(From FAQ) Isn’t IT transformation to a managed services model a big deal – and what about the people in IT?

Before going further, let’s make an important distinction between transforming to the managed services model and outsourcing or multi-sourcing. One is not the other.

Implementing a managed services model gives you the tools to run IT like a business. That includes the ability to source services in different ways (insource, outsource, multi-source), but does not require it. The changes for IT people during the implementation of a managed services model are primarily in roles and responsibilities that correspond to new or modified service delivery processes. People’s jobs are changing. When implementing a multi-sourcing strategy, jobs are at stake.

The transformation to a managed services model is a big deal. It involves fundamental changes to processes, organization and technology. Extensive support is required from the Finance and HR functions. Customers of IT will interact differently with IT in procuring services. It’s a lot of change. In my experience, IT people can learn and operate successfully in the new paradigm fairly quickly – a matter of a few months – so long as the management team invests heavily in time to communicate the vision and value of the new managed services model (not just speeches, true interactive sessions) and provide training.

Implementing a multi-sourcing strategy is much more difficult to manage from a staff impact perspective. Presuming that you have already done the diligence and have a compelling case to pursue significant outsourcing of services, my advice is for full disclosure as soon as you have any sort of timeline for the process. If you are in an IT leadership role, you will soon find that your communications and staff interaction on this topic consume the lion’s share of your time. It’s time well spent, since you’ll want to minimize attrition – particularly of your best people, who know that they have options and can easily make a move.

Unfortunately, the answers that IT people most want to know (what happens to me, specifically) aren’t generally available until the end of the process. That is deeply unsatisfying to someone who is directly impacted. What I’ve found to be of value is to communicate throughout the process about what the various steps of the process are and will be known when.

The bottom line is that people will have choices to make and a time frame in which to make them. If someone is in the outsourced services scope, then the choices are generally pretty straightforward:

• A non-IT role at the current company
• An IT role that is not in-scope at the current company
• An IT role with the company that the services are sourced to
• Severance Package
• Retirement

The timing of when each of these will be known and available varies; so impacted staff will probably have multiple decisions to make. HR will be your best friend in helping to manage the information and processes for the various options.

Successful transformation programs invest heavily in an Organizational Change Management program of work that runs in parallel to the transformation workstream. These efforts are mostly communications-based and are vital in keeping the IT group informed and engaged during the transformation.

One of the most important points in these communications is that the transformation to a managed services model does not mean that IT jobs are being outsourced. In fact, unless both the goals of the business and IT transformation are best met by outsourcing as soon as possible, I would strongly suggest against the two efforts (IT transformation to a managed services model and IT outsourcing) being done as one – and then even so, I would caution that it will be a very bumpy ride for both the business and IT.

Again, the transformation to a managed services model positions IT to be able to source its services internally, externally or in any combination along the sourcing continuum. I believe that this multi-sourced model is the only way for IT to be competitive from cost, service quality and capability dimensions in today’s continuously changing global technology marketplace. However, it is highly advisable that the managed services structure first be in place and operational before implementing a multi-sourcing strategy.

Be prepared that no matter how well you communicate and execute this process, you will be the least popular person in IT for some time. Read Colin Powell’s Leadership Presentation – particularly the last page on “Command is Lonely.” It may help you though a difficult time.

Organizational Change Management

FAQ Query: When discussing transformation, you refer to Organizational Change Management (OCM). What is that all about?

If you are in IT, chances are that the only “Change Management” that you are familiar with is the ITIL process. OCM isn’t that.

Organizational Change Management is all about leading your organization though change and coming out the other end with a realized vision and energized workforce. Probably more business books have probably been written on Change than any other topic that I’m aware of  (I’m a big fan of Katzenbach, Kotter, and Senge) – but don’t expect this answer to be a scholarly treatise.

For me, OCM begins well before any change is on the table. It’s establishing relationships and credibility across the organization. It’s knowing and understanding a wide variety of stakeholder groups, their needs and concerns. It’s an investment of time. Without this investment, you will not be able to answer the first of three key questions asked of a change leader by people before they will support Change – Can I trust you?

In developing the Change, the first (and generally most neglected) step is development of a compelling vision of the “to be” state. It can be tricky to do this without trashing the current state – and, by extension, the people who got you there. It is far preferable to honor the current situation as what has made you successful to-date and position the vision as what is required to take you and the business to the next level of success, most likely due to market forces or other environmental change. This vision is the compelling goal that gets everyone though the gooey, sticky mess of transformation.

Components of the vision must be consistent with cultural values and be described in enough detail to make the vision real and meaningful to all your stakeholder groups. These components can include services, processes, organization structure, technology – whatever is important to paint a comprehensive picture. Being able to articulate the vision and what it means to “me” furthers trust that change leaders have been diligent and are being both forthright and trustworthy.

The next set of to-do’s in our Change has to do with answering the second key question asked of the change leader – Are you committed? In my experience, most of the objections raised by people impacted by change are of the “we tried that already and it didn’t work” variety. To me, this speaks to a lack of commitment by leadership in commitment of time, people or budget – not the capability of the organization.

At this point, we are getting into what most people would agree is an OCM framework: Development of communications, communications planning, stakeholder engagement, leadership alignment, assessment of barriers and enablers, monitoring and feedback loops, readiness assessment, changes to management systems, etc. The development and communication of the OCM program itself early on speaks volumes to the commitment of change leaders to the Change. Ongoing consistency by the change leaders in thought, word and deed re-enforces this answer.

All of these components of OCM are important and necessary for success, but they do not answer the third and most important question asked of the change leader – Do you care about me?

There are a few different models for the stages of change that people go though. Most seem pretty similar to: Denial, Anger, Bargaining, Depression and Integration. Morale and performance are largely dependent upon what stage a person is in at the time. People need time to move though these stages and will do so at different rates. The OCM program supports this process and must adapt to different stakeholder needs – it is not sufficient, though, to answer the third question.

Your people will judge your answer by how much time you spend working through this with them and how forthright you are in sharing information. No matter how well you have developed your OCM program and communications, you will not have all the answers. Some tips: Lay out the transformation process. Commit to target dates. Celebrate short-term wins. Be open and honest about what you know and when you will have answers to what you don’t. Don’t be afraid to adapt targets and modify decisions based on new information. Demonstrate a good moral compass and empathy. Treat your folks the way that you would like to be treated. Then they will know that you really do care about them and will fully invest themselves in the Change.

The bottom line: As stated in the beginning, OCM is the foundation for any successful transformation and time spent on it is well invested.  Don’t skimp on it.