Organizational Change Management Budget Risks in the Era of Cloud Computing

Organizational Change Management Budget Risks in the Era of Cloud Computing

System implementations have changed dramatically over the past 20 years.  The era of highly customized software, multi-year waterfall implementations and massive infrastructure budgets has shifted to modular software, agile methods, flexible configuration and cloud.

What does this have to do with an accompanying budget for change management?  If you’re not careful, it guts it.

Organizational change management (OCM) budgeting has always been an inexact science.  The most common budgeting approach was born from technology projects and the factors behind them.  Rather than basing initial estimates on, for example, stakeholder numbers and impacts, we base them on technology spend.  Specifically, the go-to OCM budget estimate range is 15% to 20% of technology spend.

With that “science” in mind, what happens to OCM when custom and slow technology implementations are replaced by configured and agile ones?  When infrastructure is rented instead of bought?  When a $1 million project can be delivered for less than $200,000?

The answer: your OCM budget drops from $200,000 to $40,000.  Your audience, with the same need to adapt to new processes, behaviors and success criteria, let alone an entirely different system, remains unchanged.

There is a commonly held belief that improved user interfaces and pervasive internet use have eased the transition process for end-users.  While there is some truth to that, we need to remember two things about this argument:

  1. It has existed since 1992, when client server technologies like PowerBuilder and Windows NT were all the rage.
  1. It doesn’t account for changes to process, roles, behaviors and success criteria that have become more common as we moved away from heavily customizing new technology.

The point of this blog is simple:

  • Be aware of the shifts in technology and how this will impact your change budget.
  • Think about your stakeholder groups and the impact to their roles before agreeing to a technology driven budget.
  • Don’t be afraid to ask for more than 20% if circumstances warrant. Just make sure to defend those circumstances well!

Stay tuned for Part 2 of our blog series that will address how to apply modern, adaptable technologies to fit smaller OCM budgets, and what pitfalls should be avoided when doing so.

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