This blog shares the essential elements from initial concept to implementation to tracking benefits.
Uncontrolled and poorly executed change significantly increases risk in organizations. This risk can manifest financially (e.g., cost overruns, unrealized business case benefits), operationally (e.g., inefficient processes, manual workarounds, control gaps, errors, change fatigue), or reputationally (e.g., service failures, regulatory censure).
Mitigating these risks requires a disciplined approach to identifying and managing risk throughout the entire change lifecycle. This blog outlines the fundamentals of an effective change management framework, covering all stages of the change lifecycle, from the initial concept and funding approval to implementation and benefits realization.
Front Door: Establish clear qualifying criteria up front.
Prior to allocating scarce financial or human resources to a project, it’s crucial to evaluate it in terms of:
- Regulatory and/or compliance obligations (“must-do”).
- Alignment with corporate strategy and/or commitments to investors and shareholders.
- Synergy, duplication or conflict with ongoing projects.
In essence, is this a priority for your organization? If so, allocate initial funding for a feasibility study and the development of a comprehensive business case. If not, minimize losses and consciously decide to cease further investment in it.
REAL EXPERIENCE: Triage before the work starts.
“Many organizations expend significant effort on proposals and finding support for projects that ultimately aren’t selected. While these projects may be feasible, if they don’t align with organizational priorities or meet investment criteria, they should not divert resources from more aligned projects. I recommend a ‘front door’ process to triage potential change projects before work starts. This can save time and frustration down the line.”
Investment Appraisal: Embed a rigorous investment appraisal process.
All change incurs cost, whether it’s internal resource allocation or external spend on vendor products and services. In today’s cost-constrained environment, it’s vital to effectively allocate limited discretionary investment funds. While most organizations enforce minimum ROI hurdle rates, payback periods and other “qualifier” metrics, many falter in scrutinizing project costs, benefits and assumptions in the level of detail required. To lessen this risk, consider these critical questions:
- What is the source of costs used in the investment case?
- Have these been independently verified?
- What contingency has been allowed and how does this compare to past experience?
Validate Project Assumptions Before Committing to a Budget
The single biggest change management risk is a project failing to deliver the promised benefits outlined in an investment case created months earlier and after significant expenditure. To mitigate this risk, invest time upfront validating project benefit computations and assumptions before allocating a limited investment budget. Consider these questions as part of your validation:
- Are assumptions credible? Can a clear link be established between project deliverables and tangible business improvements? Bold claims of improvements to metrics such as Net Promoter Score, customer retention or lifetime value are notoriously difficult to attribute to individual change projects. Approach any attempt to assign a dollar value to such claims with caution.
- How will benefits be measured, and what is the tracking mechanism?
- Is there a sponsor accountable for the forecasted benefits and willing to commit to realizing them when the change is implemented?
REAL EXPERIENCE: Challenge optimistic vendor assumptions.
“Bear in mind that when a vendor responds to an RFP, their response will likely reflect the ideal scenario (e.g., seamless onboarding, unlimited availability of business SMEs and IT resources, no infosec or other governance requirements to navigate and minimal configuration effort required on their part). Make sure you challenge any assumptions behind time-to-value claims and ask for testimonials from similar clients to verify the realism of costs and projected benefits associated with their solution.”
In-Flight Monitoring: Keep in-flight projects under continuous review.
Funding approval should not be seen as a blank check. Make use of governance routines to monitor the vital signs of active projects to maximize return on investment across the change portfolio. For each project, regularly evaluate:
- Will it deliver on time?
- Will it deliver on budget?
- Will it deliver the agreed scope?
- Do cost and benefit assumptions remain valid?
If the answer to any of these questions is no, consider necessary course corrections, impacts on forecasted benefits and whether revised costs and benefits still meet your investment criteria.
For larger projects, use formal tollgates tied to key milestones to manage the phased release of funding. With the most recent and accurate information at hand, assess whether the project remains the best use of resources.
REAL EXPERIENCE: Exercise caution when reducing scope to save time or money.
“In my experience, hastily reducing scope to cut costs or meet deadlines can have long-term consequences, often leading to manual workarounds that introduce operational risk and negate expected time savings due to errors, inconsistencies and poor controls. These workarounds then become the “new normal” because there is seldom funding or desire to make good sub-optimal processes after the fact.”
Business Readiness: Enforce a disciplined approach to implementation.
As the go-live date approaches, focus typically shifts to implementation and expectation builds. Commercial considerations and stakeholder demands can pressure implementation of change that may not be ready.
Address this risk with a disciplined approach to business readiness approval. Establish minimum go-live criteria with all stakeholders during planning and adhere to these standards in a formal “Go/No-Go” decision point.
Define clear business readiness tollgate criteria and schedule a formal “Go/No-Go” decision point with stakeholders. Consider the following factors:
- Testing (coverage and quality) is complete and the timeline for any deferred bug fixes is acceptable.
- Training meets user needs, including any short-term workarounds.
- Change can be absorbed by affected teams.
- Customer communications have been issued.
- Procedures documentation has been updated to reflect new ways of working.
- A benefits tracking mechanism is in place (including methodology and ownership).
REAL EXPERIENCE: Pay close attention to corrections and fixes.
“Avoid shortcuts in user acceptance testing and defect prioritization. If fixes need to be deferred after go-live, consider: Is an interim manual workaround required? Are business and customer impacts fully understood? What is the target delivery date and confidence level in achieving it What is the contingency plan if this date is not met? Are all stakeholders in agreement with proposed treatments?”
Benefits Realization: Ensure that the project delivered the promised benefits.
Ultimately, assess if your project delivered the benefits originally committed in the business case. Organizations often overlook tracking and reporting benefits realization. Due to the effort required to complete a project it can be tempting to move on to the next priority. It’s crucial to validate benefits and value creation as a key component of your change management framework.
If the project has not achieved the anticipated benefits, consider the following:
- What lessons can be learned?
- How can these lessons inform future projects at the investment appraisal stage?
- What is the profit & loss impact and what are the implications for financial planning?
- What are the operational and reputational risks arising from impacts on colleagues and customers?
Every Thursday, Collections & Recovery sends out an exclusive email packed with analysis on the newest trends in collections strategy, the shift to digital collections, best practices for vendor management, and deep-dives into regulatory and compliance issues that matter to you. The only way to get it is to subscribe.