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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 Work
Information M
anagement
Business
Transform
ation
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 necessaryIssue: captures conflicts between win conditions and their associated risks and uncertaintiesOption: candidate solutions to resolve an issueAgreement: 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 Realization6. 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.