Over a Third of Companies Abandoned Business Change Projects in Last Three Years
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:
Figure 1: What Have Been the Main Barriers to Effective Business Process Improvement at your Company? Select up to Three.
Source: Logica & EIU research
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: