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Why is change management so difficult? Especially in IT? Martin Erb, product portfolio director, Pink Elephant, says IT service management (ITSM) and IT outsourcing (ITO) face the same challenge: "IT people try to manage change, which has a heavy emotional component, when they are not good at managing emotional things at all."

Pink Elephant's research shows that ITSM installations generally fail when the company can't handle the core issue of dealing with change. He posits it's the same thing with ITO.

He says when companies try to implement ITIL (Information Technology Infrastructure Library) for the first time, they often discover that managing change in people's behavior, culture, and organization is a key competency that's missing. He says people can move up through the IT ranks without having to obtain people skills to succeed. "They are never going to become the CEO," he notes.

Pink Elephant's research found non-IT people led the most successful ITIL initiatives. Moving to ITIL "is an emotional change," he observes. He views managing through change as a "maternal activity." IT people, on the other hand, are pre-paternal. "They launch new ideas and rarely hang around to see if they work. They set the trajectory, check the wind, then launch. They then turn their attention to the next project and may or may not listen to what the scouts tell them about what actually happened -- depending on if it provides an opportunity for a heroic rescue."

Outsourcing, he points out, also changes how a company does IT. Now there's an extra degree of difficulty: the department has to work with people from an outside company, not fellow employees.

"Paradigm shift doesn't begin to describe the change required," Erb says. "The company has to be able to manage the outsourced process without compelling leverage with any of the outsourcer's employees."

When Pink Elephant helps companies move towards ITIL, it provides a Web-based tool called PinkBOOKCASE, a library of 100 management books and 100 videos that employees can use to build skills to help lead and deal with the behavioral, cultural, and organizational changes ahead. There's also PinkREADY, a risk assessment tool that ranks 22 success factors in change management. It assesses employees' responses to a range of questions. The result measures the organization's ability to make the changes and tests to see if the company has the right skills to keep the changed state working. He suggests outsourcers use similar skill-building and readiness assessment tools.

Four steps to ensure successful change management

Erb says there are four steps suppliers can take to determine the probability of success in their outsourcing initiatives. They include:

• Survey the buyer's executives. "You have to care what they think," he says. "If you have executives against the change, the supplier will have a hard road ahead." He says the only way to succeed is "to expose those issues and get them off the table. If you don't, they will hunker down and not participate."
• Understand the grief cycle. Erb says employees will grieve for the old ways. "Everyone grieves. Understanding their grief will help you with their resistance levels," he says. He likens outsourcing to a brutal cure for a life-threatening disease. "The impact on the human body is horrible. But you have to fix it. You have to help people get past the denial," explains Erb.
• Decide what are mountains, what are mole hills, and what are dead buffaloes. Assessing the level of risk is crucial. Beware the dead buffaloes. "They smell horrible. And no one wants to do anything about them. Put on some gloves and deal with it."
• Realize your most valuable commodity is trust. "Outsourcing is built on trust," says Erb. "Integrity is in your interaction with everybody. Be honest or it will cost you. People who feel you didn't communicate with them truthfully will not trust you again," he continues.

For example, here's how he would have addressed a sourcing buyer's IT department when it outsourced: "Here's our specific problem. We need to shave 40 percent off our costs and still provide more value to the company. We want you to help us figure out how we can work with our supplier to do this and solve the problem." He says the first group to ask this question is the unit that is furthest from the cost and value goals.

He's adopted four tools Ken Blanchard developed in his book, Structural Leadership. Here's how he would use them in an ITO change management scenario:

• Directive. This first step sets the stage and guides people. This stage is when the initial enthusiasm is high but the capacity is low. Erb says people need guidance here because they are in the denial sector of the change curve.
• Negotiation. Here the outsourcer and the buyer's management have to talk about "how narrow the options are." This is important because it frames "how the rank and file will respond to change," notes Erb. They need this because more often than not they are angry.
• Supportive. Erb says people need support at this stage "because they are deep into the valley of funk."
• Coaching. This stage is the beginning of acceptance. Now most of the people "are getting on board and their enthusiasm and competency are rising," says Erb.

Erb says none of these things typically come easily to an IT professional. "Their idea of coaching is to smack the display."

Perhaps the best predictor of ITO success is the level of the ITSM practice in the department to be outsourced. "ITSM sets up an IT shop nicely for outsourcing because it establishes how work gets done. You know exactly what's going to the outsourcer. A company can blow its entire outsourcing savings if it loses control of the process," observes Erb.

Lessons from the Outsourcing Journal:

• Change management is difficult under most circumstances. But it can be more difficult for IT departments because they are typically unskilled at managing behavior, culture, and organizational change.
• Sometimes non-IT people are best suited to lead a change management effort.
• Four things suppliers can do to ensure successful change include:
  1. Survey the buyer's executives to determine what they're thinking.
  2. Understand the grief cycle so you can manage it.
  3. Decide what are mountains, mole hills, or dead buffalos. You have to deal with the dead buffalos even though no one else wants to.
  4. Build trust through honest communication.
• IT shops with good ITSM processes are good candidates for successful outsourcing because the buyer knows exactly what processes are moving to the supplier, but the costs have gotten out of line.

Publish Date: June 2009

Copyright © 2009 - Everest Partners, L.P.

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