White Paper Human Change Management. Application Management & Modernization. Product & Solution

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1 White Paper Human Change Management. Application Management & Modernization. Product & Solution

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3 Content. 1. Introduction Human Change Management The Change Story Critical Success Factors Additional Information Literature. 10

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5 1. Introduction. 4 5 Outsourcing is still a hot topic! Nearly 94 percent of companies in Germany currently have outsourcing projects on their agenda. This was pointed out by the study Erfolgsmodell Outsourcing 2011, which was done by Steria Mummert Consulting in collaboration with the Institute for Management and Economic Research (IMWF). In total, 207 IT executives, directors, officers and CIOs of companies with more than 100 employees were interviewed. The reason why more and more companies plan to outsource their IT applications, or even invest in existing IT outsourcing projects, is obvious: With outsourcing, companies cannot only save costs, they can gain greater flexibility and optimize their business processes. Human Change Management as an interface An outsourcing project is always closely connected to change. However, it is not only the technology and processes that are changing. Most times, the change also impacts employees and their daily working life as well. Therefore, in outsourcing projects, the employees should also be considered. It is employees who ultimately decide the success or failure of a planned change. People Processes Technologies Fig. 1. Human Change Management. This is where Human Change Management comes into play. Human Change Management supports the success of IT outsourcing projects by specific measures. These measures take place outside of the purely technical change, and moreover, they are at the intersection of the three factors: processes, technologies and people. IT executives are often aware of the importance of Human Change Management. However, numerous outsourcing projects present a different picture: On the one hand, there is a lack of customized measures that accompany the change, and on the other hand, the lack of a coherent communication leaves room for rumors and speculation.

6 2. Human Change Management. Consciously design changes that is the ethos of Human Change Management. Whether just simple processes are changing or the overall roles and responsibilities of single employees, all affected people go through a process of change, which, depending on the extent and type of outsourcing projects, can be different. The psychological process of change In scientific literature, there are various change models that help to structure a change process. The Seven-Phase-Model by Streich (1997), for instance, focuses on the people aspect and gives insight into the psychological reactions of the members or the organization during the change process. Streich divides the progression of mood into seven stages: 1. Shock At the beginning of each change, the affected people experience shock. They are facing a new situation. A huge discrepancy appears between their personal expectations and their new reality that is the outcome of the change. The situation does not seem manageable. 2. Rejection First resistance may appear in the rejection phase. For the affected people, the change happening is not necessary. This distorted perception actually prevents further development that is necessary in order to achieve the next phase. 3. Rational Perception The affected people realize the necessity of the new procedures and practices. They become aware that they have deficits in certain skills, topics, processes, etc. Their own skills are not sufficient in order to implement the change. 4. Emotional Acceptance Here, the turning phase within the change process starts. The affected people start to question their own behavior and attitude. This phase also implies a certain risk: If the affected people do not question their values and behavior, then they can again start rejecting the new situation, which can even slow down or stop the change process. 5. Learn As implied, this is where the learning phase begins. The willingness of a learning process is initiated by the previous stage Emotional Acceptance. 6. Realization In this phase, the affected people get to know why certain behavior led to success and other behavior, for instance, to failure. With the help of this feedback, the newly acquired knowledge can be used selectively. 7. Integration The successful practices are integrated in the behavior and actions of the Progression of mood. Progression of Mood Integration Rejection Realization Learn Rational Perception Shock Emotional Acceptance Fig. 2.

7 6 7 employees. From this time on, the affected people feel more competent; they unconsciously conduct the previously learned behavior and practices and become positive enablers of change. Based on the progression of mood, clear-sighted measures can be established. The emotional starting point of the affected people needs special attention. While the progression of mood (see Figure 2) is similar in any change project, the emotional starting point may vary enormously. Once a change project is carried out successfully, it is then easier to implement new change projects. Meaning, the better a previous change project was completed, the more positive is the attitude of affected people towards further change projects. The characteristics of the individual phases of the above-presented model may vary in comparison to a previous change project. 1. What is the current state? With the help of this question, the CMO should be examined more closely. Each workshop participant has to have a clear view of the starting point. 2. Why does the change happen? The reasons for the change are derived from the CMO. They are really important for all affected stakeholders because they address the Sense of Urgency. 3. How does the future state look like? The FMO has to be defined. In this context, it is important to make yourself aware about what exactly is to be achieved with this project. 4. How will the company achieve the future state? Here, the way of change is looked at more closely. In IT projects, this might 2.1 The Change Story In order to set up specific measures for each target group, the change story has to be developed before the Human Change Management project starts. The change story is a detailed analysis of the current mode of operation (CMO) as well as the future mode of operation (FMO). The aim of the change story is to establish a clear vision of the whole change management process. Every change process is unique, and the affected people, as well as management, ask themselves questions; for example, why the change is necessary or what exactly the objectives are. Thus, the change story should be developed within a workshop together with the initiators of the change. In order to develop the change story, and consequently, also the vision, the following six questions have to be answered: The Change Story. The Change Story What is the current state? Why does change happen? How does the future state look like? How will the company achieve the future state? What does this mean for the people involved? Will anything stay the same after the change is implemented? Fig. 3.

8 be, for instance, the implementation of new software or even the outsourcing of various applications to a provider. 5. What does this mean for the people involved? The consequences that are derived from the change are in focus. The impact of the change as well as all relevant stakeholders need to be described. 6. Will anything stay the same after the change is implemented? There are also change management projects where all changes are not being implemented initially. These aspects should be pointed out, so that they can later on be used in the change communication. By developing the change story, the initial situation, the changes, the relevant stakeholders, and the impact, as well as the changes to the stakeholders will become transparent. Additionally, the content of the change communication is based on the workshop results: All workshop participants give answers to the questions shown in Figure 3. Thus, the basis for coherent communication with the affected employees is given. 2.2 Critical Success Factors For a successful implementation of human change management the following three success factors have to be considered: change and can therefore hardly understand what reactions can be expected from the affected employees. Therefore, it is important to have a look at the progression of mood (see Figure 2) in order to find out what feelings or fears the affected employees will face. 2. Success Factor Participation Participation means to let the affected employees actively participate in the change project. Here, the following applies: The affected people have to be involved as early and as comprehensively as possible. A sustainable commitment can only be achieved by an early, consistent, and honest involvement of the stakeholders. How this participation looks like differs from case to case. A fully participatory process, where all stakeholders are involved in the entire conception, can be considered, but it is only feasible for smaller companies or projects. 3. Success Factor Communication Change communication has to always be included in a human change management project. Its goal is to remove the communicative obstacles for changes within a company and to enable sustainable change. By customized communication measures, the willingness to change can be strengthened. Information about objectives, strategies, and measures of the change process should be communicated. An effective change communication is on time and does not leave room for any speculation or even rumors. 1. Success Factor Management Management plays a significant role within any change process. Without the participation of management, changes can never be successfully implemented in the company. In many cases, management itself is not affected by the

9 3. Additional Information. 8 9 Human Change Management is an integral part within T-Systems AMM outsourcing methodology, AMbition. Experienced human change managers accompany the outsourcing projects across the entire project lifecycle. As an accompanying process, Human Change Management supports Service Transition and Service Transformation with customized measures to create awareness why the change is needed. T-Systems is Deutsche Telekom s corporate customer arm. Using a global infrastructure of data centers and networks, T-Systems operates information and communication technology (ICT) systems for multinational corporations and public sector institutions. With offices in over 20 countries and global delivery capabilities, T-Systems serves companies in all industries from the automotive industry to telecommunications, the financial sector, retail, services, media, energy, and the manufacturing industry all the way to government agencies and the healthcare sector. Approximately 48,200 employees worldwide use their industry expertise and ICT know-how to provide topquality service. T-Systems generated revenue of around EUR 9.2 billion in the 2011 financial year.

10 4. Literature. Source Document [Bernhart, Wolfgang / Dressler, Norbert / Mastering Engineering Service Outsourcing in the automotive industry. Market Study. (2010) Tóth, András] service_outsourcing.html. [Heins, Valeria] [Pfannenberg, Jörg] Change-Management: Die Rolle der Führungskraft in Veränderungsprozessen. Norderstedt: GRIN Verlag, Strategien der Veränderungskommunikation. In: Veränderungskommunikation: So unterstützen Sie den Change-Prozess wirkungsvoll. Themen, Prozesse, Umsetzung. Hrsg. v. Jörg Pfannenberg. Frankfurt/Main: Frankfurter Allgemeine Buch, [Garbani, Jean-Pierre, Hubbert, Evelyn, Competitive Analysis: Application Performance Management and Business Nelson, E Lauren] Transaction Monitoring, Q4 2011, Forrester, [Rigall, Juan et al.] Change Management für Konzerne. Komplexe Unternehmensstrukturen erfolgreich verändern. Frankfurt/Main: Campus Verlag GmbH, [Scherm, Ewald / Pietsch, Gotthard] Organisation. Theorie, Gestaltung, Wandel. München: Oldenbourg Wissenschaftsverlag GmbH, [Quack, Karin] Outsourcing erhält das Prädikat strategisch. Fig.-Nr. Figure Name Figure 1: Figure 2: Figure 3: Human Change Management. Progression of Mood. The Change Story.

11 About the Expert Ricarda Kleff is a consultant within the Global Competence Center for Application Management & Modernization (AMM). As a change manager, she accompanies international outsourcing deals during the bid as well as the implementation phase. Her experience includes, for instance, the development and implementation of a Human Change Management concept in which T-Systems took over responsibility for an application environment (about 80 business critical applications) from multiple providers. Besides the implementation of new processes, the shift of a purely national to an international delivery model (Germany, Russia, India) had been a major challenge for Human Change Management. The GCC AMM is a multinational team of more than 30 consultants and project managers who specialize in the implementation of critical application outsourcing projects. Big AMM deals are accompanied from Lead to FMO above all branches, technologies and countries. This Expert Paper is published within the Experts on Application Management & Modernization column. For more information go to:

12 Published by: T-Systems International GmbH Hahnstrasse 43d D Frankfurt Responsible for content: Product Marketing HCM October 2012 RecySatin, halbmatt gestrichen weiß Bilderdruck, mindestens aus 80 % Sekundärfasern, Rest aus holzfreien Primärfasern. Kontakt: T-Systems International GmbH Holger Wächtershäuser Market Intelligence Hahnstraße 43d Frankfurt am Main Holger.Waechtershaeuser@t-systems.com T-Systems International GmbH Günter Hüttig ICT Solution Marketing Otto-Röhm-Straße 71c Darmstadt Guenter.Huettig@t-systems.com T-Systems International GmbH Ricarda Kleff Global Competence Center Application Management & Monderization Fasanenweg Leinfelden-Echterdingen amm.coe@t-systems.com