Editor's note: CharlieMihaliak is an executive director in Ernst & Young'sFinancial Services Office and is located in Hartford, Conn.Raj Sharma is a principal in EY's FinancialServices Office and is located in Redwood Shores, Calif.Bill Smith is a principal in EY's FinancialServices Office and is located in Los Angeles, Calif.

As insurers invest considerable resources in large-scale,technology-enabled transformation programs, organizational changemanagement (OCM) helps them avoid common risks and pitfalls such assub-par adoption of new technologies and lack of organizationalalignment around new processes.

Given that new product development, new systems deployments, andclaims, policy and billing transformations can command budgets inthe tens of millions of dollars, project teams need to use everytool at their disposal to drive faster, more predictable results.OCM, historically seen as the responsibility of business leaders,is important to IT because proven techniques can drive fasterexecution, lower costs and better outcomes throughout a projectlifecycle. Further, OCM can help IT organizations transform andmature their capabilities over the long term, increasing IT's valueto the company.

In the past, conventional wisdom held that OCM equated toend-user training and some communication about major projectmilestones. While those elements are still necessary, they are notsufficient to the requirements of today's high-stakes, complexchange programs. Nor do they meet the needs of CIOs and other ITleaders who understand that their roles now emphasize strategicengagement with the business and the enablement of performanceimprovement.

Rethinking the role of OCM and how it works allows organizationsto proactively plan and strategize for change management at theoutset of a project, rather than scramble to address it“mid-flight,” as so often occurs, usually in the midst of build andtesting activities. In other words, IT leaders can and should beactively involved in shaping and executing OCM strategies, not justpassively accepting whatever the business decides.

OCM can help accelerate projects by:

• Minimizing rework on requirement and design activities byaligning teams around clear project objectives, scope and thefuture-state vision, as well as engaging operational leaderseffectively to secure their buy-in.
• Shortening timeframes for decision-making and issue resolutionby driving leadership engagement and defining clear project roles,responsibilities and decision-making processes.
• Ensuring IT and business resources are available to executewhen needed by aligning leaders around the program, includingappropriately prioritizing and integrating with other initiatives,and communicating effectively.
• Promoting rapid user adoption by engaging stakeholderseffectively throughout the project lifecycle.

OCM in action: a multi-faceted approach

Effective OCM extends beyond training and project communicationsto position the project team, IT and business operations toeffectuate the desired project outcome. The components of aneffective OCM approach include:

Leadership alignment. Leadership alignment iscrucial to ensuring projects stay on track. Leadership alignmenthelps IT to be more productive by reducing rework, minimizingcross-project conflict and mitigating the risk of midstream projectcancellations.

The basic idea is powerfully simple: projects that start withleadership buy-in, a clearly defined target-state vision, a strongproject approach and appropriate funding will run more effectivelybecause it's easier to control scope, identify risks sooner andescalate and resolve issues faster, especially when severalprojects are calling on the same resources.

Risk management discussions are moretransparent when there is clear understanding of project needs andshared objectives across the business and IT leadership team. Leaders will be better positioned to prioritize betweennearer-term enhancements and larger-scale projects when they haveclearer visibility into ROI models and resource requirements.

Stakeholder engagement. Extending beyond theboundaries of IT, stakeholder engagement eases the path to successby aligning requirement definition and design decisions withproject goals. When stakeholders understand the big picture of aproject's mission and scope, they are better positioned to makeinformed decisions about the important details. Further, the chanceof rework is greatly diminished when stakeholders have clarity andconsensus on program objectives, the target-state vision andinterdependencies with other initiatives.

Practically, it's about involving the right subject-matterexperts from the business, operational teams and other IT units atthe right time, and ensuring their management supports theirinvolvement. Engaging business stakeholders sooner makesrequirement and design sign-offs easier and increases thelikelihood that appropriate resources will be available to supportthe project throughout its life cycle and that user adoption willoccur rapidly at implementation.

Projects that utilize agile-like techniques are proving the value of effectivestakeholder engagement.

Organizational alignment. Today, IT projectsare increasingly judged on the achievement of expected businessresults. That's a pretty high bar compared to past measures, likeon-time and on-budget performance or application-response time ordefect density. Organizational alignment helps to ensure thebusiness-specific benefits of IT projects are realized.

A key step in driving organizational alignment is to conductorganizational impact analyses for each group or function affectedby the project. This effort should be highly structured and specifychanges to roles, workflows, skills, performance management andother areas that will be necessary to achieve targeted results.Information and findings from impact analyses should be used toformulate an action plan to drive alignment.

Minimizing data challenges. Definitions,data stores, analytics tools and environments, data quality andmanagement reporting may all be materially affected after newapplications and processes are implemented. The incorporation ofadditional third-party data can also be a big change. Datarepresents the lifeblood of insurance companies and it brings ahost of compliance issues and other challenges as well assignificant potential impacts on critical functions across theenterprise – from product development, marketing and customerservice to finance, actuarial and IT. Engaging these stakeholdersearly can advance a company's data strategy by reducing resistanceto and drag on project speed.

Roles, responsibilities and communications. Themost effective projects have certain notable characteristics. Chiefamong them are clearly defined roles, responsibilities andperformance expectations for all team members, as well as effectiveongoing communication. If these sound like self-evident hallmarksof success, it's important to remember that they are alsocomparatively rare. Project teams face significant pressure tobegin as soon as resources become available and frequently givethese important activities insufficient attention.

These steps are especially important for larger projects thatrequire roles to be filled by individuals from many groups,including multiple functions across the enterprise and externalservice providers.

Deployment readiness. Veteran IT projectmanagers know all too well how IT organizations bear the burden ofany project bumps or issues, even if lack of business preparationor participation is a contributing factor. OCM can have a directbearing on implementation success by ensuring that businessoperations are fully engaged and ready for deployment. Indeed, thisis where OCM overlaps with general project management or releasemanagement best practices.

The key steps must be completed well in advance of launch day,of course. It's critical that business operations understand hownew technology will impact current roles, workflows, workassignments, supervision practices and various operational formsand procedures. There are also significant management-informationimpacts as well. The details are many and minute. Business-sideimpact analyses must be comprehensive.

These challenges have been successfullyaddressed by defining business deployment roles and workstreams. Inone successful project, deployment manager roles were defined aspart of the central change management team and employed part-timelocal office deployment champions within each office affected. Thedeployment manager would assist the local office deploymentchampions in preparing for day 1 implementation and then providesupport during the critical early days of deployment. Workactivities were planned in detail using readiness checklists andmanaged aggressively. The company also implemented scorecards totrack the achievement of readiness activities across the officesand shared the scorecards with program and senior leadership.

Preparing IT for new technology. One of thehigher-risk areas in technology-intensive change programs is theimpact on IT associates. It's also one of the most often overlookedareas and thus, a strong candidate for considerable OCM efforts.More specifically, new technology deployments often suggest todevelopment and support teams that their core skill sets may be onthe verge of obsolescence. Given that many IT resources equatetheir specialized knowledge of legacy systems with job security,anxiety levels can run very high when core policy administrationplatforms or customer data repositories are modernized. The moresenior the resources and/or the longer their tenure, the morelikely there will be turbulence in the change. Similarly, changeprograms that include new sourcing arrangements with offshore orexternal providers may require extra effort. In some cases,business or operational units may take on new technology-relatedresponsibilities, leading to changes in IT roles and reportingrelationships.

At a minimum, IT groups need to plan training or reskillingprograms for associates who may be reassigned to new roles orteams.

If time and money are available, effective organizational changemanagement should be embraced by IT as a “must-have” projectactivity rather than a discretionary add-on.

The payoff of OCM for IT leaders is twofold:

• It helps IT teams address their traditional challenges relatedto project costs and duration — that is, it drives faster and moreeffective project performance through reduced risks and strongerdecision-making.
• It demonstrates IT's increasing business orientation,collaborative capabilities and focus on improving the bottom-lineperformance of their companies.