Succeeding with business transformation?

By Colin Ashurst, Durham Business School

The drive for the change was coming from the top. The vision was clear if a little vague – creating a customer centric organisation. There were clear targets, a new system and consultants with a mission to get the system in place throughout the organisation. At a regional level there was a programme board to manage the change. In fact, a first part of their job was to try to shape a coherent programme of change from the initiatives coming from different teams at the centre. On the ground there were some very committed people who wanted to provide a customer focused service. Considerable effort went into analysing local processes in advance of the new system. Unfortunately they were not clear what the new system had to offer and there was little time for design of new processes. As this first step was relatively small there was very little interest from senior management locally. There was also very little budget at a local level. Anyway, the consultants turned up, the system was switched on and the end users were shown how to use it. Unfortunately the new processes had still not been established and in any case the new system did not provide key management information needed locally. What did the progress report say? Job done. System in place. Move on.

It is a true story, just slightly disguised. The case illustrates some of the difficulties of alignment of goals and resources and of communication on a project of this scale. The technology isn’t or shouldn’t be the problem. We know that for the last 30 years the failure rate of IT projects in terms of value delivery is 80 percent, so the story is not untypical.

Overcoming the fragmentation

It is an increasingly common challenge – managing transformation across a huge organisation at global, regional and local levels. We have seen a range of approaches. In some cases an IT led, top-down approach works – to a point. For example, introducing a new, global e-mail and communications solution or the newest version of Microsoft Office. The project can be run centrally and completed quickly. A number of benefits will be direct and will be rapidly realised, fewer servers, higher security, less support resources, less down-time. This may well cover the costs. But what about the other potential benefits? How can we really take advantage of these new capabilities to address email overload; to enable effective flexible and mobile working; to establish really effective virtual teams. These things will not happen automatically. There is a need for a process of learning, of capturing and sharing good ideas and providing ongoing support and advice to help people overcome the problem that they ‘don’t know what they don’t know’.

In other scenarios global solutions perhaps for the finance and HR systems or for employee purchasing have worked well. However when it comes to systems supporting core business activities, particularly in service and knowledge-based organisations it has proved much harder. Top-down programmes are much less likely to work well with local business conditions, working practices and cultures.

Overcoming the fragmentation of many change programmes requires a new approach. We call this business transformation. Business transformation implies a clear focus on realising benefits for stakeholders. This is the starting point. It then requires a co-ordinated approach addressing all aspects of the organisation including people, process, space and technology. This requires the different silos to work together from planning to execution. It requires establishing an organisation-wide approach so that there is a common language and a practical toolkit to support these transformation initiatives.

The implications for the role of the CIO

What is IT really about? It is about changing and improving the organisation. The benefits actually come from enabling people to do things differently and from delivering value to customers and other stakeholders. Realising value from IT is fundamentally a challenge of business innovation and transformation. Given the speed of development of IT and the accelerating impact of globalisation this is not a challenge to ignore. This is a strategic business issue. In our view, people at all levels in the organisation need to have the expertise to get involved in, and lead, transformation projects.
Building an organisational capability to succeed with transformation and developing leaders of transformation requires a top level champion in the organisation. This is a clear opportunity for the CIO.

For many, this implies a shift in perspective. The key issue is “how can this organisation realise value from IS/IT most effectively in the future?” rather than “how should we structure the IT function?” This implies a much broader perspective and influence. Realising value from IS implies increased skills across the organisation at all levels. Senior business managers need to be able to work as leaders of major change programmes. Local teams need to be able to continuously learn and innovate taking advantage of the information and capabilities provided by IT.

For the CIO and the wider IT function there are major implications for skills and structures. There is a need to find a way to educate and support people across the organisation as they get involved in transformation projects. There is also a need to establish much more pro-active support to help improve the effectiveness of knowledge work as this increasingly becomes the focus of value creation. This implies moving resources away from big, show-case projects and into education, support and sharing good ideas.

Colin Ashurst is senior teaching fellow, programme director of the executive masters in business transformation and chief information officer at Durham Business School.