Date post: | 25-Dec-2015 |
Category: |
Documents |
Upload: | donna-mathews |
View: | 218 times |
Download: | 1 times |
Setting the Stage
• Have you struggled with investment prioritization?
• Why is it so hard to create a business case for IT projects?
• Do you struggle aligning your IT efforts to the business strategy?
• How do you communicate with Executives and obtain their sponsorship?
1-3yearse.g. Project A
4+ yearse.g. Project B
Foundatione.g. Project C
Long TermObjectives
Short TermObjectives
Capability Developing Objectives
Rate Investment Yr 1 Yr 2 Yr 3 NPVProject A 5% (500)$ 500 250 0 $193.28Project B 5% (500)$ 100 200 800 $445.44Project C 5% (500)$ -50 0 200 ($357.00)
A+B+C 5% (1,500)$ 550$ 450$ 1,000$ $281.72
Example Study:
Ken, VP Operations Julie, CIO
Situation: Economic hardship. Extreme capital project scrutiny.
Challenge: Architecture initiative would not give a positive return on investment. Initiative is important – future initiatives dependant upon it.
Standing on its own, the collaboration architecture project appeared to be a poor investment.
She needed to take a different approach. Rate Investment Yr 1 Yr 2 Yr 3 NPV
Project A 5% ? ? ? ? $0.00Project B 5% ? ? ? ? $0.00Project C 5% (500)$ ($50) $0 $200 ($357.00)
A+B+C 5% (500)$ (50)$ -$ 200$ ($357.00)
Valuing the intangible - Why is this hard?
Because… • Value creation is indirect. • Value is contextual. • Value is potential. • Assets are bundled.
1-3yearse.g. Project A
4+ yearse.g. Project B
Foundatione.g. Project C
Long TermObjectives
Short TermObjectives
CollaborativeCapabilities
Connected Business Framework
Connected Business Framework
Connected Partner / Member
Connected
Worker
Connected
Services
CBA Concepts
1. Balanced Scorecard2. Strategy Map3. Capability Identification4. Capability Maturity5. Alignment
1. Workgroup
Collaboration
2. Seamless Communic
ations
3. Leveraging Knowledge
and Expertise
4. Innovation & Process
Improvement
5. Employee Engagement
Ken, VP Operations - Julie, CIO
Julie’s Collaboration Architecture Initiative will develop the following capabilities:
1. Workers ability to ‘labor together’ for the purposes of creating business value through aggregated ideas, information and expertise.
2. Ability for information to be communicated effectively between workers, across workgroups and beyond organisational boundaries.
3. Ability to capture and access expertise, knowledge and intellectual assets produced through any business activity.
4. Ability to innovate on and transform work patterns within the organisation as a means to develop increased business value.
5. The ability to engage workers and align operational activity to achieve strategic outcomes.
CBA Concepts – Capability Identification
Calculating Alignment…
Step 1:Identify Objectives
Step 2:Prioritize Objectives
Step 3:Determine Contribution Level for each capability to objectives. (First Pass then Calibrated)
Step 4: Calculate Correlation = sum(weighting x contribution)
CBA Concepts – Alignment
Correlation Guidelines
10+ steps required to reach objective 7 - 10 linkages required to reach objective5 -7 linkages required to reach objective3 -5 linkages required to reach objective1 -2 linkages required to reach objective
Improved leveraging of knowledge and expertise
Enable the transition of knowledge from one employee to another.
Greater efficiency in transforming the workforce
Greater agility to adopt new processes Ability to develop new card offerings faster
Capability Developed
Scorecard Objective
CBA Concepts – Alignment
Example of a Substantially Correlated Capability
Correlation is calculated as a series a cause-and-effect relationships
Seamless Communications
Workgroup Collaboration
Work Pattern Innovation and Transformation
Leveraging Knowledge and
Expertise
Worker Engagement and
Alignment
Relative Return
Rela
tive
Alig
nmen
t
Ken, VP Operations - Julie, CIO
Seamless Communications
Workgroup Collaboration
Work Pattern Innovation and Transformation
Leveraging Knowledge and
Expertise
Worker Engagement and
Alignment
Harmonised
Optimised
Rationalised
Normalised
Harmonised
Optimised
Rationalised
Normalised
Assessed Maturity Level by Capability
Seamless Communications
Workgroup Collaboration
Work Pattern Innovation and Transformation
Leveraging Knowledge and
Expertise
Worker Engagement and
Alignment
Future State
Current State
Harmonised
Optimised
Rationalised
Normalised
Harmonised
Optimised
Rationalised
Normalised
Future-State vs. Current State Maturity by Capability
Seamless Communications Workgroup Collaboration Work Pattern Innovation and Transformation Leveraging Knowledge and Expertise Worker Engagement and Alignment
Ability for information to be communicated effectively between workers, across workgroups and beyond organisational boundaries.
Workers ability to connect for the purposes of creating business value through aggregated ideas, information and expertise.
Ability to innovate on and transform work patterns within the organisation as a means to develop increased business value.
Ability to capture and access expertise, knowledge and intellectual assets produced through any business activity.
The ability to engage workers and align operational activity to achieve strategic outcomes.
Workers use ad hoc emails, instant messaging, distribution lists and phone calls to disseminate information through the organization though informal networks.
Workers collaborate on an ad hoc basis, generally through common work areas (meeting rooms) or telephone conferences established through manual scheduling.
Work patterns are generally understood and innovation is welcome with much of it propagated informally through person-to-person training.
Knowledge is captured in ad-hoc process; documented knowledge is not universally or centrally accessible, but it is generally captured.
The strategy of the company is well defined that has been communicated to every employee in the organization.
Workers and workgroups demonstrate a fairly standard use of typical communications modes (i.e. phone/conferencing, email, voice messaging).
Worker collaboration is generally delivered through consistent means (knowledge/materials centrally managed and accessed, centrally and universally accessible meetings physical/virtual meeting space).
Work patterns are defined and documented in each of the work groups. Workflow measurement is understood and quality of work is demonstrable.
Capture and reuse of knowledge at group level, mainly document and paper-based; sourcing and applying knowledge typically requires some experience;
The strategy of the company has been broken down into quantifiable targets which are understood and achievable throughout the organization.
Organisation does not generally suffer from "over" or "under" communication. Workers generally feel they are connected without feeling overwhelmed by low-priority or out-of-context email, voicemail, instant messages, etc.
Collaborative methods, approaches and facilities (or tools) are designed for accessibility and ease of use.
Individuals recognise their role in work pattern enhancement and are engaged to participate in initiatives mandated to deliver innovation.
Workers capture and reuse knowledge through central and accessible repositories. Knowledge management through process and policy is a cultural and organisational capability.
The strategy of the company is believed by the workers who use the targets that are defined in the strategy to create their daily work plans.
Organisation provides the ability for workers to "opt in/out" of channels of communication based on their role, interest, project/program context, events, etc.
Collaborative methods, approaches and facilities (or tools) are provided to workers and internal workgroups based on function, ability to leverage, access.
Workers are actively solicited and encouraged to contribute ideas for work pattern innovation; there are cross-functional group(s) that challenge work patterns, measures, alignment and quality.
Capture and reuse of knowledge across organisational work groups is seamless. All major workgroups leverage the common framework and methods consistently.
Worker motivations, measures and compensation are aligned to strategic outcomes.
Communication is shared as a function of role, context, interest, expertise/capability, capacity and other factors.
The collaborative facilities, tools and approaches [I, my workgroup, the organisation] use are easily leveraged and accessible for collaboration with those outside [my direct team, my workgroup, the organisation].
Work pattern innovation is the responsibility of every member of the work group, and workers are equipped to seek innovation in unconventional ways and from disparate sources. Improvements are quantified and actioned in a timely manner and a direct link to improved outcomes can be measured and demonstrated.
Generation and sharing of knowledge extends to a community of stakeholders (partners, customers, etc.) which provides both enhanced support to customers and direct product/service input and feedback to organisations.
Worker measures, targets, commitments and activities are strategically aligned with corporate objectives as well as objectives of external stakeholders, customers and partners.
Capability IdentificationCBA Concepts – Capability Identification
CBADay 1
Strategy AlignmentDay 2
2Cap AssessmentDay 3
2Cap Development Plan
Workshop 1aExecutive Briefing
and Strategy Review
Workshop 1bSr. Management Briefing
and Strategy Review
Workshop 1cMid-Management Briefing
and Strategy Review
9am
10am
11am
12pm
1pm
2pm
3pm
4pm
5pm
Workshop 2aCurrent State Assessment(Capabilities & Capacity)
Executive & Sr. Management
Workshop 2bCurrent State Assessment(Capabilities & Capacity)
Mid-Management and Line Staff
Workshop 3aReview Roadmap
(Capabilities & Capacity)
Executive & Sr. Management
Workshop 3bReview Roadmap
(Capabilities & Capacity)
Mid-Management and Line Staff
Strategy Alignment Interview(25 Questions)
Future State Assessment(25 Questions)
Future State Assessment(25 Questions)
Current State Assessment(25 Questions)
Current State Assessment(25 Questions)
Review Roadmap (Capabilities & Capacity Development Plan)
Review Roadmap (Capabilities & Capacity Development Plan)
Strategy Map
Disclaimer: Efficacy before Alignment
• Alignment trap – having an effective IT environment is a pre-requisite to seeking alignment.
Three key principles are useful in moving organizations to high effectiveness:
1. Simplify. 2. "Rightsource" capabilities. 3. Focus on value delivery. complete projects on
time, on budget, and with IT functionality that delivers what was requested by the business.
- Bain
Project TypesRate Investment Year 1 Year 2 Year3 NPV
Project A 5% (500)$ 200$ 300$ 500$ $375.72Project B 5% (500)$ 1,000$ 200$ 100$ $685.88Project C 5% (500)$ -$ -$ 1,000$ $346.51
Each cash inflow/outflow is discounted back to its present value (PV). Then they are summed.Therefore NPV is the sum of all terms , where
t - the time of the cash flowi - the discount rate (the rate of return that could be earned on an investment in the financial markets with similar risk.)Rt - the net cash flow (the amount of cash, inflow minus outflow) at time t .
Other Types of Measures
• Internal Rate of Return (IRR)
Investment Year 1 Year 2 Year3 IRR
Project A (500)$ 200$ 400$ 500$ 44%Project B (500)$ 1,000$ 200$ 100$ 122%Project C (500)$ -$ -$ 1,000$ 26%
References
Connecting the dots : aligning projects with objectives in unpredictable times / Cathleen Benko, F. Warren McFarlan.
Strategy Maps: Converting Intangible Assets into Tangible Outcomes / Robert S. Kaplan and David P. Norton
The Balanced Scorecard: Translating Strategy into Action / Robert S. Kaplan and David P. Norton