Over a Third of Companies Abandoned Business Change Projects in Last Three Years

21 Oct 2008

Over a third (37%) of company executives surveyed said they had abandoned a major business change project in the past three years, according to research by Logica Management Consulting and the Economist Intelligence Unit (EIU). The researchers estimate that global companies are losing up to £7.8bn a year.

Some of the main barriers to effective business process improvement were found to be:

•Pressures of day-to-day business (48%).
•Lack of dedicated resources (38%).
•Lack of alignment between functions (38%).
•Lack of support from senior management (15%).
•Poor planning (16.3%).
•Lack of necessary IT/ infrastructure/applications (22%).
•Lack of expertise in business process design and/or change management (21%).

In a survey of 380 executives in western Europe, the key drivers for change management include improving financial performance (66%), improving customer focus (45%) and reacting to competitive pressures (32%); in practice, a worrying performance gap means this is unlikely to actually happen.

While 70% of the firms surveyed said they spent as much as 1-6% of their revenue every year on business change projects, nearly one third of business process changes fall short of expected benefits. Surprisingly, almost one fifth (18%) of organisations do not assess the achievement of specific goals against the original business case, such as ROI.

In an interview with gtnews, James Campbell, management consultant at Logica Management Consulting, said that this lack of evaluation around a project's success is a real problem. "One of the issues that we have identified with our clients is the ability to measure success. You need to start off with the business case and track the benefit realisation throughout the whole programme. Typically a lot of clients develop a business case and then they don't actually track it through, so there is no idea about how well they are doing and whether it is really giving them the return that they expected." Only 29% of the companies surveyed have specific systems in place to assess the impact of change projects on process performance.

The survey also found that:

•Successful changers are more ambitious. They undertake more cross-departmental projects and far more cross-regional projects (respectively 90% versus 85% and 81% versus 68%) than less successful changers.
•Collaboration with suppliers, customers and partners is not yet common practice, with only 24% of the companies surveyed reporting that they work highly collaboratively with suppliers, 27% with customers and 31% with business partners. Successful changers have a more open relationship with both customers and business partners.
•The top three most important business process changes over the past three years were the introduction of new technology, outsourcing and integration over different regions. For the next three years, automating processes replaces outsourcing in this top three. Future challenges for European executives consist of integrating locations and realising the benefits of earlier initiatives, including outsourcing.

First published on www.gtnews.com