Leading principles for IT related organisational change

Leading principlesfor IT relatedorganisationalchangeIBAFrame study results – May 2010

Change register presentation • This presentation is an update of the edition of April 2010 • Changes with reference to this April-version are: – Correction on slide nr. 5: the amount of 6 million investment for organisational change projects in the Netherlands is changed in 5 million – The order of slides has been changed – New findings are added with slide number 15 – New findings are added with slide number 19© Logica 2009. All rights reserved No. 2

Current era: Trends and figures • We are living in the fifth technology revolution (source: Carlota Perez) • Globalisation and IT are key drivers • Average lifetime of an organisation has decreased from 90 years in 1935 to 12½ years (source: Het veranderboek - 2009) • Organisations transform from rigid pyramids into a network of collaborating organisations (source: Nolan Norton Institute - 2000) • Business shifts from product orientation to service orientation (source: management team - 2010). Some examples: - Ericsson: 41% services in 2006 -> 69% services in 2009 - Orange: 34% services in 2004 -> 49% services in 2008 -> 69% services in 2011 • Quick absorption of new IT-solutions can make the difference in the (global) competition • Investments in organisational change projects (KPMG – 2004) – On average Euro 5 million per year per organisation in the Netherlands – On average Euro 9 million per year per organisation outside the Netherlands • Organisations suffer from investments in (new) information technology solutions: – Poor results – Stagnating implementations – Very often aftercare effort is large Sources: Nolan Norton Institute Changing IT in six / Regie voeren over organisatieverandering met ICT© Logica 2009. All rights reserved No. 5

Current era: TOP For issues related to organisational change in the fifth technology revolution, there is a permanent interaction in the context of Technology, Organisations and People (TOP-mix). For each issue the TOP- mix (context) is unique. Each TOP-mix contains its own dynamics and unpredictability. Results are never absolute. It has to be analysed which domain contributes most and in which domain change has the biggest impact. After that it can be concluded which approach and what form of steering has to be chosen. Technology This is the offering of available technology and its possibilities, limitations and impossibilities. Even when limited to the domain of IT the offering is enormous. A technology that turns several industries upside down is the Internet. Internet has made it possible to create a virtual world (V-world) besides the physical world. The meaning of terms like place, time and presence has drastically changed in the V-world. Organisations Organisations apply IT to support their corporate objectives. IT gives organisations almost unlimited possibilities to reshape business processes and organisation structure (including location). Due to the shortening of life cycles of available IT, absorbing new IT has to be a key capability to transform and adapt quickly to changing circumstances. People New IT solutions change the content of work and collaboration between employees inside and outside their own organisation. A proper attitude and stimulation of learning processes are important to quickly build up new knowledge and skills. Learning processes have to be tuned on the individual preferences and capabilities. Related to the affinity with IT, digital natives versus digital immigrants is a popular distinction, to clarify differences between (generations of) people.© Logica 2009. All rights reserved No. 6

Study background (1) • Organisational change where IT is an important factor is a dynamic process and involves a certain degree of unpredictability. The IBAFrame change instruments are instruments which provide a guideline to handle the dynamics and unpredictability, and as such to exert a positive influence on the changes in which IT plays an important role. IBAFrame stands for IT Benefits Accelerator Framework. An alternative popular description of the acronym is Innovation Benefits Accelerator Framework. IBAFrame is a framework that supports to make more possible with information technology. • The change instruments are focusing on the use on different levels of organisation, group and individual. The change instruments ensure alignment and connection between the changes in the IT solution and the changes in the work domains of users and IT support employees. It links ‘hard’ and ‘soft’ objectives for the IT related changes. • IBAFrame distinguishes five levels of corporate power to change (A up to and including E). Score A means the organisation has no knowledge and experience in using IBAFrame change instruments. Score E is the highest score. This score indicates that change is a second nature to the organisation. Management and employees have expert knowledge in handling change instruments.© Logica 2009. All rights reserved No. 8

Study background (2) • IBAFrame contains six leading principles for steering organisational change where IT plays an important role: 1. Shared objective and common view: determining the corporate objective leads to a common view for the destination. The complexity and impact are assessed and known. 2. A fitting approach: the pace for implementation should fit the complexity and circumstances. This supports the learning process and people are able to contribute. 3. Commitment and collaboration: the corporate objective is translated to detailed objectives on group level. Objectives and timelines on this level are realistic. Steering on this level is focused on collaboration and involvement inside and outside groups. Steering is focused on alignment and connection between project, users of IT-solutions and IT-support. 4. Stimulation of the learning process: there is sufficient room and time to learn and share insights. This forms the fundament for a proper adoption of (new) IT-solutions. 5. Attitude: an attitude of open-mindedness supports collaboration and involvement. 6. Competences: (basic) knowledge about technology, organisation and people and their interaction is important besides knowledge and experience with coordination of IT related organisational change.© Logica 2009. All rights reserved No. 9

Study background (3) • Data is collected on a quick scan basis between 2007 and 2009 from (international) organisations in the Netherlands in private and public sector. • 46 projects (or situations) where information technology (IT) plays an important role have been studied. For these projects the way of steering has been investigated and results that have been achieved. Findings and conclusions have been expressed according to IBAFrame six leading principles.© Logica 2009. All rights reserved No. 10

IBAFrame study results 2007 – 2009 (1) Overall main findings for 46 projects: • Benchmark for achieved result is 5.2 • Benchmark for way of steering is 5.6 • 41% (19 projects) score a result on level D or E • 3 projects (7%) score a result of 54% above benchmark • The way of steering (implementation) affects the achieved result significantly Category E: Category D: Category C: Category A-B BenchmarkStatistics 46 reference projects Result 8-10 Result 6-8 Result 4-6 Result 1-4 norm%-share projects 7% 34% 52% 7% 100%Number of projects 3 16 24 3 46Average score result 8,0 6,3 4,6 1,9 5,2Average score for way of steering 7,4 5,8 5,4 4,3 5,6 © Logica 2009. All rights reserved No. 12

IBAFrame study results 2007 – 2009 (2) Overall main findings for achieved results: • Result is an improvement and meets the objective and proper absorption are best scoring aspects • Aftercare effort is an important area of attention for all categories • Aftercare effort of category E and D projects scores 20% above benchmark * The aspect improvement and objective is the consolidated result of 5 criteria and counts 5 times for the average score result. Category E: Category D: Category C: Category A-B Benchmark Statistics 46 reference projects Result 8-10 Result 6-8 Result 4-6 Result 1-4 norm %-share projects 7% 34% 52% 7% 100% Number of projects 3 16 24 3 46 Average score result 8,0 6,3 4,6 1,9 5,2 Average score for way of steering 7,4 5,8 5,4 4,3 5,6 Score per Score per Score per Score per Benchmark Aspects result based on IBAFrame aspect aspect aspect aspect per aspect Improvement and objective * 8,4 6,5 4,6 2,5 5,4 Absorption 8,0 6,3 4,6 1,0 5,2 Aftercare 5,0 5,5 4,3 1,0 4,5© Logica 2009. All rights reserved No. 13

IBAFrame study results 2007 – 2009 (3) Overall main findings for way of steering: Principles of one shared objective and view, fitting approach and commitment and collaboration are more difficult to fulfil. Reasons are that complexity and impact are mostly not assessed, the chosen approach is not in line with the preference of involved people and timelines are not realistic. Best scoring aspects are strongly affected by the phenomena of self-serving bias: people reward the own attitude and * Score per aspect is related to involved number competence significantly higher if compared to of criteria and used for weighing to calculate the colleagues. average score for way of steering. Category E: Category D: Category C: Category A-B Benchmark Statistics 46 reference projects Result 8-10 Result 6-8 Result 4-6 Result 1-4 norm %-share projects 7% 34% 52% 7% 100% Number of projects 3 16 24 3 46 Average score result 8,0 6,3 4,6 1,9 5,2 Average score for way of steering 7,4 5,8 5,4 4,3 5,6 Aspects steering (implementation) based on Score per Score per Score per Score per Benchmark IBAFrame * aspect aspect aspect aspect per aspect One shared objective and view 7,3 4,7 4,1 1,8 4,4 Fitting approach 7,0 4,6 4,6 2,3 4,6 Commitment and collaboration 7,3 5,3 5,1 3,0 5,2 Support learning process 6,2 6,2 5,4 4,8 5,7 Attitude 9,0 7,2 6,7 6,6 7,0 Competences (TOP-mix) 7,6 6,0 5,8 5,4 6,0© Logica 2009. All rights reserved No. 14

IBAFrame study results 2007 – 2009 (4) Commitment and collaboration: Individuals is asked to indicate their own competence to adapt to change and to indicate these competence also for colleagues. For category E projects, on average individuals indicate their colleagues as more competent to adapt to change. For category A and B projects, individuals indicate on average to be much more competent if compared to colleagues. The road from me to you, to we and result 10 9 Category E projects (Result 8-10) 8 7 6 5 Benchmark of 46 projects 4 3 2 Category A and B projects (Result 1-4) 1 0 Own knowledge to Knowledge of Collaboration + Result adapt colleagues to adapt knowledge sharing Me You We Result© Logica 2009. All rights reserved No. 15

IBAFrame study results 2007 – 2009 (5) Overall main findings for outsourcing projects: •Results for 9 outsourcing projects are 8% below benchmark Benchmark Statistics reference projects Outsourcing norm %-share projects 20% 100% Number of projects 9 46 Average score result 4,8 5,2 Average score for way of steering 5,7 5,6© Logica 2009. All rights reserved No. 16

IBAFrame study results 2007 – 2009 (6) Overall main findings for small, medium and large projects based on involved number of employees: • Aftercare effort is for large projects a very important area of attention Involved < Involved > Involved > Statistics reference projects** 100 100 < 500 500 %-share projects 33% 24% 17% Number of projects 15 11 8 Average score result 5,9 4,9 4,1 Average score for way of steering 5,6 5,7 4,8 * The aspect improvement and objective is the consolidated result of 5 criteria and counts 5 Score per Score per Score per times for the average score result Aspects result based on IBAFrame aspect aspect aspect ** 12 projects did not have characteristics for involved number of employees. These projects Improvement and objective * 5,9 5,1 4,3 are excluded for this view Absorption 6,0 4,5 4,4 Aftercare 5,6 4,5 2,9© Logica 2009. All rights reserved No. 17

IBAFrame study results 2007 – 2009 (7) Overall main findings for private and public sector: • Projects in private sector perform better than projects in the public sector • Achieved results in the public sector are 6% below benchmark * 8 projects did not have characteristics for result private and public sector. These projects are excluded for this view Private Benchmark * Statistics reference projects sector Public sector norm %-share projects 52% 30% 100% Number of projects 24 14 46 Average score result 5,2 4,9 5,2 Average score for way of steering 5,7 5,1 5,6© Logica 2009. All rights reserved No. 18

IBAFrame study results 2007 – 2009 (8) Overall main findings for perception of results: • Respondents involved as manager for the change perceive the result 23% more positive with a score of 5.8 if compared to respondents who did not act as manager with a score of 4.7. * 12 projects did not have characteristics for management involvement. These projects are excluded for this view Statistics reference projects * Manager Yes Manager No %-share projects 28% 46% Number of projects 13 21 Average score result 5,8 4,7 Average score for way of steering 5,6 5,4© Logica 2009. All rights reserved No. 19

Key references • Regie voeren over organisatieverandering met ICT: Sdu / Academic service http://www.sdu.nl/catalogus/9789012125895 • Changing IT in six: Royal van Gorcum http://www.vangorcum.nl/EN_toonBoek.asp?PublID=4552 • Rotterdam Business School – Management of Technology http://www.hogeschool-rotterdam.nl/page.html?id=156155 • Logica – IBAFrame centre of expertise leon.dohmen@logica.com - bert.van.der.hooft@logica.com© Logica 2009. All rights reserved No. 21

For questions and special requests – Contact Management of (Information) Technology Leon Dohmen | Principal Management Consultant – IT Management Consultancy Kennedyplein 248, 5611 ZT Eindhoven | Netherlands T: +31 40 2957 777 | M: +31 6 1737 6636 leon.dohmen@logica.com© Logica 2009. All rights reserved No. 22

Logica Netherlands B.V.: Consultancy and Professional Services - Practice IT managementLogica is a leading IT and business services company, employing 39,000 people across 36 countries. It provides business consulting, systems integration,and IT and business process outsourcing services. Logica works closely with its customers to release their potential – enabling change that increases theirefficiency, accelerates growth and manages risk. It applies its deep industry knowledge, technical excellence and global delivery expertise to help itscustomers build leadership positions in their markets. Logica is listed on both the London Stock Exchange and Euronext (Amsterdam) (LSE: LOG; Euronext:LOG). More information is available at www.logica.com

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Leading principles for IT related organisational change

by Leon Dohmen

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