In Conversation With Bob Hennessy, CEO Bearing Point - Business Transformation

In Conversation With…
Bob Hennessy
Chief Executive Officer
BearingPoint

“Change Management:
IT Enabled Business Transformation”
October, 2010

Executive Briefing Series ‘In Conversation with…” Presented by Robertson Executive Search
Contact: pgoddard@robertsonsearch.com
prush@robertsonsearch.com

L10/ 155 George Street, Sydney AUSTRALIA 2000

Introduction

Change and transformation have become core organisational activities

that have become central to how organisations gear themselves for

competition, deliver ongoing increased margins to shareholders and

better products and services to customers.

A PwC 2004 study of 200 companies found a clear link between

change management, high performance and a high project

management maturity level. They found that 59% of project

failures are caused by organisational aspects.

The key to unlocking value is how change is perceived and the

degree change is embraced in organisations. Information

technology is central in delivering high impact outcomes.

Bob Hennessy, CEO of BearingPoint and several key CIO’s and

executives from leading Australian organisations gathered at

Robertson Search to discuss how they and their teams manage

change and share their collective experience.

What is central to change/transformation programs?

Bob shared his early experience with change management, circa

1982, with respect to the steel industry. The organisation wanted

to change the production methodology from specific runs of



products to instead, produce what clients needed at any

anytime.

Bob shared how he and his team built a change management

prototype to determine the effect and impact of the change in

processes. This enabled him to ‘sell’ the concept to the larger

organisation and especially the workforce.

Bob contrasted this experience to a change program that he

dealt with in 2010: this Fortune 500 company was commencing a

$2billion change program and was advised it could be done in a

16 week period, by their advisors. It became clear in the post

implementation review, that 4 to 6 of the key stakeholders

admitted to not owning let alone knowing, about the project.

Suffice, it to say, this program was not successful.

These examples highlighted the dilemma faced by executives:

when will organisations and change leaders learn and practice

the essentials of managing change, successfully?

A few years ago, McKinsey published a study based on 40 large

scale industrial change projects. They found that the ROI of such

projects was 143% when an excellent Organisational Change

Management (OCM) program was part of the initiative; but only

35% when there was a poor OCM program or no program.



The 11 most successful companies in the McKinsey study had

excellent OCM programs and shared the following features:

* Senior and middle managers and frontline employees

were all involved;

* Everyone's responsibilities were clear;

* Reasons for the project were understood and accepted

throughout the organisation.

“Change management or transformation is all about

and around people – not just systems or the next great

methodology (which assists with program management but

is not about the process of managing change).”

What are the stages of transformation?

Bob spoke about stages of transformation and where change

management fits within project life cycle or transformation

program and made the point that change management is not a

‘nice to have’ but a must have to avoid failure.

The three stages of transformation that he highlighted were:

1. Positioning the strategy defines the new business model

and operations

2. Realisation implements changes across people, process

and technology



3. Transition migrates customers and operations from the old

to new order

1. Positioning 3.
Reta Wholesal
Custo mer
Transition
CustomerService Products
Ch an nels
Targ et
Service Channels
Target Customer Relationship Data Quality
Customer Business
Business Marketin g
Marketing Customer
Value
Value Pro po sitionModel
Strategy Communications Migration Data Migration
Bund ling &
Proposition Pricin g
Core Bundling &
Core Cap abilities Partn Pricing
ers /
Capabilities Partners Supp liers
/ Satisfaction
Suppliers

Governance

Program Transformation Business
Representation
Management
Management
Architecture / Design Vendor
Order Authority Management
Leadership
Provisioning
Campaign Billing & Motivation
Structure
Receivables
Process Organisational
Sales
Transformation
Customer Ticketing
Roles /
ResponsibilitiesChange Culture
Problem CRM
Service Billing /
Communications
Monitoring Website / Collections
Portal NextGen HR, AR, GL
Order Systems
Management
Workforce
Inventory Infrastructure
2. Realisation Management

The diagram above illustrates how transformation management

is essential in:

1. the positioning of the business strategy with all stakeholders;

2. ensuring that there is a cohesive and transparent strategy to

manage this change

3. how to transition to customer migration.

What are the risks involved with change?

Bob went on to discuss the risks involved with change:

1. Leaders assume the organisation is ready for change.

2. Not enough people know the business reasons for the

change.

3. Top and middle management do not support the change.

4. The change is developed without input from those whom it

affects. This problem is compounded by inadequate

information sharing before, during and after the change.



5. Managers’ and employees’ job roles, accountabilities and

performance metrics define and reward the “old” way of

conducting business.

6. Employees lack or do not receive the knowledge and skills to

make the change.

7. Leaders do not budget resources to help avoid the first

six risks.

What are the critical success factors?

1. Organisation & Governance

 Transformation Program outcomes should be aligned to

strategic objectives and executive performance metrics

 Executive leadership and commitment to Transformation

Program is critical

 Strong stakeholder engagement

 Balancing innovation and risk against strategic objectives

2. Change & Communication

 Effective, consistent and timely communication at all levels of

the organisation

 Ensure a comprehensive change management program to

embed the Transformation into the organisation

 Embed a culture of continuous improvement that continues

post Transformation Program

3. People


 Acquire and / or leverage best possible available expertise

 Leverage vendor capabilities

 Integration of existing suppliers (if relevant) into the

Transformation Programme

4. Finance

 Sufficient budget via the submission of a successful business

case, to allow delivery

 Iterative Financial and Statistical Analysis

 Articulate benefits from Transformation Program and track

through to realization

5. Approach

 A robust and empowered governance, to ensure that the

program delivers on time, to cost and quality

 Sustained support from the Executive Stakeholders

 Robust risk management

6. Information

 Ensure metrics are specific, measurable, achievable, realistic

and timely

 Ensure metrics are accessible

Why transformation projects fail?

Bob spoke extensively about this topic and out lines the following

errors and model:



Error #1: Not establishing a great enough sense of urgency

Error #2: Not creating a powerful enough guiding coalition

Error #3: Lacking a vision

Error #4: Under communicating the vision by a factor of ten

Error #5: Not removing obstacles to the new vision

Error #6: Not systematically planning for and creating short

term wins

Error #7: Declaring victory too soon

Error #8: Not anchoring changes in the corporations culture

The ‘Australian’ Factor

Bob further highlighted the ‘Australian’ factor. In his experience

there is a greater degree of complexity and depth in the supply

chain and management thinking in Australia, which change

initiators do not account for.



It would appear that there are more complex business planning

systems in Australia compared to other geographies, as we ‘play

high and low’. We are more diversified and also more regulated.

Australian demographics mean that we often have to outsource

or import talent, which in itself modifies how organisations

approach change. We are a multicultural workforce and this

reflects in how we approach change.

A case in point, as asserted by the group, was that there have to

be more women in IT and especially in leadership roles. He

commented that he believed that women add an extra dimension

in stakeholder and people management in large scale

transformation projects. The Australian experience in that there

are many women in change communications but not enough

being nurtured by functions like Finance and IT, to make a

significant difference. Change encompasses the organisation,

but it is often the Finance and IT functions that form the basis of

internal operational excellence. The female diversity aspect in

these areas needs to be improved.

Bob concluded that success depended on managing these risk

factors and successfully accounting for the ‘Australian’ factor.

Conclusion

The CIO and their teams need to become a driver of business

rather than a cost centre.



There was significant consensus that transformation programs

work best when there is the ‘smell of death’ hovering over the

organisation – change or die.

The people who design transformation roadmaps are too smart

ie: “it doesn’t matter what I know, it is what can I get my

organisation to behave like it knows”, that counts. Change

management isn’t just what you do after you’ve planned out your

transformation ... it needs to be built into the thinking as an input

or even a constraint to the aspiration.

Underlining this was the realisation that change from ground up

is key if organisations are to streamline for efficiency and deliver

value.



Attendees

Company Attendee Title

APN Tim Catley CIO

BearingPoint Bill Katsaros Partner

BearingPoint Bob Hennessy CEO

DHS Steve Sloan Director

Macquarie David Reeve CIO

Deloitte David Spreadbury Director

Consultant Frank Ruscio Consultant

TNT Express Gary Smith ICS Director Asia Pacific

GrainCorp Glenn Mason CIO

Associate Partner Karsten Hansen Associate

Partner Paul Rush Partner

Robertson Executive Peter Goddard Managing Partner
Search



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