Importance of Organization Change Management (OCM) in large programs.
In the context of programs that involve fundamental change in the IT delivery model for clients, the focus on organization change management (OCM) required or the scale and the coverage required for the exercise is usually overlooked.
Most customers tend to rely on the deal consultants who have advisory services to address the OCM requirements. Usually the answer is," Yes", we have factored in the need for the change and we have an internal team working on it along with our HR.
Most sales people do not factor in OCM as a part of the solution. The sales team does not push to add an OCM component fearing the increases in the deal cost.
This mind set and approach usually result in a poorly designed organization structure and an eco system, including the business, which poorly understands the new delivery model and has incorrect expectations.
While the business case would be met both on the client side and the vendor side at the start of the deal, the misalignment of new organization structure results in operational pains that has the potential to derail the business case on both sides resulting in statements like "I knew that this would not work for us. This was a cost cutting mechanism that failed for us ...". "The client organization is unreasonable..". "The internal staff is not aligned with management and has wrecked this initiative..."
Based on my experience from multiple deals, following are anecdotal situations during transition
- Surprised Business user --> I am used to calling Joe to get this resolved.... now I have to call and log a ticket?
- IT manager with expectation mismatch --> I need a resource with X years of experiences in this skill and this technology and to be located in this town like how I had in my team before!!
- IT manager in the retained organization with misalignment of capabilities and role Not ready to manage vendor but wants to be hands on and manage work instead of monitoring and measuring results.
- Staffing mismatch by vendor --> Resource mix and experience is changed to accommodate the reality of the retained structure or in some cases this adjustment does not happen resulting in addition friction.
- New governance is not adequately adjusted to the change
In an organization that changes the way IT has been delivered from an in-house organization to a vendor managed organization or to a completely outsourced organization, each stakeholder will wake up to a new world the day the transition is complete. If the stake holders, whether it be the CIO, the IT manager, the Business VP or the end user, are not oriented and have an training of what to expect and how to operate in the new environment then the chance of the program and the business case being met will be jeopardized and the business potentially impacted.
The key to success is to plan for the change ahead of time. Budget for the change management exercise. Involve the vendor in the change management exercise and not treat the vendor as a piece of puzzle that will fit in. The change management required will depend significantly on the model being proposed by the vendor and the organization structure that the vendor is proposing/building as a part of the solution. This will potentially be different for each vendor and is not a one size fits all vendor. Involve the business and the end users in the communication and the training.
Paying close attention to the structure of the retained organization and the skill set of the resources that will be part of the retained organization is key. A manager who is highly technical may not fit the role of a retained vendor manager even though s/he may have deep expertise in the underlying technology but may not be able to manage and coordinate geographically dispersed vendor teams. The change requires that the role transform from a "Responsible" to an "Accountable" role. To add clarity, earlier the manager was responsible and accountable for the delivery of the IT function using his/her teams. In the new scheme of the organization, the manager is still accountable but the vendor teams are responsible for delivery and the client manager has to manage this using a set of pre determined KPIs and vendor management/governance mechanism. This change is not easy and often times require that a new person handle the role.
A regular and well defined process is required to ensure that the organization has the ability to train and orient a new employee to the delivery model. A periodic refresher in the initial years of the journey would help to align the entire initiative to the goals set out during the start of the program. Creating a potential set of scenarios that might arise in the new way of working and understanding the potential workflows and governance required for it will ensure that both sides understand how each other would react in some of these tough situations.
Understanding the vendor model and the vendor organization's proposed solution is very important. The level, role and the internal KPI of the key vendor resources deployed will play a crucial role in the success of the engagement. Ensuring that there is alignment of these to the KPIs of the initiative is very important.
Summary of key takeaways
Incorporate OCM right from the beginning
Involve all stakeholders including business
Design the retained organization with care and select the right people
Involve the vendor in the retained organization definition
Define goals and KPIs on both sides
Conduct refreshers periodically during the initial years
The client must understand the KPI of the vendor key resources
Prepare and play out some of the scenarios ahead of time