​​​The Transformation Journey

When assessing a transformation program, internal auditors should consider five key criteria in their analysis.​

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Over the past 40 years or so, program and project failures have virtually littered the road of business. The causes vary widely — ballooning costs, scope creep, poor decision-making — and the consequences are often severe. And while countless hours have been devoted to analyzing past failures, aimed at learning from mistakes and preventing recurrence​, initiatives of this type still present a considerable risk to the organization.

Business transformation programs can be especially problematic. Structural reorganizations, core product and service revisions, and major technology initiatives, for example, introduce fundamental changes to the business that​, if not handled correctly, can lead to significant disruptions. Failure of these initiatives can be harmful — even devastating — to organizations.

The mind-set of those involved in transformation programs is critical to program success. Not every multi-year program is going to obtain a "perfect score," given that individual metric and success criteria change as the business landscape and the organization evolves. Setting realistic expectations, goals, and strategies is key to the process.

Onboarding the right stakeholders, who understand the need for change, is also critical. Internal audit should be one of these key stakeholders. When assessing a transformation program, there are five key criteria affecting program effectiveness that internal auditors should keep in mind. These criteria should factor into the program analysis and guide areas of audit review.

1. Strategy and Benefits Expected

A vision for the transformation should be clearly defined, and it should align with the organization's business strategy. Everyone involved needs to know the program's starting position; planned changes need to be clearly articulated, communicated, and mapped; and all participants and stakeholders must understand the journey to success — as well as its end state. Moreover, expected business benefits need to be clearly defined and objective metrics aligned, measured, and revisited throughout the life of the program.

2. Ownership and Accountability

To ensure successful program delivery, use, and acceptance, the business — and only the business — should own the program and its outcomes. One person within the business (the sponsor) should assume accountability for the program, rather than a committee or multiple persons.

All program stakeholders need to be on the same page, with clear responsibility, accountability, and open communication among them. It is important to build a strong group-wide capability to deliver complex programs, without fear of bringing in experienced resources as required. Even with the assistance of such resources, however, accountability still must reside with the program sponsor. 

3. Facilitating Change

All stakeholders must recognize the need, or business justification, for change —and consensus and coalitions must be established to achieve it. These actions will facilitate acceptance within the business, enabling the change to become part of the organization's culture.

Toward that end, a clear and structured communication plan should be created — communications need to be timely, clear, and concise. Moreover, disconnected behaviors should be amended to allow for the change and to link incentives to change-related goals.

To further ensure buy-in and acceptance, business changes in most cases should be tested and implemented in waves, rather than all at once; a milestone-driven approach tends to minimize risk. The changes need to be embedded within the organization from Day One, to ensure that people do not revert back to their pre-change approaches.

The transformation process needs to engage all parts of the business — both technical and nontechnical. The concept of operating seamlessly as one organization should be embraced to help ensure delivery of an integrated solution. The organization also needs to maintain its focus on the business problem it is trying to resolve, enabling organizational needs to drive the process change. 

4. Alignment of the People and the Organization

Multi-year programs inevitably will see the transitioning and attrition of multiple program directors and managers, as well as stakeholders and partners. Succession planning and strong process are therefore crucial to ensure continuity and momentum are maintained. When new stakeholders commence with the program, it is critical that the project team and the stakeholder community share a common vision and operate from the same page.

5. Governance

A strong steering committee or governing council composed of senior stakeholders who understand the transformation from a technical perspective, as well as the organization's culture, is crucial to the program's success. Asking the right questions at the right time is imperative to keeping the program in focus and on track. Moreover, the transformation effort should draw resources from structures such as a program management office to help support the program and provide independence on day-to-day activities like reporting and tracking. Periodic internal audit reviews at critical junctures also lends assurance to the project.

Carving a Path

Each organization has to carve its own path toward transformation and find its way. Defining the reason for change, articulating what success looks like, and communicating this information early and timely to engage the hearts and minds of stakeholders are imperative to the transformation journey. The people's acceptance of change is critical to the success of any transformation program.  ​

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