Implementation and Deployment

The Challenges of Managing Major Change

Peter QuintanaProgramme DirectorStandard Chartered BankMarch 2002

– A statement of the obvious

– Some worrying statistics

– Reasons for failure

– A programme approach to change

– What can we do to improve?

– Tactics for success

Excellence in execution….

….Requires flexibility and discipline

Organisations face increasingly complex & demanding change programmes….

Multi-Site

Large Scale

Complex

ResourceIntensive

High Cost

High Risk

MultipleStakeholders

Global

Multi-Cultural

Multi-Functional

Majorstrategicchange

…impacting on every aspect of their business

Some worrying statistics

100 Change Projects50% (50 Projects)

Deliver the Solution

• 30% are cancelled• 20% have serious delivery problems

50% (50 Projects) Fail

50 Change Projects70% (35 Projects)Are accepted by

business users

• 30% fail to be accepted by business users

30% (15 Projects) Fail

Some worrying statistics

35 Change Projects40% (15 Projects)Deliver Expected Business Benefits

• 60% fail to deliver expected business benefits

60% (20 Projects) Fail

Some worrying statistics

Reasons for failure 1 - Delivering the solution

55 1010 1515

Technology IlliteracyLack of IT managementDidn’t need it any longer

Lack of planningChanging requirements

Unrealistic expectationsLack of resourcesLack of user involvementIncomplete requirements

Percentage of failed projects

Lack of executive support

Lack of planning for the changes

No short-term successes

Under- involvement of affected staff

No clear vision of the change

Poor communications

Fear of failure

Resistance

Inertia

Reasons for failure 2 - Readiness for change

Projects not aligned to strategy

Company strategy changed

The marketplace changed

Reasons for failure 3 - Delivery of benefits

Strategy

Objectives

Critical Success Factors

The business case was wrong

The desired benefits were not known

Projects not prioritised against organisational CSFs

Projects do not contribute to shareholder value

– Prioritise investment by contribution to the business

– Select the ‘right’ set of projects

– Set a baseline so we can measure business benefits

– Combine strong project management with skill in managing the human elements

– Be able to change as the outside world changes

Flexibility and discipline….

….A programme approach to change

Programme management….

….Managing risk in multiple dimensions

The identification, prioritisation and execution of a portfolio of change initiatives in an open

environment to achieve real business benefits and enhance shareholder value

….Gated approval to allow reaction to change

Initiation Operations

Planning

Impl

emen

t

benefitsbenefits

benefits

Planning

Review

Review

3. Business Plan approved,funding for detailed planning in place

5. Additional funding approved at milestoneevents

An open lifecycle….

Definition

1. Strategic alignment and prioritisation of change initiatives to achieve business benefit

2. Approval to establish overall funding, resources and infrastructure

7. Progressive delivery of benefits

8. Controlled transfer of responsibility to operations

4. Identification of detailed tasks, interdependencies, timeframes, resources and benefits

6. Managing achievement, delivery of benefits, issues and variations

What can we do to improve - Delivering the Solution

Providing Support

Developing the Capabilities of

the PM Community

Establishing Project

Management Standards

Developing Capabilities to Deliver Projects

–Advice and coaching for project managers and teams

–Assurance reviews

–Establishing corporate processes

–Benchmarking

–Helping strategic sponsors fulfil their roles

–Career structure with competencies for project managers

–Training curriculum

–Group Project Management Guide

–Project Management Library

–Tools and techniques

Skills and disciplines for project management

–The Group Project Management Guide

–Assessing project risk–Project approvals–Roles and responsibilities–Managing projects by a number of processes

–The Project Management Library

–Templates–Best practice examples–Advice and guidance–Tools & techniques

Group projectmanagement guide V2.0

The projectmanagement library

First release - April 1999

Focus on time, cost and quality

Helps to determine:– the required project

approvals– the “management

environment”– PM experience– project organisation– formality of

approach– level of external

review

Assessing project risk

Risk Score (max score 15) 12Risk Classification (High Medium Low) HIs this a Critical Project? (Yes, No) Yes

High Risk = score of 12-15Medium Risk = score of 7 - 11Low Risk = score of <7

Risk Category Risk Factor Notes FactorScore

Categorytotal

RoundedAverage

Project Size Cost Project is >10M USD 3

P & L impact P&L is > 4M USD (2001) 3Project duration (incl.Feasibility)

9 – 12 months 3 9 3

Complexity Project objectives High level scope clear & agreed 2SCB areas impacted Single business units, but

multiple geography2

External parties 2 external suppliers 2Degree of change Minor operational changes 2Dependence on otherprojects

Partial dependence on CS&Sfor channel capability; andMBP for direction on hubbing

2 10 2

Time-scale Ability to achieve Very demanding timescale –very tight and no contingency

3

End-date Imposed internally 2 5 3BusinessImpact

Impact on GroupAnnual Results

>0.1% and <0.5% 2

Strategic significance Moderate 2Customer impact Significant 3Regulatory impact Some negotiations required

with one or more regulator2

Market impact No + or – impact on share price 1Reputation Moderate 2Stability of localenvironment in whichthe project isoperating

Stable 1 13 2

Organisation Group experience Done before 1Team experience Project management and team

skills available within Group2

Technology risk Technology new to businessunit or geography

2

Business risk Some business process/productnew to business unit orgeography

2 7 2

TOTAL 44 12

Par for Detailed Planning Phase

Detailed Planning Phase

Par for Implementation

Implementation

Feasibility

Project approvals - managing risk levelsU

nce

rtai

nty

+

-

Time

PAR1 PAR2

What can we do to improve - Readiness for ChangeDefine The

Change

Assess The Climate

Identify Change Approach

Generate Sponsorship

Develop Target Readiness

Create Cultural Fit

Build Agent Capacity

Motivation Planning

Communication Planning

Integrate Planning

Plan

ImplementMonitor

Skills and tools to understand and manage the human elements of changeAccelerating ImplementationManagement(IMA)

5

Sponsor Capacity

Employee Readiness

Cultural Fit

Agent Capacity

Organizational Stress

History of

Implementation

Focus on implementation history and organisational capabilities

Strategies to surface and overcome resistance to change

Assessing sponsor capacity

– Changes are lost in the management ‘black hole’

– Impact on power & control– Impact on job characteristics– Work pressure, stress & worklife

disruption

– Treat all layers of the organisation as change ‘targets’– Define terms of reference for Steering Committee

– Objectives – Responsibilities– Outputs

– Implement a face to face communications programme– Implement regular written communications

– Bi-weekly bulletin– Monthly executive update– Vendor position statement – Ad hoc information packs

– Define measurement of effective implementation success– Ensure clear links between jobs, strategy and changes– Ensure careful prioritisation and allocation of resources

Building reinforcing sponsorship

ObjectivesRepresent the interests of all stakeholders

to the programme and provide direction to the programme director

Regularly review the business case and recommend corrective action for any changes in the business case

Provide policy guidance to, and resolve any issues that cannot be resolved by, the programme director

Ensure adequate resources are available and allocated to the programme

Provide assurance on overall programme performance through the monitoring of significant risks and progress against targets for quality, time scales and costs

Principle ResponsibilitiesDefine Programme Director’s responsibilities

and objectives

Provide overall guidance and direction to the programme

Review and approve the Programme Terms of Reference and Plan

Review progress against the plan and budget, and any exceptions

Authorise items of expenditure above Programme Director’s delegated authority

Ensure that regular programme assessments are undertaken

Sign off each completed stage and approve progress to the next stage

Ensure that all deliverables are satisfactorily completed and delivered

Approve the impact of agreed scope changes

Steering Committee Terms of Reference

Global Unsecured Lending Processing Solution

A fixed term contract with a third party, governed by a series of service level agreements, for continuous management responsibility for the

provision of a single Cards and Loans processing Application, plus data centre processing support and software development services for that

Application, supporting all Unsecured Lending products and services - for credit cards and personal loans, globally. Headlines @ 8/2/2002 :Programme approved for Functional Solution Definition (FSD) PhasePre-FSD will be conducted with both vendors - SLBS and CertegyFSD will be conducted with a single choice vendorProgress in the last two weeks:

Heads of Agreement (HoA) and Commercial negotiations nearing completionCommenced audit of the evaluation framework and vendor selection processPresented Due Diligence findings to Programme Steering Committee (4/2/02)Issued Vendor Position Statement on 5/2/2002Investment Proposal for FSD Phase approved by CBPIC (6/2/02)Preparation for Pre-FSD and FSD Phase

What's Next:Obtain further transparency on vendor customisation and conversion costsExplore potential opportunities for business process outsourcing within GULPSExplore potential to include Collections within GULPSAnalyse existing IS / IT costs allocated to Unsecured LendingCommence working with Compliance to understand regulatory position

COSTSRFP : budget US$325k, spent US$342kDD : revised budget US$1.9m, spent/committed to date US$1.45m

KEY ISSUES & RISKSLack of available SCB business resource to join the programme team.Lack of in-country resource to support programme during FSD and subsequent roll-out.Regulatory restrictions may prevent a single service centre.Both MESA and Africa have reported urgent needs for unsecured lending systems solutions. The GULPStimetable cannot hold these up, but it is recommended the solutions adopted are either short-term fixes, orallow SCB to exit with minimum cost.

COMMUNICATIONSMeetingsProgramme Steering Committee : Next PSC date - To Be AdvisedCore Programme Team : Weekly, every Monday at 5pm SG

ReportsMonthly Project Status & Financial Report: Due on 12th Feb 2001Quarterly Project Status & Financial Scorecard: Due in Mar 2002

PublicationsBi-Weekly Bulletin Board: If you wish to be taken off the distribution list / would like to see more info. - pleasecontact Cecilia Teoh (Tel: +65 3312833 Email: Gulps Programme/APRS/SCB)Document Store: A GULPS document database has been established in Lotus Notes

Bi-weekly bulletin

Global Unsecured Lending Processing SolutionExecutive Update

Issued By : Peter Quintana Overall StatusFebruary 2002

Objective To source a managed service, comprising integrated, consolidated, standardised software

solutions and data processing, to support unsecured lending products and services – i.e. creditcards and personal loans – offered in segmented APR, MESA and Africa

Scope A fixed term contract with a third party, governed by a series of service level agreements, for

continuous management responsibility for: the provision of a single Cards & Loans processing Application data centre processing support and software development services for that Application parameter management and migration of parameter changes to production

The Application will support all unsecured lending products and services - for credit cards andpersonal loans - globally

Business Case Programme Costs : US$65M; IS/IT Savings EP @ Stake (2007) : US$12-17MBenefits Removes the restrictions inherent in the current systems Delivers worldclass functionality for competitive advantage (profitability & service levels) Benchmarks to best in market on cost for performanceBudget RFP phase - budget US$325k; spent US$342k DD phase – revised budget US$1.9M; spent/committed to date US$1.45M

ResourcesProgramme Steering Committee John Lorimer, Mike Grime, Mike Hart, Subroto Som,

Roland Teo, CY LingProgramme Director Peter QuintanaProgramme Office Cecilia TeohCore Programme Team Keyka Pourkarimi, Raymond Yip, John Carr, Ericson

Chan, David FleetFinance Tan Sok Hong

Achievements to w/e 8/2/2002• RFP phase

• completed end September• five vendors responded

• Due Diligence phase• Findings presented to PSC 4/2/02• Heads of Agreement/Commercial Negotiations (on service fees) nearing completion

• Functional Solution Definition (FSD) Phase• Approval for budget to proceed to FSD gained from CBPIC 6/2/02• A ‘Pre-FSD’ phase has been agreed to explore BPO options, clarify vendor

customisation/conversion costs, and analyse internal IS/IT costs• Heads of Agreement will not be signed until Pre-FSD is concluded• FSD is now expected to start by 1st April latest

Key Milestones – Functional Solution Definition Phase

Issues

• The Pre-FSD phase may delay the start of FSD to 1st April, and therefore the projected datefor first country roll-out to Q2 2003, as the vendor will potentially not be able to start sourcingand deploying their team until 1st March (once Heads of Agreement have been signed)

• The start of FSD is dependent on sufficient resources being recruited into the BusinessStream. HR have been contacted and are preparing job watches for publication on 18/2, andsome potential candidates have already been identified

• The FSD budget presented provided for 3 FSD workshops. To manage costs more effectively,this approach will be revised. However, the outcome of FSD will be a fixed vendor cost andschedule for customisation and conversion that will be included in the final contract. ThereforeFSD must result in a sufficiently detailed understanding of each country’s specific needs, tohave confidence in the final price and timeline.

Present Due Diligence findings/FSD budget to PSC 04/02/02

Present FSD funding proposal to CBPIC 06/02/02

Achieve transparancy in vendor conversion costs 22/02/02

Review and sign-off data centre location 28/02/02

Analyse current & residual IS/IT costs 28/02/02

Review inclusion of Collections in scope 22/02/02

Scope BPO options 28/02/02

Finalise and sign-off GWAN costs 22/02/02

Confirm funding & scope of ISIS 22/02/02

Review financial treatment of programme costs 28/02/02

Finalise Heads of Agreement 22/02/02

Finalise Commercial Terms 28/02/02

Re-work FSD approach 15/02/02

Define Process Stream 28/02/02

Present Pre-FSD findings and recommendations to PSC 01/03/02

Present Pre-FSD findings and recommendations to EXCO 13/03/02

Mobilise for FSD 31/03/02 Date tbc

Complete FSD 30/06/02 Date tbc

Sign-off Customisation scope & costs 30/06/02 Date tbc

Sign-off Conversion Schedule 30/06/02 Date tbc

Present FSD results/Implementation budget to PSC 30/06/02 Date tbc

Present Implementation funding to CBPIC 30/06/02 Date tbc

Present overall programme for approval to Board 30/06/02 Date tbc

Sign Contract 30/06/02 Date tbc

Monthly executive update

What can we do to improve - Delivery of Benefits

Initiation

Planning

ReviewImplementation

1. Analysis & Identification of improvements

2. Benefits Identification & Quantification

5. Benefits Tracking & Reporting

3. Benefits Optimisation

4. Refine & Develop Business Cases

6. Benefits Review

Close

Skills and disciplines for benefits management

Project A

Project B

Project c

Project D

Project E

Project D

Tranche 1 Benefits realised

Tranche 2 Benefits realised

Project F

Project H

Project E

Project IProject G

TRANCHE ONE TRANCHE TWO

TRANCHE THREE

Tranche 3

PROGRAMME

CLOSE

Focus on progressive delivery of benefits

Analyse & Identify

Improvements Required

Define & Quantify Benefits

Optimise Benefits

Baseline Benefits &

Define Measurement

Criteria

Continuous Tracking &

Reporting of Benefits

Realisation

Review Achievement of Benefits

– What improvements are required or desired?

– What benefits are expected and on what scale? What type of benefit?

– Which benefits will provide best nett return on investment

– Chosen benefits must be baselined to provide a starting point for measurement

– What to measure and how to measure must be clearly defined including source of MIS

– Individual benefits must be tracked until fully realised (to ensure benefits case does not change)

– Review validity of benefit achievement when projects meet deliverables

The benefits management process

– Identify the initiatives needed to deliver the targeted benefits

– Understand the relationships and inter-dependencies between initiatives, benefits and programme outcomes i.e. the cause and effect dynamics of activities and results

– Evaluate initiatives in the context of risk, cost and time to payback vs contribution to high level programme benefits

– Classify initiatives as – Strategic choices– Winners– Tactical returns– Losers

– Prioritise and sequence the programme to maximise benefits in the short term

27

Optimising benefits - the road map

Shareholder Value

Enhanced

CustomerValue

Enhanced

EmployeeValue

Enhanced

Effective AcquisitionManagement

achieved

Effective 1 -to - 1or Customized

MarketingCapabilityachieved

Superior Customer

Managementcreated

EffectiveCampaign

Managementachieved

CustomerInformation

rules& standards

created

Staff are skilled

in QM andhave the

tools

EffectiveBusiness & Marketingplanningachieved

Brand Valuesdefined

QuantitativeMarketing

Implemented

EffectiveProduct

Managementachieved

CustomizedCommunication

CustomerSegmentsidentified

CustomerAnalysiscapabilityincreased

Understandingof Customer

needs,behavior,

value

Quality & amount

of CIincreased

Alliances&

Co-branding

Differentiated & consistent S&S

by customersegmentachieved

Sales & ServiceIntegrationachieved

Proactive Sales process

enhanced

People &Culture

aligned withS&S

Success Criteriameasured onMarketing Efficiency Dashboard

Sales and Retention

Informationupgraded

EffectiveCRM planning

achieved

ExternalSegmentation

frameworkcompleted

External &InternalResearchconducted

ULTIMATEOUTCOMES

Establish a InformationManagement process

Establish a DQManagement process

Define CRM strategy

CRMstrategydefined

SalesManagement

refined

Develop businessplan by country,product, segment

Built inBrandCornerstone

Develop CustomerManagementPlan

Customer Information & Marketing Summary Road Map

Tactics for success - Leading Change

– Local Line Leaders– accountability for results and authority to undertake changes

– who can also undertake meaningful organisational experiments

– Internal Networkers– through which new ideas and practices spread across the

organisation– ability to carry ideas, support and ‘stories’ – help make executive leaders aware of the support that changes need

‘Little significant change can occur if it is driven only from the top’ Therefore cultivate the ‘leadership communities’ at lower levels of the hierarchy who can play critical roles, e.g.

Tactics for success - Initiating Change

‘The fundamental problem is lack of time flexibility - the discretion to focus on what might be important in the long term’ Therefore ensure time invested is effective in order to generate willingness to commit, e.g.

– Integrate initiatives into programmes of change– Create capacity for coaching – Explicitly raise questions about relevance (and revisit regularly)– Make more information available– Keep training tightly linked to business

– Start small and build momentum– Avoid frontal assaults– Encourage participation by choice (not coercion)– Establish interim goals– Communicate the benefits– Avoid jargon – Act as mentors, interpreters and diplomats

Tactics for success - Sustaining Change

‘Harmony is often maintained through a façade - don’t rock the boat’ Therefore ‘lower the water level’ to reveal the rocks underneath and develop organisational confidence to raise issues and challenges e.g.

Tactics for success - Redesigning Change

‘Long term change programmes and ‘change du jour’ create significant potential for disillusionment’ Therefore encourage thinking and new ideas about strategy and purpose e.g.

– Keep articulating the case for change in terms of business results

– Engage network leaders as coaches and carriers of new ideas– Release information about new innovations early– Engage people continually in thinking about strategy and

purpose– Ensure process is open to new strategic influences in the

environment

– The risks of failure to deliver the solution can be mitigated by standards and discipline in project management

– The risks of failure due to lack of readiness for change can be mitigated by adopting tools and developing skills to understand and manage the human elements of change

– The risks of failure to deliver the benefits can be mitigated by standards and disciplines to optimise the programme and maximise returns

Summing up - flexibility means managing risk….

The organisational capability to react to change within an open ‘programme’ life cycle

Appendices

– Optimising Benefits : Initiative Evaluation

Contribution to benefitContribution to benefit

RiskRisk

HighHigh

HighHighLowLow

How risky is an initiative in comparison to its contribution to achieving the high level programme benefits?

Consider a risk status in terms of both the risks to implementing the initiatives successfully and the future operational risks to benefits delivery.

Risk Factors to consider:• the size of the initiative - cost, size of implementation team, duration of project implementation• complexity - dependencies between initiatives and between programmes, geographical spread,

participation of external parties, cross business impact• organisation - skills, experience, knowledge of new technology, scarce resources• business impact - customers, regulators • business risk - new product, new market, competitor activity• extent of business change • sensitivity to changes in markets, strategy, technology

LowLow

Optimising benefits - 1. Risk evaluation

Contribution to benefitContribution to benefit

CostCost

HighHigh

HighHighLowLow

How much does an initiative cost to implement in comparison to its contribution to achieving the high level programme benefits?

Cost should include all implementation costs.

Cost Factors to consider:• systems and hardware• staff cost of the implementation team and administrative costs of the initiative

e.g. travel etc• redundancy costs resultant from change and any associated recruitment cost

for new skills• marketing • training etc.

LowLow

Optimising benefits - 2. Cost evaluation

Contribution to benefitContribution to benefit

Speed Speed of of

returnreturn

Long Long termterm

HighHighLowLow

How long will it be until the investment in this initiative is paid back in comparison to its contribution to achieving the high level programme benefits?

Early in the programme lifecycle this evaluation will be on a best guess basis. Later with more accurate estimates available more sophisticated methods may be employed.

Financial evaluation methods:• simple payback duration • time taken to reach steady state

short short termterm

Optimising benefits - 3. Financial Return evaluation

Contribution to benefit

Attractiveness of initiative

Highly attractive

HighLow

Unattractive

Tactical Tactical ReturnReturn

StrategicStrategicChoicesChoices

LosersLosers

WinnersWinners

Optimising benefits - Classification of initiatives

1. Strategic Choices - essential to the programme, however they need to be planned and implemented with a great deal of caution. First actions on these initiatives are likely to be the commissioning of detailed planning work to establish true costs, risks and investigate alternative solutions. It is unlikely that these will be the first initiatives to be implemented. Action may include suspending implementation of existing initiatives.

2. Winners - the ‘obvious’ initiatives which make a big contribution. They are more likely to be included in the first tranche of programme activities and lay the foundations for future programme activity by establishing profile for the programme and potentially funding for further tranches of activity. They are not necessarily ‘quick wins’ but rather ‘quick starts’.

3. Tactical returns - These are not big contributors to the end result but are attractive as low in cost, low risk or payback quickly. These should be considered for inclusion in the programme only after the resource considerations of 1. & 2. have been allocated.

4. Losers - these are not worth pursuing in the current environment. Details retained for future reference.

Optimising benefits - Classification

Strategic High Potential

Key Operational Support

Projects delivering assets critical to

achieving the organisational

strategy

Projects delivering assets which may be crucial to the

future organisational

strategy

Projects delivering assets on which the organisation will be critically dependent

Projects delivering assets which are valuable but not

crucial to organisational

success

Strategic High Potential

Key Operational Support

Business Innovation and

Change

Business Process Structuring

Creating Opportunities for Business Change

Proving the potential benefits

Process rationalisation and

integration

Process elimination and cost reduction

Optimising benefits - Alternative classification methods

Classification by business contribution Classification by benefit drivers