What’s in this for me?

One of the more interesting errors of omission I encounter often in architecture or business transformation programs is the absence of a clear, well articulated value proposition for all interested stakeholders.  We call this the “what’s in it for me” for each stakeholder from each of their perspectives. Why is this important? The benefits to the business should be obvious, right? We (the program team) firmly believe we can reduce costs, improve profitability, manage process compression, enable growth, and improve the customer experience as a result of our efforts.  This is obvious, right? This is crystal clear to us.  But what about the stakeholders outside of the core program team?

What is usually less clear to others is the impact and perception the proposed program or technology introduction will have across the organization. We are human after all, and the one thing I know is most humans are terrified of change – any change. This is compounded by the dynamics (some would say web) of conflicting agendas, misguided incentives, and a host of other perfectly natural attempts to optimize and guide an organization competing for scarce resources to meet its strategy goals and objectives.

Different Perspectives

For example, let’s just omit organizational (line of business) or geographic boundaries for a minute and just focus on typical roles we find in every organization and try to understand what is really important to each ( “what’s in this for me”).  Examples here are vastly simplified for clarity (and generalized without industry specific needs) but I think they will help to illustrate my point.

Chief Executive Officer

• Earnings Per Share, Share Prices Appreciation
• Dividends Per Share
• Price to Earning Ratio and Market Book Value
• Value Drivers
• Leadership recognition and respect of peers in the industry

VP Operations

• Gross Margin
• Profitability (Margin e.g. EBIT, EBITDA, NOPAT)
• Operating Expenses
• Asset Turnover
• Working Capital Management, GMROI (for Retailers)
• Actual Employee Turnover Costs

Chief Financial Officer

• Cash Flow
• Debt to Asset, Debt to Capitalization, and Interest Coverage Ratios
• Cash Flow / Share
• Return on Total Net Worth, Return on Common Equity

VP Marketing

• Growth (lift, where is it occurring in the business and why)
• Market or Wallet Share
• Effectiveness of Campaigns
• Selling Together (propensity)
• Not Selling Well (end of life, uncompetitive)
• Selling in What Market
• Portfolio Erosion or Segmentation Trends

VP Sales

• Customer Intimacy (Satisfaction)
• Their Competition
• My Next Sales Opportunity (managing the pipeline)
• What is Selling Now
• Cross-Sell and Up-Sell Opportunity Realization

As you can see this covers a very wide range of needs at the executive level in this simplified view of the world.  And why we need to be very careful about the law of unintended consequences. A growth objective for example, may adversely impact profitability in the near term or cannibalize an existing product line.  Or what is more common, reducing key process cycles may expose or create stress in downstream consumers of key outputs, For example, sales may be overwhelmed by new channel development through an effective introduction of customer acquisition tools or a series of highly successful marketing campaigns driven by improved analytics, one right after the other, driving up working capital needs to support new business levels.  This is what I call a “high quality problem”.

Solving for this is one of the real pay-offs for using the method I will share with you. Defining the “what’s in it for me” in our stakeholder community means we can gain a better understanding of what really drives decision making in an organization. And why people do what they do (even if it doesn’t make sense to us). This also explains the optimization trade-offs that are made that sometimes leave us scratching our heads and wondering why the “killer” no-brainer investment is shelved,  orphaned, or simply encouraged to just “go away”.   In some cases, what we thought made sense to ourselves is viewed a real and present threat to others – not exactly what we ever want when embarking on a long difficult transformation program.

More than benefits

We are probably much closer to the real benefits and costs than our peers (they have a business to run after all) having lived through the detailed planning and development of a defensible business case and program master plan.  As a result of our hard work we should be able to begin to assemble a well defined set of generalized, quantifiable benefits. The usual suspects would include:

• Business
  • Improve Customer experience and loyalty
  • Shorten latency and response times
  • Improve Quality in Delivery (e.g. perfect order fill rates)
  • Improve Time to market (cycle compression)
  • Improve productivity (more value-added activity)
  • Preserve intellectual capital
  • Encourage reuse – standardize on a repeatable processes
  • Minimize Rework
  • Improve management visibility into the business
• Technology
  • Modernize and Simplify Business Processes and Systems
  • Define core master data once and use everywhere
  • Standardize tools and processes
  • Adopt global data definitions, policies, and standards
  • Adopt specific governance policies, procedures, and metrics
  • Transform information and data from one structure and format to another
  • Enrich the same data where needed or requested
  • Reduce costs of operations and maintenance

This is not enough.  What we have now is a solid starting point to begin associating each stakeholder to one or more of the benefits above expressed in their terms with specific examples we can all relate to.

What to do?

Armed with this understanding now it is time to roll our sleeves up and get to the real work. We should be able to tie each relevant (not all may apply) benefit to each stakeholder’s needs clearly and articulate the value proposition or “what’s in it for me” for each of them.

Using an IT Portfolio Improvement initiative as an example we would start with the collection of both direct and indirect stakeholders this program initiative would impact.  More than likely based on their role they would probably agree with many of the generalized business and technology benefits cited earlier.  For each of these stakeholders, we then need to describe their true interest as we understand it. For example the CIO’s true interest may be in realizing a reliable and dependable process is in place regarding cost performance of CAPx and Operating expenses for all IT investments.  For project managers that want to see good performance data, there is clearly solid interest. On the other hand, other project managers may consider proper accounting a wasted exercise outside the area of project management with little or no value to themselves.  

The next step is to understand where we need each stakeholder to help us succeed. In our example, the CIO is needed to sponsor the project, review and approve recommendations on implementing project solutions, and issuing communications directly to Project Managers or through a PMO group.  In our example, we need to leverage those Project Managers that agree the process is broken and highlight their success to drive full scale adoption to other projects that may choose to ignore or block project recommendations and solutions.

After this is completed we need a strategy for communicating with each stakeholder to ensure success.  For the CIO, we need to provide weekly updates through the PMO Director and monthly briefings we participate in directly to share project results and work products. Our strategy with the project managers is a little different. We would probably identify and include a selected group of project managers for test piloting proposed solutions. We would include this same group in progress reports throughout the project life cycle. In addition, we should plan on communicating updates and news alerts to the entire population of project managers as well to maintain a consistent repeated set of messages to encourage adoption of the piloted solution.   

Refining our new view of the world we should complete our work by determining the relative Power or Influence of each stakeholder and their level of interest scoring each value from low to high. The results can be plotted on a rudimentary quadrant graph to visually help us manage efforts to help us understand the stakeholders we need to keep satisfied and manage closely (top two quadrants) and the stakeholders we need monitor casually and keep informed (bottom two quadrants). 

 

So when planning a program of any significant size and impact you must know your stakeholders. This means being able to clearly articulate the “what’s in it for me” for each of them, and actively managing this reality over the life of the initiative.  Anything less and we risk the probability for reducing the successful adoption of our program or project.

Strategy – How to build a Road Map

I know this is sounds crazy, and maybe it’s just me. How many of use in the profession can truly say we have been taught to develop, refine, and deliver a professional road map based on a sound method with consistent repeatable results?  Have been at this crazy business for years, and still astonished at the wide variety of quality in the results I have experienced over the years – and it’s not getting any better. Not sure I can identify why this is so, maybe it’s the consolidation and changes in the traditional consulting business (big eight to what? two, maybe) or the depreciation of the craft itself among our peers. And then again, maybe sound planning went out of style and I didn’t get the memo. No matter what the root cause(s) is want to take a little time and share some (not all) of what has worked for me with great success over the years and may make your next roadmap better. I’m no genius, just believe I have been blessed to come into the industry at a time when the large management consulting firms actually invested in intellectual property and shared this with the “new hires” and up-and-coming staff professionals. Don’t see much investment in structured thinking, communication skills, or just plain good analytics anymore, it is truly troubling. Where are the young people learning the craft anymore?  Enough of the griping I beginning to sound like my parents again…

Bear in mind this not just confined to the “bigs”. What I’m going to share is works well in the boutiques as well. I have demonstrated the success of this method over the years with my experiences as a small boutique leader and several channel partners.  It simply works. You will not find this in textbooks, class rooms, or in your local book store (I have looked, maybe not hard enough). You will find this in the best and brightest organizations that have adopted an optimized way to think about guiding their organizations to perform as expected (this is called experience). Now on to the summary of what I want to share, the balance will be revealed in later posts.

The Overall Pattern

At the risk of over-simplifying things, here is the overall pattern ALL roadmaps follow:

Click to enlarge

 

1)      Clear and unambiguous understanding of the current state

• Business Objectives (not strategy or goals, quantifiable objectives)
• Functional needs
• High impact business processes or cycles
• Organization (operating model)
• Cost and complexity drivers
• Business and technical assets (some call these artifacts)

2)      Future or desired end state definition
First, (know this is obvious) what are trying to accomplish? Is there an existing goal-driven strategy clearly articulated into quantifiable objectives? Sounds silly doesn’t it, and if this exists and a no one knows about it or cannot clearly communicate what the end game is we have a problem. This could be a well guarded secret. Or, what is more common the line of sight from executive leadership down to the mail room is broken, where no one knows what the true goals are or cares (it’s just a job after all) becomes a annual charade of MBO objectives with no real understanding.  Some better examples I would expect include:

• Performance targets (Cash flow, Profitability, Velocity (cycle or PCE), Growth, Customer intimacy)
• Operating Model
• Guiding principals

3)      Gap Analysis
Okay, now this is where the true fun starts. Once here we can begin to evaluate the Delta between who we really are, and what we truly want to become.  Armed with a clear understanding of where we are and where we want to be, the actionable activities begin to fall out and become evident. Gap closure strategies can then begin to be discussed, shared, and resolved into any number of possibilities usually involving the following initiatives:

• Organizational
• Functional
• Architectural (technology)
• Process
• Reward or economic incentives

4)    Prioritization
Okay – now we have the list of actionable items now it is time to prioritize what is front of us. This is usually driven (in a technology road map) by evaluating the relative business value AND the technical complexity, plotting the results in a quadrant graph of some kind. It is critical here that the stakeholders are engaged in the collection of the data points and they are keenly aware of what they are scoring. At the end of the day, what we are doing here is IDENTIFYING what is feasible and what has the highest business value. I know, I Know this sounds obvious, and you would be astonished by how often THIS DOES NOT occur in the wild.

 5)   Optimum Sequence
Okay, now we have the initiatives, the prioritization, how about sequence? In other words are there things we have to get accomplished first, before others? Are there dependencies we have identified that need to be satisfied before moving forward? This sounds foolish as well, and we sometimes we need to learn how to crawl, walk, run, ride a bike, and then drive a motor vehicle. And what about the capacity for any organization to absorb change? Hmmm… Not to be overlooked, this where a clear understanding of the organizational dynamics is critical (see number 1, this is why we need to truly understand where we are).

 

 6)    The Roadmap
Now we are ready. Armed with the DELTA (current vs. desired end state), the prioritization effort (what should be done), and the optimum sequence (in what order) we can begin to assemble a sensible, defensible road map describing what should be done in what order.  How this is communicated is critical now. We have the facts, we have the path outlined, and we have a defensible position to share with our peers. We have the details readily available to support our position. Now the really difficult exercise rears its ugly head. Somehow, we need to distill and simply our message to what I call the “Duckies and Goats” view of the world.  In other words we need to distill all of this work into a simplified yet compelling vision of how we transform an organization, or enabling technology to accomplish what is needed.  Do not underestimate this task, after all the hard work put into an exercise like this, the last thing we need to do is to confuse our stakeholders with mind-numbing detail. Yes, we need this for ourselves to exhaust any possibility we have missed something. And to ensure we haven’t overlooked the obvious – not sure who said this but “when something is obvious, it may be obviously wrong”.

 

So, this is the basic pattern which is how a robust road map should be developed for any organization across any discipline (business or technology) to ensure a robust, effective planning exercise. Wanted to share this with you to help you with your efforts, this is usually not an exercise to be taken lightly. We are after all discussing some real world impacts to many, all the while understanding the laws of unintended consequences (more on that later), to come up with a set of actionable steps to take along the way that just make sense. I may be just another “rodeo clown”, but this has worked for me time after time. think this may just work for you. More on this later….

Project and Portfolio Management

Today’s tough economic environment is bringing new challenges. And an absolute focus on performance. Investment decisions should be made with a complete understanding of the impact to cash flow, profitability, velocity, growth, and customer intimacy in your IT organization. Project and Portfolio Management addresses these concerns by adopting a combination of processes based on COBIT 4.1 and VAL IT management frameworks using the right tools to ask and answer the right questions. 

In portfolio management we really want to know:

• Are we doing the right things?
• Are we realizing the benefits?

The answers will help guide us to approve the right mix of work to optimize contributions to strategic objectives while providing value, at affordable cost with an acceptable level of risk. And, focus our attention to the projects generating the most significant improvements in the five (and only five) essentials in business that matter: cash flow, profitability, velocity, growth, and customer intimacy.

We use project management when we really want to know:

• Are we doing them the right way?
• Are we getting them done well?

How effective and disciplined are my delivery and project management processes? Are we finding ways to continually boost the productivity of our project management teams? Does our organization have the capability to evaluate our initiatives in a systematic and objective manner?

Asking the right questions here is critical to success.  Poor project and portfolio management practices can prevent even the best organization from performing in an optimal manner. Most of the real problems begin with execution in project management where the work is planned and managed. Since this is where most of the project activity originates and is recorded, it is a critical to measuring progress to plan and evaluating performance accurately. Without an effective and disciplined project management function unplanned work begins to overtake planned activity (see my prior post on Demand Management). Because intent is not communicated clearly to stakeholders and resources committed, a significant amount of risk can be introduced into every initiative undertaken. The results are inevitable and lead to:

• Incomplete project definition leading to ongoing project extensions
• Unclear work assignments, goals, objectives, and deliverables.
• Non-value added essential work and unplanned activity ratios rise as more and more meetings and status reporting is required to communicate intent and progress.
• Scope creep or frequently changing delivery targets
• Budget overruns occur to meet the unplanned activity not accounted for
• Missed deadlines on scheduled deliverables or slippage in cycle delivery occurs
• Unusable new product or feature is created – expensive, costly rework is required
• Failure to deliver on some elements of the project scope – focus is lost
• Customer confidence and value is destroyed faster than it can be created

Now that we have met the enemy, what can be done?  I plan to address some straight forward ways to improve fundamental blocking and tackling in project management practices in the coming weeks. Effective Portfolio management is built on this foundation, without getting this right you will only be left guessing at best when it comes time to make the right call.

A breath of fresh air…

Terrific read about what Paul Johnson (CIO) is doing over at BB&T in this economy. Well run organization, it is truly refreshing to see this kind of thought and insight when others are running for cover and mindlessly adopting awful financial re-engineering techniques (slash and burn) to destroy value faster than can be created (or retained for that matter). See the entire article at CIO and let me know what you think about his approach.

Demand Management

First up in this corner office series is the subject of demand management. Or lack of it. Demand management defined means we are meeting customer needs consistently, meeting expectations on a regular basis. It doesn’t mean we drop everything to address an urgent priority in our partners mind every time we are asked. Maybe if is both urgent and important. Maybe. But consider that high performance organizations usually spend less than 10% of their time on urgent and unplanned work.  This has been proven to be the single characteristic (metric) that can be used to indicate extremely high levels of operational excellence, compliance, security, and good working relationships with business partners. High performance organizations:

Build and complete new projects for the business
The ideal organization is completing projects on time, with reliable quality, and delivering needed capabilities to the business. These projects are planned work, and anything that detracts from completing it is unplanned work. If developers spend more than 10% of their time on emergency break/fix issues escalated from operations, project commitments suffer, almost guaranteeing late projects.

Operate existing services and use assets effectively, efficiently, and securely
Services are performing as advertised and promised, with a reliable level of quality; customers are satisfied; controls exist so that management detects variance early and can repair it in a planned and orderly manner; and controls exist to foster a culture of compliance, helping management achieve business goals and satisfy auditors.

You have got to get this right. 

Here is a quick way to understand where you are and what kind of actions you can take to begin managing this key discipline to lead a high performance organization.

First, get a handle on the true capacity constraints you are managing to. Calculate the entire man-hours resource pool required and available and then multiply this amount by 80%. This is an effective planned capacity. Group the work characteristics so that Maintenance and Production Support is clearly identified and separated from development and project related activity. Leaving 10%-12% means professional staff can be developed, trained, and use a manageable amount of free time to actually research tools and methods to offset the times when a true emergency occurs and then can be expected to work at 100% or above levels.  The other 8% – 10% should be reserved for unplanned, unforeseen activity.  Develop a true plan of record to uncover any gaps from what is planned and the capacity constraints you have identified. Use this plan to prioritize with the business so that the important and urgent work still gets done and shortfalls (expectations) can be managed.  This will be required anyway to demonstrate need if additional headcount is needed.

Second, evaluate your Plan of Record (it does exist right?) and make sure you share this often within the organization to guide planning efforts or help resolve prioritization issues.  Conflicting demands are addressed on a reactive basis so try to mitigate confusion and ambiguity introduced through shifting priorities, assignments, and resource allocations that can create a significant amount of unplanned activity. Make sure Create/Build and Operate/Maintain missions are clear and unambiguous among the professional staff tasked with providing both roles concurrently. Ruthlessly pursue this clarity of mission. Not doing so will introduce a significant amount of rework and waste. Watch carefully for symptoms and extraordinary amounts of non-value added essential activity (e.g. meeting after meeting with all-hands for example) to overcome the poor communication a good plan of record will overcome.

Third, ensure adequate resources have been identified and allocated to the scheduled tasks at the right time. Sounds simple, but in many cases I have witnessed first hand the same resources committed two and three times over which is a direct result of poor coordination and communications. Use the Project Management Office (PMO – you have one right?) to examine project plans to make sure they are not populated with UNAMED RESOURCES or roles without an association to an actual resource. TBD is not good enough here. If uncovered in your work plans, this will only lead to further ambiguity and confusion over committed resources. And there will be hell to pay when it comes time to deliver real work.

Fourth, make sure there is evidence of resource pooling or sharing concepts in use. If not, there may be a lack of skill and experience with program management in general or some fundamental misunderstanding of basic IT management concepts. A good place to start is in production support activities.  If there is one resource allocated and no back up or cross-training occurring you are in trouble. Get your resume up to date and hope for the best.

Last, and most important – have your PMO regularly report to you the ratio of unplanned to planned activity. If they can’t do this, ask why. There may be a skills or competency issue. There may be a capacity or set of processes that are broken. This may be your best shot at managing demand, judging capacity, and understanding how well your organization is managing to objectives. This is an essential make or break early-warning metric to quickly realize when your organization’s ability to respond to and overcome demand management challenges needs attention.

There is much more to this subject, intend to explore some real world examples in the coming weeks. I welcome your thoughts and comments on this important management challenge.

Best of Intentions

Welcome to the corner office. Will try to keep this as entertaining as possible and encourage all to contribute and share their personal and professional experiences here. This eclectic collection of posts will in many ways reflect the wide variety of issues will all encounter in our daily professional lives.

Will try to restrict claims and assertions made in this blog to reflect generally accepted, time proven best practice principals that have demonstrated value.  I believe no operating model you are managing is complete without addressing the subject areas identified here as a whole. Taken together, the effect of one on the other is cumulative; improving one without the other will result in a less than optimal solution.

Understanding this we can still prioritize which deficiency to attack first and use this to guide our efforts to take corrective action. The order which makes most sense is to begin with leadership and management (“we have met the enemy and he is us”), then the professional practice, and finally address the skills and competency issues. In other words when you asked to improve an ineffective IT organization I recommend you attack the solution in this order:

– Demand Management
– Organization
– Project Management
– Knowledge of the Business
– Professional Skill and Competency
– ITIL and the Operating Model

Posts collected here are not indictments of the current operating models or leadership fads. Believe me, over my career just when I think I have seen all, the unexpected happens. The good, the bad, and the really ugly. Many hardworking and well meaning professionals have contributed to this understanding of what works and what doesn’t. Topics found in this blog represent a sincere desire to share the years of experience we have collected in corporate IT management, commercial software development, and executive management to solve similar challenges for others.

Thank you for your interest, hope this will meet your expectations and you will become a regular reader and contributor.

Method for an Integrated Knowledge Environment (Mike 2.0)

One of the more interesting sites I have kept an eye on is the open source Method for an Integrated Knowledge Environment better known as Mike 2.0 (http://mike2.openmethodology.org/wiki/MIKE2.0_Methodology). Initially created by a team from BearingPoint, the project started as the development of an approach for Enterprise Information Management in early 2005. Much of the content of the MIKE2.0 Methodology was made available to the Open Source community in late December 2006. The contributor base includes a number of individuals, from BearingPoint and from external community. The Data Governance and Management Consortium (DGMC) is being formulated to take ownership of MIKE2.0 and to lead the extension of many aspects of the methodology.

Sean McClowry is the overall lead for the MIKE2.0 Methodology. Sean wrote much of the Overall Implementation Guide, and was the core contributor on a number of MIKE2.0 Solution Offerings as well as the overall collaborative framework that hosts the MIKE2.0 Methodology. Andreas Rindler is the architect of the collaborative framework that hosts MIKE2.0 and primarily focuses on development of content related to Enterprise Content Management, Enterprise 2.0 and the Open Methodology Framework.

There is a wealth of material to explore on this site, you can spend days wading through the details and templates provided. As an example, I encourage you to see the Data Migration solutions offering  and I think you will agree this is a terrific exposition on a subject area there is just not a lot written about. Of course there is much more to be done, but this represents an invaluable resource for all of us in this profession. Thank you Sean and Andreas for making this readily available to all of us, very much appreciate all the hard work you have put into this.