P3 January 2005 Class 3: ISM Managing IT Adoption “We can now do IT!”

P3 January 2005 Class 3: ISM IT at KCC after 2001: Key Benefits Built its IT capabilities: “Our ‘we can do it’ attitude was a huge change!”, Mary Mallet Back office automation and integration to prepare for front office e-government Drive change through IT, e.g. Organizational changes: more resources to front office and less “waste” on back office, creation of KSSIP, IT organizational changes Process changes New chart of accounts – first in 10 years Plus other “typical” benefits (reduce IT costs, automate and infomate processes, process efficiency, accurate information, other cost reductions such as head count reduction, etc…)

P3 January 2005 Class 3: ISM IT at KCC Before 1999 Many small (£150K) isolated (legacy) IT systems, no project with critical mass Outdated technology with high maintenance costs Many-headed IT Hydra: a “Spaghetti Chart” IT Autonomous groups making IT decisions Poor IT investment decisions: “all are urgent” Diffused ISG employees, attached to functional areas: blurred responsibilities Uncertain IT skill sets Low IT incapable of delivering e-Vision –Low confidence in IT capabilities –Organizational inertia: impediment to change

P3 January 2005 Class 3: ISM 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: Faster and safer implementation Cons: Risk sharing and accountability? Internal IT knowledge and capabilities?

P3 January 2005 Class 3: ISM Managing Inertia at KCC Why: Large scope of required IT Number of groups involved Number of processes affected Many autonomous groups affected by IT How to manage: Broad top management involvement: “It was a defining moment… bigger guns were needed” Careful scope reduction and incremental phasing: “Phase One took us out of the hole” Urgency feeling: “We must reach our 2005 targets!” – the “frog in the water” rule

P3 January 2005 Class 3: ISM Some Best Practices from KCC Governance: Top management commitment and involvement (needed) Cross-functional steering committee – all key stakeholders have a voice Able project manager Close vendor/partners collaboration (steering committee, integrated team with KCC people) Project Management: Clear Targets: “Set clear money, time, “how far and how fast” targets early on” Flexible targets: “…and be ready to challenge them soon” Clear process maps: “as is” and “to be” Smart “process versus software customization” decisions: “vanilla” vs business Risk identification: identify potential risks, and prepare for possible crisis Iterative planning and testing Stakeholder Management: Communication: create visibility of the project throughout the organization Expectations management User involvement (justify IT (our ‘e-vision’), conference room pilots, training, de-snagging) Post go-live support until stabilization

P3 January 2005 Class 3: ISM IT versus Organization Change the ProcessChange 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

P3 January 2005 Class 3: ISM Governance: Rich-Con vs KCC Both (Sawyer & Mallett) were highly committed to the project, but: Sawyer tried to do everything herself 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 is played out is just as important

P3 January 2005 Class 3: ISM A Governance Structure Executive sponsor (Mary and Tom/Kevin): VP, CFO, CEO: relates system to overall strategy, communicates to affected parties, manages expectations, enforces/manages necessary organizational changes, supports crisis Steering Committee: All key stakeholder groups get a voice (Dave/HR, John/Finance, June/IS) Vendor/partner involved Project manager: Combination of technologist, business expert, politician

P3 January 2005 Class 3: ISM

P3 January 2005 Class 3: ISM 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) -Create cross- func. project team -Define scope and budget -Broadly map «as- is » and « to-be » processes -Check for training requirements -Understand risks Selection -Visit providers -See their existing customers -Check financial viability -Check fit -Negotiate -Choose outside help Implementation + - Redesign process - Modify code - Train users - Iterative testing of the system - Change management - Manage «scope creep» - Manage crisis - Design incremental steps « Go Live » Incr. phase vs Big Bang New system in use - Check for failures - Post-live support - Lessons learned

P3 January 2005 Class 3: ISM Many Best Practices, but… Why So Many IT Failures? The “silver bullet” theory or the “too little IT knowledge” theory The “too much IT knowledge” theory

P3 January 2005 Class 3: ISM Key Managerial Actions 1.Governance a.Top management involvement b.Cross-functional implementation team c.Project manager d.Close collaboration with partners (vendor, implementation partner) 2.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.Communication and user buy-in b.Expectations management c.Change management d.Further user involvement (e.g. pilot testing) e.Training f.Support and help of user – pre and post

P3 January 2005 Class 3: ISM 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

P3 January 2005 Class 3: ISM Foreseeing the Key Foreseeable Adoption Risks Key Risks Inertia Resistance Mis-specification Mis-use Non-use McAfee, SMR 2003 Factors (observable pre-implementation!) Stakeholder 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? Technology Analysis 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?

P3 January 2005 Class 3: ISM Factors Key Risks FactorsKey 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 McAfee, SMR 2003

P3 January 2005 Class 3: ISM Key RisksKey Managerial ActionsExamples 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 (G2G 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 CoSine Com (CRM) Avoiding Adoption Risks: Focused Resource Allocation

P3 January 2005 Class 3: ISM 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

P3 January 2005 Class 3: ISM Preparing for the Unforeseeable Risks 1.Governance: 2.Project Management: Have an anticipatory mind frame, and focus on keeping the project’s momentum

P3 January 2005 Class 3: ISM Key Lessons The KCC way of building IT capabilities: succeed on a large IT system adoption (more next class) 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 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)

P3 January 2005 Class 3: ISM 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?