 Hello, and welcome to this session in which we will discuss the concept of change management. What is change management? This concept is typically used in an organizational change, such as implementing a new IT system or a software, restructuring the organization or introducing a new business processes. In this session, we would look at the process, the steps in a process, and in the next few sessions, we'll discuss more about risks involved in the change management and how to mitigate or to deal with those risks. But simply put, you are moving from a current state to a desired future state in some sort of a domain. And we're gonna be discussing specifically new IT or new software system. The goal of change management is to ensure that the changes that we are making are implemented smoothly, effectively, with minimal disruption to the organization. Because when a change is done, maybe you're gonna be some disruption, most likely will be disruption. Well, we're gonna minimize those disruption for our employees and most importantly for our customers. So this involved processes and methods for managing and controlling changes to a system or organization in a way to reduce or practically try to eliminate the impact of the impact on business operation and reduce the negative consequences. You don't want to tell your customers, well, I cannot deliver the product because I'm updating my system. That's not acceptable for the customer. The customer don't care whether your system is working properly or not. The customer is expecting the product on time. Therefore, effective change management would involve a range of activities we will cover next in an example showing you the process step by step. Before we proceed any further, I have a public announcement about my company, foreheadlectures.com. foreheadaccountinglectures is a supplemental educational tool that's gonna help you with your CPA exam preparation as well as your accounting courses. My CPA material is aligned with your CPA review course such as Becker, Roger, Wiley, Gleam, Miles. My accounting courses are aligned with your accounting courses broken down by chapter and topics. My resources consist of lectures, multiple choice questions, true-false questions as well as exercises. Go ahead, start your free trial today. No obligation, no credit card required. Now, why would a company, why would a company or an organization and for that matter an individual want to update, do some information system, IT infrastructure changes? We're gonna go over some reasons. Some of these reasons are obviously applied to you on a personal level, but let's go over them. Once is Ups or Lessons. What is Ups or Lessons in information system? Simply put, the software or the hardware that you are using become outdated. No longer meet the company's expectation. A case in point is Apple computers. When you have an iPhone, if you have an iPhone seven or eight, although the phone's still working properly, Apple will not allow you to update anymore. Apple will not allow you to put any more apps on it. Therefore, it becomes Ups or Lessons. So this might include hardware, software, Ups or Lessons that's no longer supported or updated by the manufacturer in this situation Apple or has been surpassed by newer, more advanced technology. So simply put, your technology is no longer good. I need to update, buy a new system or create a new system. The next reason is the most important is security. Well, if your system is not secure, it's worthless. And specifically cyber security threat because everything is on the internet are constantly evolving and companies need to ensure that their hardware and software are up to date to secure against potential attacks. So all their system may be more vulnerable to security breaches and upgrading might help mitigate those risks. So that's another reason why you will need to go through an IT update, which involves change management performance. As the company grows, the hardware of the software may change. And that's why you want a hardware and a software that can scale, that can grow with your business. But maybe you are not planning for that. So as the number of employees or customers, hopefully customers increases, the company will require more powerful hardware and software to handle the increase of workload. Also the cost is a factor in updating. If the cost of unmaintaining an outdated system exceeds the cost of upgrading, well, it's no brainer, go ahead and upgrade. And if you do that, you're gonna go through the change management. Comparability, that's kind of sense related to obsolescence. If a company needs to work with partners or customers who use different hardware or software, they may need to own a system that ensure comparability. In other words, your system is obsolete if you want to partner with someone else. For example, insurance company, they want to connect their system to the repair shops. Well, if the repair shop don't have a system that's comparable with the insurance company, they might have to upgrade. Also regulatory compliance, that's mandatory. That's what you have to do, the mandatory change, you have no option. In certain industries, you are subject to specific regulation, require compliance, to use specific hardware or software to ensure compliance. And here what we are talking about is the banking industry and the healthcare, among many others. But here we're talking about privacy issues, security issues you have to have, your system designed have certain features. So change management involves seven steps. Now in your CPR view course, in your CMA review course, or in some other course, they may make it eight, they may make it six, it doesn't matter. The point is there is a systematic way. The first step is in anything is to identify the need for the change. Why are you changing? Well, this may be driven by internal factors. The company decided to change because for the reasons that I mentioned on the prior page, they want to scale the business, improve efficiency, reduce cost or external factors, mainly regulatory environment. Well, let's assume a company may have identified the need to improve their customer service processes and realize that a new CRM system is needed. So if that's the case, we identified the change, we need a new customer relationship management system. Well, after we identified the issue, we plan for the change. Well, the plan should be developed to guide the change management process because it's a long process. The company will need to develop a plan for implementation for the new CRM system, including details such as the scope of the project, how long it's gonna take, resources needed because it's gonna cost us money, time, employees, so on and so forth. Three, we have to communicate the change. Now, we identified it, we planned it. There are people that need to be aware of the change. Effective communication is critical for the success of any change initiative. You cannot just wake up and say, tell your employees we're using this new system or you're telling your customers, all suppliers, you wanna communicate this information slowly and the more complicated and the more important that change is, the more that communication is. So the change of the plan should be communicated to all stakeholders, including employees, customers, suppliers to ensure that everyone understand the need for the change and the impact it's going to have. Step four is to assess and manage risk. Change management can be complex and carry a range of risks, which we'll talk about the risks in the next session, including operational disruption, increased cost and resistance to change. These risks should be minimized and managed throughout the change to minimize their impact. And we'll talk about how to manage this in the next session. Implement the change. Now you're ready to implement, to just put it into place. With the plan in place, communication completed and risk managed, the change should be implemented. Now you're ready to put it into action. This may involve deploying the system, the new technology, restructuring the team, if that's the case, or restructuring the department, implementing new policies and procedures. So the new CRM will be installed at this stage, employees will be trained on how to use it and the system will be integrated with other existing systems and processes. And always you wanna monitor and evaluate the change because once the change has implemented, you want to make sure it's effective and evaluate its impact. This will help to identify any issues or areas for improvement. Is it working as expected? If not, what areas do we need to improve? Because really, you don't know how good or not good a system is until you put it to work. And this will, you will ensure that the change is delivering the desired outcome. So here the company will monitor the effectiveness of the new system and evaluate its impact because this is a CRM on customer service processes and customer satisfaction. You'll have to capture that. The number seven is embedded the change. Finally, the change should be embedded into the organizational culture and processes. Now it becomes part of your system to ensure that it's sustained over the long term. You want the people to accept it and as a result to adopt it, work with it to improve customer relationships. So the company will embed the new CRM system into its culture processes, such as providing ongoing training and support for the employees on a regular basis, reviewing and redefining processes and continuously seeking to improve customer service because that's the whole purpose of the system in the first place. Now it's very important in the next session since we looked at the processes and we said there are risks in this process. We need to know how can we mitigate? How can we deal with that risk? But what should you do now? Go to Farhat Lectures and look at additional MCQs whether you are a CPA candidate studying for the CPA exam or a CMA candidate or taken an accounting information system or studying for some certification. Understanding change management, especially in the CPA exam 2024, that's gonna become a critical component of the exam. Study hard, good luck. I'm always here to help you and stay safe.