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Benefits Analysis & WinWin Negotiations

Nupul Kukreja16th September 2013

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Agenda• Part 1: Benefits Analysis

– Deficiencies of Project Management Mindset– Evolution of IT Applications – Adoption of Program Management Mindset– Program Model– Benefits/Results Chain

• Part 2: WinWin Negotiations– WIOA Model of Negotiations– WinWin Sessions in 577

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Agenda: VBSE 4+1 View

Theory-W:SCS Win-Win

Dependency Theory

Utility Theory

DecisionTheory

ControlTheory

1. Protagonist goals3a. Solution Exploration7. Risk, opportunity, change management

2. Identify SCS2a. Results chains

3b, 5a, 7b. Cost/schedule/ performance tradeoffs3b, 7a. Solution Analysis

5a, 7b. Options, solution development & analysis

3. SCS Value Propositions (Win Conditions)

4. SCS expectations management

5a, 7b. Prototyping

6, 7c. Refine, execute, monitor & control plans

6a, 7c. State measurement, prediction correction; Milestone synchronization

5a. Investment analysis, Risk analysis

5. SCS WinWin Negotiation

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Project Management“The project was delivered on time and within

budget and scope and thus was a resounding success”

• What’s wrong with the above claim? – Difficult to ascertain if the project was indeed

beneficial to the clients/stakeholders– Just delivering the project doesn’t guarantee benefits– Benefits don’t turn on automatically after project

delivery– Parochial IT-centric view i.e. delivery of IT system is the

start-all and end-all

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‘Silver Bullet’ Thinking• Belief in the power of IT alone to deliver

business results• Businesses purchase/install/create complex IT

“silver bullet” packages with the belief of “benefits found inside”

• IT applications have evolved from simple automated systems to complex IT-enabled business transformations – demands new approach to management

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Evolution of IT Applications

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Automation of Work

Impact Benefit Examples

• Getting Work Done

• Doing the same thing more efficiently

• Operational Efficiency • Payroll Processing• Census data calculations• Check Processing• Basic Order Processing• Basic Airline Reservation

Systems etc.,

• Few manual jobs were automated and few new jobs created• Limited change to people’s jobs or to business processes

• Overall change to nature of work not significant• Learning requirements: simple and focused on technology use• If the application ran correctly most of the benefits

would be realized• Designed, operated and managed by IT experts

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Information Management - 1

Impact Benefit Examples

• Restructuring work and work processes

• Doing things differently

• Operational and Tactical Effectiveness

• Customer Information Systems (CRMs etc.)

• Airline Yield Management Systems

• Executive Information Systems

• Information was by-product of automated applications• Information used to make operational/tactical/strategic

decisions owing to the proliferation of desktop computers• Slight change of jobs with training for taking predetermined

action based on information• More Information Benefits gained from analysis and

application of information the job

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Information Management - 2• Automated information bases provided opportunities for

designing new products– Mutual Funds– Discount Plans– Coupons etc.

• Delivering a correctly functioning application no longer sufficient. For benefits to be realized:– Nature of people’s work changed– Business processes restructured and better integrated– Change in reward systems– Significant learning other than just technical usage

• Increased number of potential IT applications (many conceived outside IT by business managers etc.)

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Business Transformation

Impact Benefit Examples

• (re)Defining the business• Doing different things• Changing the business/

industry rules

• Strategic Effectiveness and Positioning

• Just-in-time (JIT) inventory systems

• E-commerce• OLAP

• Information management applications enable organizations to rethink and redesign their business processes and how they carry out business

• Example(s):• Internet and virtual banking redefining financial industry• Airlines offering passengers direct access to reservations

systems• Amazon.com

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Strategic Importance of IT

Automation of W

ork

Inform

ation Manage

ment

Business

Transfo

rmation

Strategic Importance Amount of ChangeIT as % Total of Change Number of potential applications

High

Low

Evolution of IT Applications

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Linkage• Alignment of IT with Business Strategy• Integration with initiatives in other

areas of business to realize benefitsPrice of Forgetting:• Lack of identification and understanding

of benefits & overlapping initiatives• Project scope inflation• Lack of clear contribution to benefits

Reach• Breadth of change required by IT

investment• Impact (depth) of changePrice of Forgetting:• Underestimation extent of change• Lack of buy-in and finger-pointing• Lack of understanding cross-functional

implications

People• Those affected by change and their

readiness for it• Understanding current competencies

and know-how of changePrice of Forgetting:• “One size fits all” mentality• Underestimated training effort• Resistance to change

Time• Realistic length of time for all changes to

occur and benefits to be realized• Based on the other 3 dimensions in the

tablePrice of Forgetting:• Unrealistic/unachievable expectations• Unexpected time lags between delivery

and realization of benefits

Traditional Project Management Blindspots

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Key Takeaways• ‘IT’ by itself, no matter how technically powerful cannot

deliver business results• Benefits don’t just happen – benefits stream flows and evolves

overtime as people learn to use the system• Benefits rarely happen according to plan – initial forecast is

only an estimate. One has to ‘keep checking’ them like financial assets

• Benefits realization is continuous process – involves envisioning results, implementing and checking intermediate results and dynamically adjusting path leading from investments to business benefits

• Paradigm shift required: – Project Management to Program Management

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Paradigm ShiftProject Management Program Management

Structured set of activities concerned with delivering a defined capability based on agreed budget/schedule

Structure grouping of projects designed to produce clearly identified business results/benefits

Typically IT focus i.e. project ends with delivery of technology

IT delivery + training, marketing, organizational change, business process redesign

IT accountable for benefits Business responsible for benefits

Projects deliver “automatic” benefits Projects deliver capabilities, programs deliver benefits

Passive benefits realization:“Trusting the gods” to deliver the benefits

Active benefits realization:Managing risks, exercising options at the right time by proactive change monitoring/management

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Paradigm Shift - Examples“Project” Project

Management Program Management

Interactive website

Focus on execution, design, development and delivery of “project”

Concerned with inputs, costs, and time required to produce intermediate outcomes

Includes all projects required to generate minimum number of hits and sales revenue target with 12 months of launch

Installation of new software package (e.g. ERPs etc.)

Initiatives to help business units achieve well-defined process improvement objectives in manufacturing, finance and sales in 12 months (say)

Customer information system /Automated response system for a call center

Staffing, training, marketing and launch projects to achieve clear operational, sales and profitability goals over first 24 months (say)

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Program Model• An ‘intermediate’ model to help articulate and

capture ‘program vision’• Created to facilitate easy creation of the

Results Chain Model• Ease of use for communication amongst

stakeholders• Helps see the ‘broader vision’ and all

encompassing view of the ‘program’

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Stakeholders(Who)

Initiatives(What)

Value Propositions(Why)

Beneficiaries(For Whom)

• Who/what resources are required for ‘executing’ the initiatives

• Any ‘partner’ department or organization?

• What are the key activities that must be done to for delivering/ realizing the value propositions/ benefits?

• Do you need to hire anyone?

• Why undertake this project/ program?

• What are the value propositions you seek to satisfy/serve?

• What are the goals?

• Who derives value from the project/program? (Usually the customers or end users; can also be project sponsors)

Assumptions: Under what assumptions is this model true?

Program Model

Initiatives that need to be undertaken to help beneficiaries derive value from the expected benefits/value propositionsInitiatives that need to be undertaken to help deliver value to the beneficiaries (i.e. “how” will the benefits reach the beneficiaries?)

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Assumptions: Under what assumptions is this model true?

Program Model

Stakeholders(Who)

Initiatives(What)

Value Propositions(Why)

Beneficiaries(For Whom)

• Who/what resources are required for ‘executing’ the initiatives

• Do you need to ‘partner’ with another department or organization?

• Do you need to hire anyone?

• What are the key activities that must be done to for delivering/ realizing the value propositions/ benefits?

• Why undertake this project/ program?

• What are the value propositions you seek to satisfy/serve?

• What are the goals?

• Who derives value from the project/program? (Usually the customers or end users; can also be project sponsors)

Cost Benefits• What are the ‘costs’ involved for

successfully implementing the program?• What are the measurable

(tangible/intangible) benefits?

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Assumptions• Growing needs of volunteers• Continuously growing volunteer pool• Increasing activities requiring more volunteers

Example – Volunteer Management System

Stakeholders(Who)

Initiatives(What)

Value Propositions(Why)

Beneficiaries(For Whom)

Developers Maintainer IIV & V Volunteer Volunteer

Coordinator Supervisor

Develop new volunteer management system

Create web application outreach

Develop improved volunteer management process outreach

Provide training for new job management process

Deploy job management process

Setup work stations for volunteer use

Improved Productivity

Faster volunteer management and less person-to-person time

Improved volunteer management process

Volunteers Volunteer

coordinator Supervisor

Assumptions• Growing needs of volunteers• Continuously growing volunteer pool• Increasing activities requiring more volunteersStakeholders

(Who)Initiatives

(What)Value Propositions

(Why)Beneficiaries(For Whom)

Developers Maintainer IIV & V Volunteer Volunteer

Coordinator Supervisor

Develop new volunteer management system

Create web application outreachDevelop improved volunteer

management process outreachProvide training for new job

management processDeploy job management processSetup work stations for volunteer

use

Improved Productivity

Faster volunteer management and less person-to-person time

Improved volunteer management process

Volunteers Volunteer

coordinator Supervisor

Cost BenefitsDevelopment Costs, Maintenance Costs, Maintainer (admin hire), Web Server (hardware), Web Hosting, Oracle License etc.

Decreased:Application Data EntryTime sheet data entryJob request timeJob assignment time

Increased volunteer applications

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MEDIC-ated Value Propositions• Articulate and capture Value

Propositions/Goals to be measurable……so that you’ll know “how much” to achieve AND if/when you’ve achieved them

• MEDIC-ated goals force early consideration of measurement influenced thinking:

M : Maintain (e.g.: a level of service maintained)E : Eliminate (a function eliminated)D : Decrease (turnaround time decreased)I : Increase (sales increased)C : Create (certain capability created)

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Creating The Results Chain

• Directly derivable from Program Model• Explicitly shows causal linkages between the

various entities• Makes explicit the 4 management blind-spots

mentioned earlier• Helps identify missing initiatives, stakeholders,

benefits in the Program Model

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Results Chain Diagram - LegendDMR/BRA* Results Chain

INITIATIVE

Implement a new orderentry system

Assumption(s):-Order to delivery time isan important buying criterion

Contribution

Reduce time to process order

OUTCOME

Reduced order processing cycle(intermediate outcome)

OUTCOME

Increased sales

Contribution

Reduce time to deliver product

*DMR Consulting Group’s Benefits Realization Approach

Stakeholder(s)

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Assumptions• Growing needs of volunteers• Continuously growing volunteer pool• Increasing activities requiring more volunteers

Volunteer Management System – Program Model

Stakeholders(Who)

Initiatives(What)

Value Propositions(Why)

Beneficiaries(For Whom)

Developers Maintainer IIV & V Volunteer Volunteer

Coordinator Supervisor

Develop new volunteer management system

Create web application outreach

Develop improved volunteer management process outreach

Provide training for new job management process

Deploy job management process

Setup work stations for volunteer use

Provide data for transformation and migration process

Improved Productivity

Faster volunteer management and less person-to-person time

Improved volunteer management process

Volunteers Volunteer

coordinator Supervisor

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Rules for Creating Results Chain• Every initiative must be followed by an outcome/benefit• Intermediate outcomes link to other intermediate

outcomes (final outcome has no outgoing links)• Initiatives/outcomes can link to more than one outcome• Stakeholders are linked to the Initiatives• Links are labeled with ‘contributions’ i.e. what does the

particular initiative contribute towards attaining a particular benefit (use only if not explicit from context)

• The “graph” is fully connected (assumptions are shown in a separate disconnected box)

• Keep asking “so-what” for every outcome to uncover other outcomes and “what-else” to see if necessary initiatives are taken to realize the outcome(s)

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Formalizing the Results Chain• For each benefit that matters capture at least the

following:– Metric: How will the benefit be measured?– Measurement Method: What is the process of capturing the

metric?– Frequency: How frequently the benefit should be tracked?– Baseline Value: What’s the current (baseline) value of the

benefit?– Target Value: What’s the target value ‘range’ of the benefit?– Target Date: By when should the target be realized?– Mitigation: Action(s) to take if target value isn’t achieved?– Accountability: Who’s responsible for helping realize the

benefit?– Trend: How have the benefits realized over time?

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WorkshopProblem Statement

USC needs an online course reservation system to automate the registration process and to use the registration data to understand which courses to offer when and to improve their overall course offerings thereby increasing quality of the program

• Get together in your teams and create:1. Program Model2. Results Chain

• Brainstorm with your team the various elements of the program model and convert it to a results chain

• Note the questions you may have or difficulties encountered• Time: 10 minutes

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Assumptions: Under what assumptions is this model true?Stakeholders

(Who)Initiatives

(What)Value Propositions

(Why)Beneficiaries(For Whom)

• Who/what resources are required for ‘executing’ the initiatives

• Do you need to ‘partner’ with another department or organization?

• Do you need to hire anyone?

• What are the key activities that must be done to for delivering/ realizing the value propositions/ benefits?

• Why undertake this project/ program?

• What are the value propositions you seek to satisfy/serve?

• What are the goals?

• Who derives value from the project/program? (Usually the customers or end users; can also be project sponsors)

Problem StatementUSC needs an online course reservation system to automate the registration process and to use the registration data to understand which courses to offer when, to improve their overall course offerings thereby increasing quality of the program

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Workshop Q&A

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Part 2: WinWin Negotiations

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Win ConditionWin Condition

AgreementAgreement OptionOption

I ssueI ssueinvolves

addresses

adopts

covers

WinWin Taxonomy (a.k.a. WIOA Model)

Win-Win Equilibrium:• All win conditions covered

by agreements• No outstanding issues

Win Condition: Stakeholders’ desired objectives stated in a form understandable by users, customers and other stakeholders and formalized only where necessary

Issue: captures conflicts between win conditions and their associated risks and uncertainties

Option: candidate solutions to resolve an issue

Agreement: captures shared commitment of stakeholders with regard to accepted win conditions or adopted options

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We also capture a 3rd dimension of “Relative Penalty” – Degree of project failure if WC not deilvered

1. Refine and expand negotiation topics2. Collect stakeholders’ win conditions3. Converge on win conditions4. Define glossary of key terms5. Prioritize win conditions on:

Business Value vs. Ease of Realization

6. Reveal issues and constraints7. Record issues and options8. Negotiate agreements

WinWin Negotiation Primer

Shared taxonomy of topics to understand project scope

Record first draft of stakeholder’s needs/wants for all to view

Disambiguation and de-duplication

Domain vocabulary to develop mutual understanding

Degree of project success dependent on win condition

Technological, social, political or economic feasibility

Variance in prioritization provokes discussion of issues/constraintsIssues recorded along with possible resolution tactics

Mutually agree to win conditions/optionsAbove steps accelerated by a “Shaper” i.e. a facilitator who guides the negotiation

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WinWin Negotiation in 577• Two (possibly 3) sessions to be held in the coming week(s)

(client required for only 2) – moderated by TAs• Part 1:

– Create Program Model– Capture Value Propositions (Benefits) in Winbook– High level breakdown of desired capabilities (top-level

decomposition)– Capturing win conditions for various aspects of the desired system:

functional, levels of service, project, budget, language/tools etc • Part 2:

– (Disambiguation/Deduplication before session)– Prioritize Win conditions (possibly broken into 2 sessions)– Revealing Issues/Constraints and other new win conditions and

actually conducting the ‘negotiation’

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Winbook and WinWin Negotiations• Based on the WinWin Negotiation Framework and directly

supports the WIOA Model• Winbook is a tool to ‘log’ the negotiation and show its ‘status’

as function of time• “Functional” Win Conditions to be captured in the user-story

format (As a <role>, I can <activity> so that <business value>)• Dynamic prioritization of win conditions with sensitivity

analysis capability• Winbook Tutorial available on class-website under “Tools &

Tutorials”• WinWin Sessions are HUMAN centric and highly iterative. A

tool like Winbook only helps ‘document/augment’ the process and not execute it

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WinWin Participation• The ENTIRE TEAM attends (includes clients )• DEN students and remote clients should “Skype” into

the conference• Set up an account on freescreensharing.net or join.me or TeamViewer etc., so as to share screen with remote participant(s)

• Bring your laptops to the session(s) – at least 3 laptops (You may check-out laptops from SAL)

• Be sure to practice the ‘setup’ prior to the session• Feel free to bring snacks and drinks

(no alcohol please )

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References• The Information Paradox – John Thorp• Business Model Canvas – Osterwalder &

Pigneur• Value-Based Software Engineering Biffl et. al.