Building An Effective Business Case For Change Management

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Change management is a structured approach designed to ensure end users and adopters understand why changes in an organization are occurring and inevitably adopt and utilize the resulting new systems. Change management is a necessary component to project success because if business users to do not adopt new systems then organizations do not achieve their target business outcomes.

The business case for change management is pretty clear and logical, yet organizations often try to cut budget corners. Next time you find yourself in a meeting making the case for change management, try asking this simple question, “Are the target business outcomes we are trying to achieve dependent on stakeholders changing how they do their job?” For each target business outcome where the answer is yes, ask the follow up question, “What percentage of this outcome results from stakeholders doing their job differently?”

In most cases this is a very powerful exercise when seeking to obtain manager buy-in for including change management in a SOW. Of course if your project involves switching network servers there is going to be very little requisite change involved for employees. But if your project involves new processes, technology, KPI’s, etc., then odds are the realistic answer to the question is somewhere around 75%.

No matter how telling the answer is, sometimes it is not enough. To further support your pitch for change management, I am going to provide three approaches to building a business case for change management. The perspectives I am providing below are intended to alter the view of change management from “nice to have” to “must have”.


Cost Avoidance

Businesses suffer significant added costs when organizational change is poorly managed. Additional resources are required to fix the process or solution, and time is needed to retrain and satisfy disgruntled employees. Other costs that can be expected are: plunges in productivity, customer and supplier impacts, loss of valued employees, reduced quality of work, declining employee morale, stress, confusion, and added resistance.

Separate from these organizational costs are project-specific costs. These costs and disruptions include: project delays, missed milestones, loss of resources, budget miscalculations, unexpected obstacles, and rework required to correct mistakes. In a nutshell, the organization fails to receive the value the project was intended to produce and the initial project investments are lost.

Change management is an effective cost avoidance approach we can use to mitigate these negative consequences.

Risk Mitigation

More than likely risk analysis is already included in your organizations standard project management methodology. A strong approach to assessing the importance of change management is to conduct employee-dependent risk alongside financial risk, security risks, and any other risks your organization may already be conducting.

When change is not properly planned for and managed the organization, project, and stakeholders are all subject to risk. Refer back to the question we discussed earlier “What percentage of achieving the target business outcomes associated with your project depend on people changing how they do their job?”    Whether the answer is a lot or a little, if it includes changes to responsibilities, behaviors, processes, systems or tools, your project has people-dependent risk.
Change management is a powerful risk mitigation solution. When change management is done well organizations achieve their project objectives and employees walk away feeling satisfied, motivated and accomplished.

Benefits Realization

If employees do not understand why changes are being made, embrace the future state, and possess both the knowledge and skillsets required to successfully operate in the to-be state, projects do not achieve the intended results. Change management is an approach designed to ensure users graduate through this process. Think of change management as an insurance policy to protect your organization’s project investment.

Whatever percentage of achieving your project’s target business outcomes can be tied to people changing how they do their jobs is the percentage that can be insured through change management.

CONSIDER YOUR AUDIENCEAll three of these approaches are highly effective, but there is no one size fits all solution. The priorities of managers and stakeholders will vary from company to company and department to department. Before making a decision about the perspective to take, it is important to consider your audience.    §  What are the current pain points creating a need in the first place?    §  What are the goals and objectives of this individual or team?    §  How is the performance of the prospect you are pitching to measured?

If you are presenting to a COO this individual might be most interested in cost avoidance. For a CIO the most successful approach will likely be to focus on risk mitigation. CPO’s are most concerned with cost reduction and efficiency gains, so benefits realization will more often than not yield the best results. The bottom line is in order to close your sale or obtain internal stakeholder buy-in for change management, your success is going to hinge on your efforts to develop a targeted approach.

The next time you find yourself developing a business case for change management, reflect back on these approaches. Consider your audience and their concerns, then select the value perspective(s) that will be most compelling.

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