Managing IT Adoption We can now do IT

Managing IT Adoption “We can now do IT!” Class 3: ISM P 3 January 2005

IT at KCC after 2001: Key Benefits ü Built its IT capabilities: “Our ‘we can do it’ attitude was a huge change!”, Mary Mallet ü Back office automation and integration to prepare for front office e-government ü Drive change through IT, e. g. ü Organizational changes: more resources to front office and less “waste” on back office, creation of KSSIP, IT organizational changes ü Process changes ü New chart of accounts – first in 10 years ü Plus other “typical” benefits (reduce IT costs, automate and infomate processes, process efficiency, accurate information, other cost reductions such as head count reduction, etc…) Class 3: ISM P 3 January 2005

IT at KCC Before 1999 ü Many small (£ 150 K) isolated (legacy) IT systems, no project with critical mass ü Outdated technology with high maintenance costs ü Many-headed IT Hydra: a “Spaghetti Chart” IT ü Autonomous groups making IT decisions ü Poor IT investment decisions: “all are urgent” ü Diffused ISG - 200 employees, attached to functional areas: blurred responsibilities ü Uncertain IT skill sets Low IT incapable of delivering e-Vision – Low confidence in IT capabilities – Organizational inertia: impediment to change Class 3: ISM P 3 January 2005

Options for KCC How can KCC build its IT capabilities? A. Outsource IT B. Succeed in-house major IT adoption KCC Outsourcing Decision Process: Pros: ü Faster and safer implementation Cons: ü Risk sharing and accountability? ü Internal IT knowledge and capabilities? Class 3: ISM P 3 January 2005

Managing Inertia at KCC How to manage: Why: ü Broad top management involvement: “It was a ü Large scope of required IT defining moment… bigger ü Number of groups guns were needed” involved ü Number of processes affected ü Careful scope reduction and incremental phasing: “Phase One took us out of the hole” ü Many autonomous groups ü Urgency feeling: “We must affected by IT reach our 2005 targets!” – the “frog in the water” rule Class 3: ISM P 3 January 2005

Some Best Practices from KCC ü Governance: ü Top management commitment and involvement (needed) ü Cross-functional steering committee – all key stakeholders have a voice ü Able project manager ü Close vendor/partners collaboration (steering committee, integrated team with KCC people) ü Project Management: ü Clear Targets: “Set clear money, time, “how far and how fast” targets early on” ü Flexible targets: “…and be ready to challenge them soon” ü Clear process maps: “as is” and “to be” ü Smart “process versus software customization” decisions: “vanilla” vs business ü Risk identification: identify potential risks, and prepare for possible crisis ü Iterative planning and testing ü Stakeholder Management: ü Communication: create visibility of the project throughout the organization ü Expectations management ü User involvement (justify IT (our ‘e-vision’), conference room pilots, training, de-snagging) ü Post go-live support until stabilization Class 3: ISM P 3 January 2005

IT versus Organization Change the Process Change the. Program Easier software configuration Easier change management and adoption by users Anyway it’s not important an important process Clearly a very important process Potentially design new, more efficient, processes Process is an industry standard (e. g. customers/suppliers/etc demand it) Easier to upgrade the IT in the future And always consider: - Flexibility needed in the future - Standardization needed to limit autonomy and “creativity”, and increase process efficiency Class 3: ISM P 3 January 2005

Governance: Rich-Con vs KCC Both (Sawyer & Mallett) were highly committed to the project, but: ü Sawyer tried to do everything herself ü Mallett relied on governance structure & project execution mechanism; played key roles that only she could play: – – – Protected project (sponsored it) Communicated to top management and politicians Managed expectations and fight off misinformation Let Craig do most of the running Intervened when necessary It is not enough to get the commitment of top management: How governance played out is just as important is Class 3: ISM P 3 January 2005

A Governance Structure ü Executive sponsor (Mary and Tom/Kevin): ü VP, CFO, CEO: relates system to overall strategy, communicates to affected parties, manages expectations, enforces/manages necessary organizational changes, supports crisis ü Steering Committee: ü All key stakeholder groups get a voice (Dave/HR, John/Finance, June/IS) ü Vendor/partner involved ü Project manager: ü Combination of technologist, business expert, politician Class 3: ISM P 3 January 2005

Class 3: ISM P 3 January 2005

Main IT Implementation Steps Realization of need - The IT Investment Decision Preparation -Sell the project internally and externally (i. e. work with customers that you may mess up orders with) Selection Implementation + -Visit providers - Redesign process - Modify code « Go Live » Incr. phase vs Big Bang -See their - Train users existing customers - Iterative testing of the system -Check financial - Change management -Create crossviability func. project team - Manage «scope creep» -Check fit -Define scope and - Manage crisis budget -Negotiate - Design incremental -Broadly map «as- -Choose steps is » and « to-be » outside processes help -Check for training requirements -Understand risks Class 3: ISM P 3 January 2005 New system in use - Check for failures - Post-live support - Lessons learned

Many Best Practices, but… Why So Many IT Failures? ü The “silver bullet” theory or the “too little IT knowledge” theory ü The “too much IT knowledge” theory Class 3: ISM P 3 January 2005

Key Managerial Actions 1. Governance a. b. c. d. 2. Top management involvement Cross-functional implementation team Project manager Close collaboration with partners (vendor, implementation partner) Project Management a. Target definition: time, budget, scope b. Target definition management: scope reduction, scope creep management, time/budget changes management c. Clear process maps and smart customization decisions d. Crisis management and risk identification e. Iterative testing and prototyping f. Size of incremental phasing (from “many small incremental phases” to “big bang”) 3. Stakeholder Management (pre/during/post) a. b. c. d. e. f. Communication and user buy-in Expectations management Change management Further user involvement (e. g. pilot testing) Training Support and help of user – pre and post Class 3: ISM P 3 January 2005

Avoiding Resource Over-spending: Some Examples When may these resources be less critical? • Top Management Involvement: e. g. local organizational scope, low coordination needed, little “on stake” by stakeholders • Training: e. g. high IT sophistication, few changes • Testing: e. g. few software customizations needed, “old” tested or non-complex technology • Change Management: e. g. few changes/high flexibility, little on stake, low coordination needed and low organizational scope Class 3: ISM P 3 January 2005

Foreseeing the Key Foreseeable Adoption Risks Factors (observable pre-implementation!) Stakeholder Analysis Technology Analysis 1. IT sophistication? 2. Impact: a. Changes needed vs. flexibility ratio? b. How much is on stake for them? c. How autonomous are they? 3. Size: organizational scope and coordination needed? 1. Size: technology scope (number of processes and systems affected)? 2. Is the use of the technology discretionary? Mandatory? 3. Software changes/customization needed? 4. Is it modular? 5. How complex and/or novel is it? Key Risks Inertia Resistance Mis-specification Mis-use Non-use Mc. Afee, SMR 2003 Class 3: ISM P 3 January 2005

Factors Key Risks Large organizational scope (S) Many autonomous groups (S) Inertia A lot on stake (will IT influence power of some people? ) (S) High changes/flexibility ratio (S) Large autonomy of groups affected (S) Resistance Many software customizations needed (T/S) Low modularity of technology (T) High novelty/complexity of technology (T) Large technology scope (T) Mis-specification Low user IT sophistication (S) Large organizational scope (High coordination needed) (S) Mis-use IT is discretionary (T) Low user IT sophistication (S) High changes/flexibility ratio (S) Non-use Based on Mc. Afee, SMR 2003 Class 3: ISM P 3 January 2005

Avoiding Adoption Risks: Focused Resource Allocation Key Risks Key Managerial Actions Examples Inertia • Top-management involvement • Scope reduction & incremental phasing KCC, Cisco Resistance • Cross-functional teams • Further user-involvement • Communication and user buy-in • Change management • Scope reduction & incremental phasing CCC (G 2 G portal) CRM/sales people RI (online surveys portal) Mis-specification • Iterative testing and prototyping • Careful software customization decisions and process maps Rich Con Nike Mis-use • Training and post live support • Scope reduction & incremental phasing Rich Con Non-use • Cross-functional management/implementation team • Further user involvement • Communication and user buy-in Rich Con Co. Sine Com (CRM) Class 3: ISM P 3 January 2005

The “Certain Unforeseeable” Risks IT adoption projects entail unforeseeable uncertainties: – IT projects are by nature very complex – too many things can go wrong! – Requirements change over time – Technology is complex (e. g. software bugs, new technology is not yet there) Crises during implementation are almost certain – but “details” are unforeseeable Class 3: ISM P 3 January 2005

Preparing for the Unforeseeable Risks 1. Governance: 2. Project Management: Have an anticipatory mind frame, and focus on keeping the project’s momentum Class 3: ISM P 3 January 2005

Key Lessons ü The KCC way of building IT capabilities: succeed on a large IT system adoption (more next class) ü 3 Steps for Foreseeing the Foreseeable Risks: 1. Always start with a Stakeholder and Technology Analysis 2. Identify likely foreseeable risks 3. Focus resources on key strategies needed to combat identified foreseeable risks 4. Manage carefully unnecessary resources ü Controlling the Unforeseeable Risks and Crises: 1. Setup the right governance (decision power and partner flexibility) 2. Plan appropriately the execution (iterative adoption, incremental adoption, risk identification, target flexibility) Class 3: ISM P 3 January 2005

Next Class Building a “We can do IT” Organization - What are the key IT capabilities? - How are IT decisions taken in an organization? - Can IT lead to sustainable competitive advantage? Class 3: ISM P 3 January 2005