It's been said: People don't mind changing; they just don't like being changed. And that's a fundamental principle underlying the practice of organizational change management--a practice that can mean the difference between success and failure when implementing new technology."When change management is used successfully-when there's a clear definition up-front about what the objectives are and those objectives tie back to the right business goals-the projects I've worked on have had 100% success," says William Speir Jr., change management portfolio manager at Hartford Technology Services Co. (HTSC), a subsidiary of Hartford, Conn.-based The Hartford Financial Services Group.
For IT projects that don't follow these guidelines, however, the success rate is only about 40%, he says.
Indeed, without effective change management, a technology project can fail-even if the technology itself works, Speir says. "Technology either works or it doesn't work. If it doesn't work, you can fix it. But if the new technology is not accepted by the people who are going to use it, it could be the perfect system-but it's not going to be used properly. It's very difficult to overcome that kind of failure," he says.
To avoid that kind of failure when implementing a new Web-based auto claims collaboration tool in 2001, Dan Watchorn, then vice president of operations and claims for HB Group, a Mississauga, Ont.-based insurance company, was a stickler for managing the change effectively.
Falling into trouble
"If you read enough, you realize so many implementations fail because bright minds look at the technology and theoretically understand that it should work-and they just put it in," says Watchorn, who is now vice president of client relationship management at the Co-operators Group, the Guelph, Ont.-based parent company of the HB Group.
"Instead of having the technology incorporated as a process change, they just add it on to existing processes," he says. "And that's where you fall into trouble."
HB Group averted trouble by including front-line operational management and staff in the process of establishing expectations and identifying benchmarks at the beginning of the project. The benchmarks compared the old system with the new one.
"My goal was to make sure everyone participating understood that we were expecting to see gains by using this new application," Watchorn says. "I wanted to get more people engaged in what the benchmark findings were-and make sure we all agreed on the findings."
In fact, at first, people didn't agree on the findings, because they interpreted the benchmarking data differently. "When we looked at the raw data, on the surface it looked as if our preferred vendors had better severity numbers than our nonpreferred vendors," says Watchorn. "But when we really started drilling into it, we realized we weren't comparing apples to apples."
Some operational employees noted that because HB Group has staff appraisers that assess damage on most claims, the impact of the new technology on repair costs was not as significant as it might be for a company that didn't have internal appraisers.
But HB Group for certain was saving in rental car costs by using the new technology-because turnaround time with its preferred vendors was two days less on average than with nonpreferred vendors. "If you can see an average of two days' turnaround difference, and your average rental is $30 per day, there's a $60 savings per file," Watchorn notes. "That's concrete evidence of direct-dollar savings."
In response to the input he received from the operational staff, Watchorn removed the arguable severity numbers from the return-on-investment equation for the new claims technology, he says. "The real gain that we were able to validate-and everyone agreed on-was that our preferred shops complete repairs more quickly. That was real."
The up-front discussions with HB Group's operational staff took several weeks of going back and forth, but it was time well spent, according to Watchorn.
"I was not prepared to go forward with full implementation until I found general acceptance with what the results were," he says. "Oftentimes, operational people are very skeptical about the basis of a decision to move onto a certain platform. And you find out years later that they made certain assumptions . . . and everyone starts pointing fingers. I wasn't interested in seeing that happen."
Confused with training
Indeed, to ensure acceptance of new technology, organizations need to spend time and attention up-front on the definition of goals as well as on communicating throughout a project, says HTSC's Speir.
"People confuse change management with training," he says. "But training is what you do at the end of an implementation. By then, it's too late to engage people in the organization to be part of the change. All you're doing is telling them what's going to happen, and hope they'll adapt."
In addition to having regular discussions in a focus group composed of a representative sampling of employees, Speir suggests holding town hall meetings to discuss changes with as many employees as possible.
"This speaks to the cultural aspect of adapting to change and giving change credibility," he says. "You let people know what is happening, what is being planned, and what is being thought. That's how you plant the seeds of acceptance. People get a heads-up and a sense of inclusion. And that's the first step to generating the buy-in you need to be successful."
Clear communication among the key players on a project is also necessary to successful technology implementation, according to sources.
The Hartford's life company operations recently developed and installed a new system for U.S.A. PATRIOT Act compliance. Tying 20 to 25 different life operations systems together, the new system enables The Hartford to maintain a centralized "good guy" directory of names-updated daily-which speeds up background checks for applicants whose names have been previously scanned.
A project leader from the Hartford Technology Services Group ensured that all business leaders and sub-project teams were communicating with each other and approaching issues in a consistent way throughout the 18-month development process, says Scott Mansolillo, vice president and director of compliance for The Hartford Financial Services Group.
"We'd have an executive sponsor meeting every two weeks or every month," which included senior business leaders and project managers, Mansolillo says. "It was a very useful hour to make sure the sub-project managers were kept on task and on budget and focused on getting from point A to point B," he says.
Too often, however, complex IT projects are derailed by myopic thinking. "I've seen organizations that have gone through mergers where they didn't have a clear understanding of what they were trying to achieve-and they were trying to integrate a lot of different pieces," HTSC's Speir says.
"They became so involved in the internal aspects of 'who's on first' and what responsibilities each manager was going to get that they completely lost sight of their customers."
A better way is exemplified by an SAP implementation at a telecommunications company, which Speir declined to identify. HTSC brought in a change management team to this firm and realized the project was going to affect every employee-tens of thousands of people.
"We looked at every aspect of how the employees' work was going to change-the roles and responsibilities, the management structures and practices that were necessary to hold the changes together, the reward and compensation programs, the measurement programs-to make sure the right behaviors were encouraged and the wrong ones discouraged," he says.
Through effective change management, every person at this company knew where they fit, and how their contribution ultimately satisfied the customers and shareholders, he says. The project took 18 months and came in under budget, ahead of schedule, with no identified defects during the first 90 days of operation, he adds.
"Change agents are the most hated people in the world," says Tim Suppes, vice president of operations at Wayne Mutual, a Wooster, Ohio-based regional insurance company, which recently went through the arduous process of switching to a new IT outsourcing provider.
Executive backing is critical to ensuring success with a technology implementation, he says. "If you don't have that, you're just swimming upstream." In addition, "you've got to make sure you have someone who can sell (the project), who also has the authority to make it happen," Suppes says.
HB Group had a lot of skeptical people at the beginning of its Web-based claims collaboration implementation, Watchorn admits. "A lot of companies fail to put as much emphasis as we put on change management."
But, after working with people to discuss how HB Group conducts its business, how new technology can add value, and by making all the process changes necessary to make the claims tool an integral part of the claims operation, "we couldn't rip this out of (the users') hands now," Watchorn says.
Avoiding unintended consequences of technology change
Technology implementations don't occur in a vacuum. In fact, the payoff of most new applications--which includes more efficient workflow, less manual intervention, and higher productivity--almost always involves work process changes.
"Let me provide an analogy," says William Speir Jr., change management portfolio manager at Hartford Technology Services Co. (HTSC), a subsidiary of The Hartford Financial Services Group, Hartford, Conn. "Think about a piece of fabric. If you start pulling one thread, the rest of the garment bunches up around it. It's the same way with change. One change affects many areas."
Hartford Technology Services Co. provides change management services to help companies focus on all areas of the organization that will be impacted by a new technology. The goal, according to Speir, is to manage those impacts effectively and avoid unintended consequences.
To that end, HTSC consultants work with companies to view the implementation of a new technology from three perspectives:
- The strategic point of view. What is the benefit of the change? How will it support your company's goals and objectives? How will it help your company respond to customers and shareholders?
- The operational point of view. How will the way work gets done be changed? What are the ripple effects? If you change activity in one area, how will that affect other areas of your organization?
- The organizational point of view. What new behaviors are needed? How do you enable those behaviors? And how do you make the change sustainable over time?
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