The change management process is the sequence of steps or activities that a change management team or project leader would follow to apply change management to a project or change (Change Management, n.d.).
It is supposed that a project is realized in a company, which specializes in retail of clothes. A company has more than 200 stores around a country. Also, it has an online store, where all the products can be bought. A company proposes clothes for all the categories of people (all ages and genders) in the different price segments. Its monthly turnover is about $5 million.
It is an obvious fact that such company is characterized with hundreds of sales operations every day. It puts forward significant requirements for controlling, accounting, and monitoring of every operation. The situation is aggravated by the fact that all the stores are located in the different corners of the country.
Because of this fact the company decided to implement an automated accounting system. Implementation of such system is going to minimize use of paper documents and time, needed to complete a particular sale or accounting operation.
The project is very complicated and requires significant financial and human resources as well as time. The company under consideration does not have an appropriate experience in this field. Therefore, it has been decided to invite external company, which specializes in such services. The project implementation plan has been developed. Both companies have agreed upon prices and deadlines. The project has been set to be finished in 8 months. However, after 3 months the IT-company that provided implementation services became bankrupt. Nowadays, the company under consideration is forced to look for a new organization that will finish the project on time in given financial conditions.
It was a momentous change and stress for the company. Such tremendous change in the process of the project’s realization is going to affect its following sides: financial conditions of the project’s realization, technical characteristics of the project, attitude of personnel, and deadlines.
First of all, the company has a limited budget for the project. Some money has been already paid to the previous organization. Respectively, it is forced to find a cheaper proposal or new ways of financing. Second, automated accounting systems are usually technically unique. It means that a new provider of such services is going to propose innovative technical solutions and requirements. Third, the company’s personnel has already passed through some educational process how to work with AAS. Therefore, employers as well as employees will be forced to reeducate. Finally, it is essentially important to find a firm that will finish the project in five months. In order to address all the mentioned issues a change management process plan has to be developed. Thus, the change management process plan should comprise a number of elements:
First, it should include a description of the ways of additional financing of the project’s realization. It is almost impossible to finish the project via the given budget. Therefore, the company will be forced to look for additional sources of financing. The change management process plan will propose several ways of potential financing of the project on the different stages of its realization. For instance, financial resources from the company’s monthly revenues, money from a special development fund, and debt financing.
Moreover, a change management process plan should describe how the current technical possibilities of the company can be combined with technical requirements of AAS, proposed by a provider. The plan should evaluate which alternative is the best one – to implement a system from the very beginning or use developments of a previous provider. In the end, a final answer is going to depend on the position of a provider.
Furthermore, the change management process plan will provide a timeline and materials for education of personnel, related to work with a new program. Such education is going to be conducted by representatives of a new provider. The educational process is going to consist of two parts: theoretical course and practical work after program’s installation. It is going to take no more than three months.
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What is more, the change management process plan should name a new company that will realize the project. A provider of services should be found immediately. This provider must have appropriate experience, and be ready to realize the project in the given deadlines for a given price. The current business world lives in the conditions of the consequences of the global financial crisis. Therefore, it may be easy to find a company that will be ready to implement AAS.
In the end, the implementation of the change management process plan and the realization of the whole project are going to depend on a new provider and its capabilities. Deadline is really short – only five months. The budget is also limited. There is no additional time and money. Therefore, the company under consideration must find a provider that will be the most suitable for the change management plan.
The last, but not the least element of the change management plan is a mechanism of monitoring and controlling the project’s realization. First of all, an important task is to assign managers who will be responsible for the project. Second, clear deadlines for the different project’s stages and the reporting dates should be established. Finally, the so-called key performance indicators, according to which the project’s success is going to be evaluated, must be implemented.
Analysis of a Project’s Failure
It has been said a lot about significant changes in a project’s realization in the first part of the work. However, it is not the worst scenario possible. Changes are not a problem, when a project is successfully realized. Moreover, sometimes changes may increase the final value of the project’s results. On the other hand, sometimes a project’s realization may lead to failure. It means that the actual results are not as good as expected. Such case is going to be considered below. A real example from a real business life is going to be analyzed. Name of a company has been changed.
A hypothetical company will be called Next. The company specializes in production and sale of ice-cream. The company produces ice-cream on its little factory, using own recipe. The ice-cream is sold in a caf? and little moving outlets. It is a family business. Therefore, a factory, caf?, and home of owners are located at the same place. Ice-cream from moving trailers is sold by family members. There are five such trailers.
This little company decided to expand its business. The first step was to sell the moving trailers. The second step was to open an additional caf? in a city’s downtown. Finally, it was also decided to open an online platform for selling ice-cream via Internet. Of course, it was a huge project for the family. Such project required significant financial resources. The family had some savings, but it was not enough. Therefore, it was decided to borrow money from a bank.
Unfortunately, the project was not realized in the expected way. The results were quite bad. That is why, it is possible to talk about the project’s failure. First of all, it was not easy to sell the moving trailers. As a result, the company was forced to sell them for the lowest price on the market. Second, online platform was not as popular a s a real caf?. Customers were reluctant to order ice-cream via Internet. The reason for it is quite simple. Ice-cream is a type of product that customers desire to see and try in reality. Third, people did not visit a new caf? in the city’s downtown actively. Revenues from sales were lower than expenditures, needed to cover a banking credit. In the end, the family was not able to pay off the debts. It was forced to close a new caf?, online platform and get another credit. The company is going to work for a few next years only to pay off the debts. It can be considered as a failure.
First of all, it is important to understand the reasons for a failure. Generally, it is not reasonable to borrow money from banks nowadays. The world is living in the conditions of the global financial crisis. As a result, banking credits are very expensive. The moving trailers are not so popular nowadays as they were a few years ago. For this reason, it was not an easy task to sell them for a good price. As it has been already mentioned, people do not like to buy ice-cream via Internet. They desire to come to a caf? and eat it there, having a pleasant time. A process is more important than a product itself. Finally, a great share of the company’s customers was constant and loyal customers from the neighborhood. A new caf? did not manage to get such clients for quite a short period of time. All these reasons have led to the situation when revenues were lower than initial costs for a business’ expansion.
Despite the fact of the project’s failure, it still has some positive moments and strengths that can be used in the future. Among these strengths, the following ones may be pointed out:
- The company has got knowledge about the most influential trends in the industry;
- The company has got an experience that way of financing of a business is tremendously important;
- The company had a chance to test its planning skills and overall qualifications in strategic management. All these skills are going to be used in the future for the next projects.
Despite the fact that this experience is in general negative, it can be used in the future for successful realization of the further projects. The main task is to get important and useful lessons from the experience.
The main mistake that has been made by the company is absence of effective strategic planning. “Simply put, strategic planning determines where an organization is going over the next year or more, how it’s going to get there and how it’ll know if it got there or not” (All About Strategic Planning, n.d.).
Next did not have a detailed strategic plan for development of the business. As a result, the company has underestimated the costs of the business’ expansion and overestimated its possible revenues. Finally, it has become obvious that the company did not know exactly its current and potential clients.