Exhibit 1 is adapted from the William Bridges Change Model; it highlights the importance of change management. The solid line in the exhibit illustrates the swing of emotions typical of end users through the course of a major corporate initiative such as a BPM software implementation. The users enter the project with fairly high expectations, which quickly dip into despair as the implementation begins in earnest and they realize how complex the initiative will be and how much effort it will require. As the implementation effort nears completion, users' emotions become more positive. However, the dotted line in exhibit 1 illustrates the way in which change management processes can smooth out the mood swings. When change management and project management are effective at the beginning of the initiative, end users enter the change with lower, and more realistic, expectations. As the full extent of the project becomes clear, users experience a downward swing in excitement about the implementation, but their emotions don't dip to the level of despair experienced in projects without effective change management. Finally, as the project comes to a close and its results become clear, end users who have been guided by well-thought-out change management are happier with the end result than those whose initiatives lacked effective management.

The fundamental elements of change management are an initial stakeholder analysis that is then monitored throughout the project, thoughtful management of all communication surrounding the project, and then effective training of end users. Through these activities, change management smooths the transition from old to new and helps an initiative gain buy-in and acceptance from all relevant stakeholders. Stakeholder analysis and the continued monitoring of the individuals and groups, as well as effective process and technical training are often times the most overlooked components of change management. The communication aspect of change management is downstream to stakeholder analysis. People's emotions change throughout the initiative — what they thought they would be OK with up front may turn out to be a concern for them later on. By continually monitoring stakeholder buy-in, the project team can appropriately alter processes and communications to address changes in behavior and emotions. Training is the final aspect of change management. Too often, companies train end users only on the technical component of the initiative. They fail to explain the project's business value and address how the change will impact employees from a process standpoint and benefit them individually, as well as the company as a whole. Training is an excellent opportunity for the company to articulate the initiative's purpose, value, and benefits. It can clarify the connection between a series of direct, actionable steps and employees' success in the new environment.

Change management is critical to the success of BPM initiatives. Our experience indicates that the impacts of change management have a direct correlation with the success of the initiative 60 percent to 70 percent of the time. One of our recent clients was in the midst of a BPM initiative, and senior management expected the sales group to manage and complete an impending revenue forecast for the business in the new BPM solution. Through the initial stakeholder analysis, the sales force seemed to be on board. Only through the change management initiative's continued analysis of the stakeholders did we discover that some salespeople had developed great animosity toward executive management with regard to the BPM solution as they became more familiar with their future role. They did not think they would be able to make time to incorporate the new revenue forecasting process into their existing functional activities. With this knowledge, we worked with management to redesign the revenue forecasting process and to obtain buy-in from the sales personnel. The outcome was a process in which the newly implemented software generated revenue forecasts itself, based on predefined drivers; then the financial planning and analysis group tweaked those forecasts; and finally the sales force reviewed and approved the plan. The outcome of this process was an accurate sales forecast that did not place an undue burden on sales personnel.

Lack of Understanding About Crucial Details

Many BPM projects fail because the project management processes fail to ensure that everyone involved in — and affected by — the initiative sees eye to eye. Misperceptions and misunderstandings always lead to project difficulties and open up potential failure points. The areas around which we most often see misunderstandings are the availability of corporate assets, such as data that needs to be pulled into the BPM software; the demands the project will make on the time of personnel in finance, IT, and the affected business units; and the level of buy-in that the project has achieved within dispersed business units, particularly international locations.

Misunderstandings about data-quality issues and about the enabling systems underlying the BPM data are systemic across all companies. Few end users comprehend the level of effort required to import historical data into a new BPM solution. Independent groups such as Gartner have confirmed our firm's experience that there is an inverse relationship between the quality of data and the perception of its quality. In other words, the more adamant companies are that their data is clean, the more problems it usually has. Data quality management is an ongoing process. Many companies embark upon a data quality initiative, only to treat their data as static instead of as the live and ever-changing variable that it is. They feel like once they have “fixed” the data, they have no more work to do. The reality is that effective management of data quality requires a company to take control over the processes which enable data to move through its systems. Organizations that treat data as a static variable often believe their information to be high-quality because it was good at one point in time. Those that understand data to be dynamic know that they will never reach a perfect state of data quality, but that striving for perfection is a constant battle they must fight every day via processes and controls.

We step into many projects in which expectations about the level of time commitment that the BPM software implementation will require from functional personnel, such as finance and business-unit managers, are unrealistic. When functional personnel do not expect to devote as much energy as the initiative demands, the company ends up in a situation where consultants provide the majority of the input and direction for the project. Although consultants are very knowledgeable about BPM solutions, they don't understand the nuances of a specific company's processes and organizational structure nearly as well as the employees of the company do. Consultants can install a great solution in an organization, but truly tailoring the solution so that it optimally meets the company's requirements demands deep involvement of functional personnel.

Employees and managers within the company are critical both in the design of the BPM system and processes, and in the management of the project. Even if consultants handle project management and change management processes during the solution's design and implementation, these processes transition to people inside the company once the software is up and running. These resources need to understand the nuances of the execution of the design that delivers the functionality. This is critical to success in future modifications of the processes and systems. In addition, the involvement of company resources with the BPM initiative is critical from a functional standpoint and an overall change management perspective.

The most effective division of labor between consultants and internal company resources is a healthy partnership, which exhibit 2 illustrates. In this model, both parties play substantial roles in the change effort. Consultants help drive the BPM solution forward, but they seek the involvement and take advantage of the knowledge of the company's internal resources. The vertical axis in exhibit 2 shows the level of participation in the project by the consultant (space below the diagonal line) and client (space above the line). When the client plays a large role and consultants' role is minimized, the client acts as a resource buyer, incurring risk by working without much expert advice. In contrast, when consultants play a much larger role in a BPM project than do internal employees, the client is buying a turnkey solution, which increases risk as well. The least-risky BPM software implementations are those in which consultant and client share the workload. BPM projects can be successful in all three zones of exhibit 2, but under very different circumstances. Limited advisory services make sense when the client company has great BPM expertise on staff. Usually a partnership is preferable, with client and consultant working collaboratively. Only occasionally is it appropriate for a client to see a turnkey solution; we typically see this scenario in crisis situations, when we (the consultants) take on a management role for the client.

Companies that succeed in getting employees involved at all the right points in the process need to also be sure they're getting all the right employees involved. When a critical function or business unit is left out of the process, misunderstandings erupt and create another key failure point. All affected business units must be kept in the conversation and must have a seat at the table where decisions about the system's functionality are made. BPM solutions need to be viewed as strategic and company-owned, which means that all stakeholders need to stay actively involved throughout the BPM initiative.

Doing BPM Right Is Worth the Effort

Benefits achieved through business performance management solutions can greatly outweigh the costs. Enhanced visibility, better decision-making, one version of the truth — these are all benefits that a successful BPM implementation can deliver. However, as our experience with troubled initiatives suggests, companies embarking on an initiative must be mindful of the risks and likely failure points associated with BPM software implementation projects.

A project must start with a strategy and a vision, which set the stage for effective management of end users' understanding about, and expectations for, the initiative. Once the strategy and vision are in place, an initiative relies on effective project management and change management processes so that stakeholders' expectations are realistic and the company makes available all the necessary resources to realize the strategy and vision within the project's defined time lines and budgets. Companies that remain true to their strategy and vision, and put in place the processes necessary to ensure that people realize the vision, have a much higher likelihood of remaining on time and on budget.

Mike Davidson is a managing director with Alvarez & Marsal. He leads the firm's CFO advisory services practice. His clients have included both healthy and troubled companies.

Richard Holt is a senior director with Alvarez & Marsal who specializes in transforming organizations from consumers of data to consumers of high-quality information.