Inpact Presentation May08v31

INPACT Integrated Process and Culture Transformation Find out how our INPACT consultants could save you £000s INPACT

What is INPACT Consultancy?  An INPACT consultant has the training in INPACT methods and tools and the experience to be able to rapidly and cost effectively:  Assess your transformation project  Identify the barriers to success  Quantify the impact these barriers will have on costs, timescales and planned benefits  Help you develop an action plan to overcome the barriers and save you £000s In this presentation we will show you some of the models and tools we use to achieve these results INPACT

But first… What is a transformation project?  The term “transformation” means different things to different people:  “Making significant changes that fundamentally alter the way business is done”  “Changing something for the better within our organisation”  “Making continuous incremental improvements within our products and services”  Clearly there is a scale difference between:  a project to re-engineer the way an organisation carries out core business processes  a small, incremental change to a particular aspect of its business  But the leading management gurus (Hamel, Kanji, Kotter, Pascale, Senge, Tushman etc al) recognise that the success of any business change project is dependent on how it changes the way people think and behave INPACT

What is a transformation project, cont…?  We believe that it is this dual focus on  a) business process and structure change, and b) corporate culture change that defines a business change project as transformational  Hence we have adopted the term Transformation Project to mean: “any change project or programme that introduces significant change to the way an organisation works”  This includes process improvement projects, introduction of new IT systems, restructuring and rationalising organisations and supply chains etc INPACT

Why do transformation projects fail?  A recent CIPD survey of 800 executives found that reorganisations failed to deliver real improvement in performance in 40% of cases  Standish Group surveys confirm that:  In large companies, only 10% of IT projects are completed on-time and on-budget  Average completion time exceeds twice the original estimate  An average 90% project contingency is required to achieve 100% of planned benefits  The Harvard Business School tracked the impact of change efforts among the Fortune 100 and found that only 30% produced a positive bottom-line improvement INPACT

Why do transformation projects fail, cont…?  A recent survey of change programmes in <400 European organisations quoted by Prof. John Oakland, Emeritus Professor, Leeds University Business School found that:  90% of change programmes faced major implementation problems  Only 30% delivered measurable business improvements  Management consultant PricewaterhouseCoopers claim that 25% of IT projects succeed. 25% fail and 50% are late or over budget (March 2007) Why is this? INPACT

Why do transformation projects fail, cont…?  Here are some of the reasons we all know about:  a focus on the technology instead of the business benefits  poor specification of the system and lack of due diligence on supplier capability  failure to gain senior management championship  Inadequate resources  poor project management  lack of user involvement  But if we all know about the reasons, why are transformation projects still going wrong so often? INPACT

Why do transformation projects fail, cont…?  It turns out that success rests as much on the capability of the organisation to cope with change and take advantage of new systems, as on how well the project was planned and implemented  John McKean, Executive Director of the Ohio-based Center for Information Based Competition is quoted as saying that 85% of project success is dependent on factors related to people  AMR Research found that even amongst successful implementations, 47% of companies reported serious challenges with end-user adoption that often put projects in jeopardy  Gartner believe that companies that spend less than 17% of ERP implementation budgets on training put their projects at increased risk of failure INPACT

The INPACT Approach  So the INPACT Assessment focuses on:  The Organisation • Management culture • Business process capability  The Project • Complexity • Benefits realisation • Suitability of IT system • The relationship with partners and other external stakeholders • etc INPACT

The INPACT Approach  The INPACT models and tools provide a framework for:  identification of the barriers to successful delivery of a change project  assessment of the impact these barriers can have on the costs, timescales and planned benefits  The INPACT Assessment delivers a quantified output to enable objective discussion and mitigating actions to be agreed  at the planning stages of a project to focus attention on the actions needed to deal with the risks  as a healthcheck to an ongoing project, to monitor progress  to rescue a project that has failed INPACT

The INPACT Approach  In this presentation we will describe how we use three of the INPACT models:  Mapping the organisation’s management culture  Mapping the organisation’s business process capability  Assessing the relative complexity of the project INPACT

Why do transformation projects fail? 1. Management culture  There is an underlying tension between the individual and the organisation which affects every aspect of the way that organisation works and its capability to introduce - and take advantage of change  The nature of this tension needs to be understood, brought out and dealt with, to be successful in bringing change into the organisation  The INPACT Management Culture model provides a framework for us to identify the dominant management style and indicate how well the organisation will cope with change  The model is based on an evolutionary spiral, with each style building on the previous styles, as shown in the following slides INPACT

Mapping the Organisation’s Management Culture - 1 We all start by doing everything ourselves = 1. Pragmatist Style This works for a while, but… 1 Pragmatist/Anarchic INPACT

Mapping the Organisation’s Management Culture - 2 As we grow, we need to delegate. This needs rules and processes = 2. Structuralist Style 1 Pragmatist/Anarchic 2 Structuralist INPACT

Mapping the Organisation’s Management Culture - 3 The problem with the Structuralist style of management is that it 3 becomes bureaucratic and Rationalist ‘tribal’. So we reorganise, streamline our processes and develop a 3. Rationalist Style 1 Pragmatist/Anarchic 2 Structuralist INPACT

Mapping the Organisation’s Management Culture - 3a And notice where this needs to fit… The trouble is, re- engineering processes doesn’t seem to work very 3 3 Dialectic Rationalist well. Why? Well perhaps we didn’t spend enough time gaining the ownership for the changes = 1 Pragmatist/Anarchic 2 3. Dialectic Style Structuralist INPACT

Mapping the Organisation’s Management Culture - 4 Now we have aligned the aspirations and motivation 4 of the individual with the 3 Dialectic Aligned policies of the organisation, the Rationalist Style becomes the 4. Aligned Style 1 Pragmatist/Anarchic 2 Structuralist INPACT

Mapping the Organisation’s Management Culture - 5 And when everyone is pulling in the same direction, 4 we can relax the rules, give 3 Dialectic Aligned people more control over how they achieve results = Pragmatist Style again, only this time it’s aligned, not anarchic, as it was in the 1 Pragmatist/Anarchic first cycle. 2 Structuralist = 5. Pragmatist/Aligned 5 Pragmatist/Aligned INPACT

Mapping the Organisation’s Management Culture - 6 Now that the organisation is working as a team, 4 communication can flow 3 Dialectic Aligned undistorted, across functions as well as up and down – so management decisions can be better informed and the 1 Pragmatist/Anarchic organisation can focus on 2 the real world outside itself Structuralist = 6. Empiricist Style 5 Pragmatist/Aligned 6 Empiricist INPACT

Mapping the Organisation’s Management Culture - 7 7 Imaginist A manager in an Empiricist style organisation has the 4 information to make radical 3 Dialectic Aligned ‘leaps of faith’ and innovative decisions = 7. Imaginist Style 1 Pragmatist/Anarchic 2 Structuralist 5 Pragmatist/Aligned 6 Empiricist INPACT

Mapping the Organisation’s Management Culture - 8 7 8 Imaginist Systemicist Once the organisation is working as well as this, the 4 captain at the helm can stop 3 Dialectic Aligned fire-fighting and intervening and start navigating = 8. Systemicist Style 1 Pragmatist/Anarchic 2 Structuralist 5 Pragmatist/Aligned 6 Empiricist INPACT

Mapping the Organisation’s Management Culture - 9 7 8 Systemicist Imaginist Finally, we come back to the place where we started, with the 4 individual now not only being 3 Dialectic Aligned fully empowered but supported by visionary management = 9. Pragmatist/ Empowered Style 1 Pragmatist/Anarchic Did you notice the way 2 these styles are distributed Structuralist in a spiral? There’s a reason 5 Pragmatist/Aligned for that.. 6 Empiricist 9 Pragmatist/Empowered INPACT

Mapping the Organisation’s Management Culture - 10 Each of the styles on red axis focuses on the 8 individual within the 7 Imaginist Systemicist organisation and their INTERNAL responses… while each of the styles on 4 3 3 the blue axis focuses on the Dialectic Aligned Rationalist organisation and its EXTERNAL or organisational responses. Imagine a pendulum 1 Pragmatist/Anarchic swinging from INTERNAL to 2 EXTERNAL, and rising as it Structuralist does so - each style builds 5 Pragmatist/Aligned on the last one, it doesn’t 6 replace it. Empiricist 9 Pragmatist/Empowered EXTERNAL INTERNAL FOCUS FOCUS INPACT (Organisation) (Individual)

Mapping the Organisation’s Management Culture  In order to progress up the management evolution spiral we have to recognise and fully deal with the underlying tension between  INTERNAL FOCUS - the individual, playing a meaningful role in the organisation, and  EXTERNAL FOCUS - the way the organisation uses people to succeed  Having identified the dominant management culture, the focus shifts to the organisation’s Business Process Capability INPACT

Why do transformation projects fail? 2. Business process capability  The second key factor affecting the capability of the organisation to cope with change and take advantage of new systems, is the way it manages its processes, or its business process capability  The majority of larger organisations are working with a piecemeal set of systems and ad-hoc processes still proliferate  Even where ‘core’ systems such as finance and operational processes have been standardised, there are many instances of work-arounds and non-compliance  And those organisations that have introduced sophisticated enterprise-wide systems report that they are often not being operated consistently across the organisation INPACT

Mapping the organisation’s business process capability  So understanding how well an organisation is managing its business processes will provide a useful reference point for assessing its capability to manage the transformation project  The model we use to assess an organisation’s process capability is the Capability Maturity Model  It is adapted from a generic model, originally developed by Brett Champlin at the Software Engineering Institute (SEI), Carnegie Mellon University  The model comprises a 5-step classification system to describe processes, from Ad hoc to Integrated, and associates the capability to manage processes, from Chaotic to Cooperative Optimisation INPACT

Capability Maturity Model Process control 5.Optimised Continuing Effective process Improvement Process measurement 4.Managed Quality and Productive Measured process Improvement Process definition 3.Defined Consistent Execution Standard process Basic management control 2.Repeatable Controlled environment Stable process 1.Initial Chaotic Ad hoc process Source:Brett Champlin INPACT

Organisational capability: Putting them together  The majority of organisations that are at levels 1 and 2 on the Management Culture model are also at levels 1 or 2 on the Capability Maturity Model  Those that have moved up the management culture spiral to Dialectic and Aligned styles are also likely to have developed more defined and standardised systems and processes  Combining the two models provides a useful baseline for an organisation to assess its capability to manage change and how successful it will be in introducing cross-department systems and processes – see next slide INPACT

Organisational capability: Putting them together Business Process Capability Management Culture Level 1 2 3 4 5 1. Pragmatic/ Anarchic Low Low 2. Structuralist Low Low Med 3. Dialectic Low Med Med Med 4. Aligned Med Med Med High High 5. Pragmatic/ Aligned High High High 6. Empiricist High High High 7. Imaginist High High V.High 8. Systemist High V.High V.High 9. Pragmatic/Empowered V.High V.High V.High In this example, management culture is Aligned and process capability is at level 3 INPACT

Why do transformation projects fail? 3. Project complexity  Having looked at the organisation’s capability to manage its people and its business processes, the third area of focus is the project itself  The literature is full of cases where IT-based change projects failed or were late and over budget, due to a combination of factors. It didn’t seem to matter how well a project was planned, at some point, if it was too complex, it would ‘go off the rails’  So project COMPLEXITY is a key factor  The INPACT assessment looks at project complexity in its own right and in the context of the capability of the organisation INPACT

Project complexity  The complexity of projects depends largely on the combination of three factors: 1. Number of People or functions involved • an approximation might be those stakeholders represented on steering and project groups 2. Number of business Activities or processes affected • for example the number of manual processes an automation project will ‘touch’ and change 3. Elapsed Time (in months) to implement • from issue of spec/ITT to planned roll-out  Put these into an equation: P x A x T Where does this put your project on the Complexity scale? (see next slide) INPACT

Exponential Complexity Tool Beyond this point your project is too complex – break it down into 1200 separate projects and employ a programme manager 1000 2500 Complexity Factor A complex project – needs 800 2000 an experienced P project manager A 600 1500 Not simple - needs some T 1000 400 project Factor Simple management project 500 200 0 1 2 3 4 5 6 7 8 9 10 INPACT

Mapping project complexity on to organisational capability  Projects that are more complex than Not Simple are unlikely to be fully successful in an immature organisation i.e. level 1 or 2 Management Capability and anything lower than level 3 Process Capability  So the relative relationship between project complexity and organisational capability needs to be understood  This can be done by taking the combined Organisational Capability value and plotting it against the Complexity value as the two axes of a simple chart - see next slide INPACT

Mapping project complexity on to organisational capability In this example, project complexity is Complex and organisational capability is Medium High Med Capability Low Not Too Simple Simple Complex Complex Complexity KEY Go ahead, the project looks as if it’s within your capability Be careful, this project may not succeed fully in realising its benefits Stop! This project is not within your organisation’s capability. Carry out an assessment and adjust your plans INPACT

How can an INPACT Consultant help you? Project Managers  Planning a project?  Or worried about a project that is not delivering planned benefits? Solution Providers  Facing the prospect of delays and lower than expected returns on a fixed price contract? An INPACT consultant has the training and the experience to:  Assess your transformation project  Identify the barriers to success  Quantify the impact on costs, timescales and planned benefits  Help you develop an action plan to overcome the barriers and save you £000s Contact us for more information – see next slide for details INPACT

INPACT Integrated Process and Culture Transformation For more information contact peterd@imaginist.co.uk Or visit our website: www.inpactuk.net Our consultants could save you £000s INPACT

Inpact Presentation May08v31

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