business leaders to ensure IT-enabled change helps reinforce the organization’s target vision and culture.

General-purpose OCM frameworks such as ACMP’s Standard for Change Management, CMI’s CMBoK, and Prosci’s ADKAR model are very comprehensive and need to be configured to PMO-specific initiatives.

• Tailoring a comprehensive, general-purpose framework to PMO-enabled change requires familiarity and experience.

References and Further Reading

• COBIT
• ADKAR (Prosci)
• Standard for Change Management (ACMP)
• CMBoK (CMI)
• Kotter’s 8 Principles
• Managing Transitions
• Kubler-Ross Curve
• The Classic Change Curve
• Switch and The Rider Elephant War

Info-Tech’s organizational change management model adapts the best practices from a wide range of proven models and distills it into a step-by-step process that can be applied to any IT-enabled project.

Info-Tech’s OCM research is COBIT aligned and a cornerstone in our IT Management & Governance Framework

COBIT 5 is the leading framework for the governance and management of enterprise IT.

Screenshot of Info-Tech’s IT Management & Governance Framework.

Consider Info-Tech’s additional key observations

Human behavior is largely a blind spot during the planning phase.

In IT especially, project planning tends to fixate on technology and underestimate the behavioral and cultural factors that inhibit user adoption. Whether change is project-specific or continuous, it’s more important to instill the desire to change than to apply specific tools and techniques. Accountability for instilling this desire should start with the project sponsor, with direct support from the PMO.

Don’t mistake change management for a “soft” skill.

Persuading people to change requires a “soft,” empathetic approach to keep them motivated and engaged. But don’t mistake “soft” for easy. Managing the people part of change is amongst the toughest work there is, and it requires a comfort and competency with uncertainty, ambiguity, and conflict. If a change initiative is going to be successful (especially a large, transformational change), this tough work needs to be done – and the more impactful the change, the earlier it is done, the better.

In “continuous change” environments, change still needs to be managed.

Transformation and change are increasingly becoming the new normal. While this normality may help make people more open to change in general, specific changes still need to be planned, communicated, and managed. Agility and continuous improvement are good, but can degenerate into volatility if change isn’t managed properly. People will perceive change to be volatile and undesirable if their expectations aren’t managed through communications and engagement planning.

Info-Tech’s centralized approach to OCM is cost effective, with a palpable impact on project ROI

Info-Tech’s Drive Organizational Change from the PMO blueprint can be implemented quickly and can usually be done with the PMO’s own authority, without the need for additional or dedicated change resources.

Implementation Timeline

• Info-Tech’s easy-to-navigate OCM tools can be employed right away, when your project is already in progress.
• A full-scale implementation of a PMO-driven OCM program can be accomplished in 3–4 weeks.

Implementation Personnel

• Primary: the PMO director (should budget 10%–15% of her/his project capacity for OCM activities).
• Secondary: other PMO staff (e.g. project managers, business analysts, etc.).

OCM Implementation Costs

15% - The average costs for effective OCM are 10%–15% of the overall project budget. (AMR Research)

Average OCM Return-on-Investment

200% - Small projects with excellent OCM practices report a 200% return-on-investment. (Change First)

650% - Large projects with excellent OCM practices report a 650% return-on-investment. (Change First)

Company saves 2–4 weeks of time and $10,000 in ERP implementation through responsible OCM

CASE STUDY

Industry Manufacturing

Source Info-Tech Client

Situation

A medium-sized manufacturing company with offices all over the world was going through a consolidation of processes and data by implementing a corporate-wide ERP system to replace the fragmented systems that were previously in place. The goal was to have consistency in process, expectations, and quality, as well as improve efficiency in interdepartmental processes.

Up to this point, every subsidiary was using their own system to track data and sharing information was complicated and slow. It was causing key business opportunities to be compromised or even lost.

Complication

The organization was not very good in closing out projects. Initiatives went on for too long, and the original business benefits were usually not realized.

The primary culprit was recognized as mismanaged organizational change. People weren’t aware early enough, and were often left out of the feedback process.

Employees often felt like changes were being dictated to them, and they didn’t understand the wider benefits of the changes. This led to an unnecessary number of resistors, adding to the complexity of successfully completing a project.

Resolution

Implementing an ERP worldwide was something that the company couldn’t gamble on, so proper organizational change management was a focus.

A thorough stakeholder analysis was done, and champions were identified for each stakeholder group throughout the organization.

Involving these champions early gave them the time to work within their groups and to manage expectations. The result was savings of 2–4 weeks of implementation time and $10,000.

Follow Info-Tech’s blueprint to transform your PMO into a hub for organizational change management

Prepare the PMO for Change Leadership

• Assess the organization’s readiness for change.
  • Perform an OCM capabilities assessment.
  • Chart an OCM roadmap for the PMO.
  • Undergo a change management SWOT analysis.
  • Define success criteria.
  • Org. Change Capabilities Assessment
• Define the structure and scope of the PMO’s pilot OCM initiative.
  • Determine pilot OCM project.
  • Estimate OCM effort.
  • Document high-level project details.
  • Establish a timeline for org-change activities.
  • Assess available resources to support the PMO’s OCM initiative.
  • Project Level Assessment

Plant the Seeds for Change During Project Planning and Initiation

• Foster OCM considerations during the ideation phase.
  • Assess leadership support for change
  • Highlight the goals and benefits of the change
  • Refine your change story
  • Define success criteria
  • Develop a sponsorship action plan
  • Transition Team Communications Template
• Perform an organizational change impact assessment.
  • Perform change impact survey.
  • Assess the depth of impact for the stakeholder group.
  • Determine overall adoptability of the OCM effort.
  • Review risks and opportunities.
  • Org. Change Management Impact Analysis Tool

Facilitate Change Adoption Throughout the Organization

• Ensure stakeholders are engaged and ready for change.
  • Involve the right people in change and define roles.
  • Define methods for obtaining stakeholder input.
  • Perform a stakeholder analysis.
  • Stakeholder Engagement Workbook
• Develop and execute the transition plan.
  • Establish a communications strategy for stakeholder groups.
  • Define the feedback and evaluation process.
  • Assess the full range of support and resistance to change.
  • Develop an objections handling process.
  • Transition Plan Template
• Establish HR and training plans.
  • Assess training needs. Develop training plan.
  • Training Plan

Establish a Post-Project Benefits Attainment Process

• Determine accountabilities for benefits attainment.
  • Conduct a post-implementation review of the pilot OCM project.
  • Assign ownership for realizing benefits after the project is closed.
  • Define a post-project benefits tracking process.
  • Implement a tool to help monitor and track benefits over the long term.
  • Project Benefits Tracking Tool

Solidify the PMO’s Role as Change Leader

• Institute an OCM playbook.
  • Review lessons learned to improve OCM as a core discipline of the PMO.
  • Monitor organizational capacity for change.
  • Define roles and responsibilities for OCM oversight.
  • Formalize the Organizational Change Management Playbook.
  • Assess the value and success of your practices relative to OCM effort and project outcomes.
  • Organizational Change Management Playbook