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Changing the Game: From Time-Based Billing to Deliverable-Based Billing -- A Case Study

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The transition towards meeting the client expectation of deliverable-based billing (as opposed to the, more typical, billing by time and materials) is a common issue facing professional services -- …

The transition towards meeting the client expectation of deliverable-based billing (as opposed to the, more typical, billing by time and materials) is a common issue facing professional services -- whether as an internal, embedded organization or a stand-alone project-based business in wide-variety of industries.

In this 3--minute recording of a live event hosted by Planview and presented by NASCO, their systems analyst will discuss how their organization embraced a new model to better support and retain their major national clients. When faced with the challenge of changing their revenue structure, they needed to find a way to:

* Wrangle 1,700 billable resources into a system of managed projects
* Ensure clear stages for billing
* Provide visibility into cash flow to compensate for inconsistent revenue
* Forecast payment and company revenue schedules
* Provide real time information to ensure agility and accuracy of information

Learn more about Planview's SRP at http://planview.com/srp


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  • Hello! My name is Sheri Millar and I am one of the Planview System Analysts and System Administrators at NASCO. We’ve had PV installed since 2009 and currently have around 1700 users in the system. We use Planview primarily as a Project and Resource Management tool where we track and schedule all of our work and assign resources so that utilization can be managed. Then all resources (Associates and Contractors) track their daily effort in the timesheet functionality so that we have the actual data needed for billing our customers and our internal financial tracking. The NASCO story I have to share with you today is about a successful transition we made within our delivery, budget and payment model in order to meet the needs of one of our customers.
  • I wanted to start by sharing with you Planview’s perspective on the Portfolio Management AdvantageAt the highest level every business we work with tries to manage the interplay of these three things: Strategy, Operations and FinancialsIn many organizations there’s a struggle to connect strategy with execution (or operations). And portfolio management can certainly help make that much more effective. But at the same time it’s integrating the financial engine of the company to that picture, which we believe makes portfolio management even more powerful, bringing these three worlds together, can help you maximize your opportunity, create an agile organization that can move and adapt quickly, maximize your competitiveness with the ability to innovate, maybe most importantly helps you establish a framework to measure the performance of the investments you make as an organization. We really see portfolio management as a fundamental platform for operating businesses.
  • Hello! My name is Sheri Millar and I am one of the Planview System Analysts and System Administrators at NASCO. We’ve had PV installed since 2009 and currently have around 1700 users in the system. We use Planview primarily as a Project and Resource Management tool where we track and schedule all of our work and assign resources so that utilization can be managed. Then all resources (Associates and Contractors) track their daily effort in the timesheet functionality so that we have the actual data needed for billing our customers and our internal financial tracking. The NASCO story I have to share with you today is about a successful transition we made within our delivery, budget and payment model in order to meet the needs of one of our customers.
  • NASCO is a technology company that serves the BlueCross & BlueShield Plans across the country with efficient, dependable and scalable systems and services for health benefits administration and health claims processing. 2012 was our 25th anniversary and that year the NASCO systems processed around 220 million health care claims for more than 18 million BCBS members. And we continue to grow as health care evolves into the new marketplace.So, each year we have customers that draw up Statements of Work with us to migrate their business onto our systems and for us to develop new functionality to meet the needs of their businesses.
  • This year one of our Blue Plan customers that was in the middle of a large, multi-year implementation project to move their business onto the NASCO platform asked to change the rules of the game, so to speak. They requested a different payment model for 2013. (CLICK)Rather than their current traditional method of monthly billings of accrued time and materials, they wanted to pay based on our delivery of the sections of work defined within the Statement of Work. In the NASCO world, these pieces of work are referred to as Deliverables, which would be very similar to what you might define as a project.So, payment in exchange for measurable and visible progress towards completion of the overall initiative. That sounded like a pretty reasonable request, and of course being eager to work with our customer, the Account Manager began designing a new model to support this request.
  • That new model became a new methodology at NASCO that was named Deliverable Based Budget Methodology, or DBBM.DBBM calls for invoicing to occur at the end of the 3 defined payment gates that correspond to the standard project management stage gates for SDLC work:Requirements & DesignModel Office (which marks the end of Build and the start of full Testing)Production Implementation(CLICK)At these 3 points in the life of each Deliverable defined within the overall program, we, as the provider, and the customer come to an agreement that the work has met the pre-defined criteria for that payment gate, and then invoicing for a percentage of the overall Deliverable budget occurs. The final gate payment is a true-up between the 2 payments made thus far and the actual expenses incurred on the work.
  • While the new methodology met the requirements of the customer, it presented some new challenges for our internal business processes.(CLICK)The first challenge was within the area of Billing. Our Finance department is responsible for generating the billing invoices back to the customer for the completed work. But under this new model, how would Finance know when a Deliverable had passed a Payment Gate and was ready to be invoiced?(CLICK)Then, if revenue was only coming in from this customer at each completed payment gate, what does that do for our cash flow to cover monthly outgoing labor expenses?(CLICK)To help manage the cash flow, we needed visibility into the schedule and financial plans of all the Deliverables so we could know what the forecast of these payment gates looked like for the year.(CLICK)And, this visibility needed to be real time and available without time-consuming manual manipulation of the data into certain report formats (i.e. Excel pivot tables).
  • So, we needed a solution…to the DBBM solution.A team of system and business process experts within NASCO joined together to turn this new Deliverable Based Budget methodology into a functioning reality. As requirements were gathered it became clear that we needed system and process support in the areas of Project Planning, the Financial tracking of the work, and different reporting views into the data.
  • To meet these needs, we were able to leverage our existing in-house tool of Planview Enterprise by utilizing the system areas of Work Manager, Financial Management and BusinessObjects reporting. All of these areas were already in use at NASCO in various ways, but we were able to expand on our use of the functionality in order to solve for our new business process challenges.I’d like to share a little bit about how each of these areas of Planview helped provide what we needed to support our new methodology.
  • Let’s first look at the Work Manager features we capitalized on to bring DBBM to life. The first thing we needed to do was organize the work in such a way that the financial health could be tracked at any level of granularity across the program. (CLICK) To give you an idea of the volume of work defined within this model, the Statement of Work was comprised of 5 distinct Attachments, each with their own defined budgets. (CLICK) Then, there were about 80 Deliverables defined across those 5 Attachments, and again each Deliverable had a defined budget. But, at NASCO a Deliverable is not exactly synonymous with a project. (CLICK) If you remember from the beginning, I talked about a Deliverable being “like” a project, but not exactly. Each Deliverable is actually a group of work entities. It combines what we call the Parent Project along with several pieces of development work called CSRs, or Change System Requests. So, the 80+ Deliverables defined in this Statement of Work contained over 500 projects and CSRs. I think you can see the need for a clean way to organize the work so that budget variance could be monitored closely at all of these levels over the life of the Program.(CLICK) To accomplish these groupings we turned to the configuration capabilities in Planview that allow custom attributes to be created. Just 2 structures were needed to organize all of this work and provide 3 different levels of aggregation; Deliverable, SOW Attachment and then all Attachments could be combined to equal the Program.(CLICK) These same structures were also used as the filter criteria to define our Work Portfolios at those same 3 levels. This ensured that as pieces of work were added or removed throughout the year that the Work Portfolios would always contain the correct work entities.(CLICK) And finally, these same Work Portfolios were used to maintain data integrity within the realm of reporting, both on screen in the Financial Management module and in BusObj reports. Within Financial Management, once the desired Work Portfolio was loaded on screen, the Financial Planning view provided budget variance data for that portion of the program. In BusObj, the Work Portfolio name was set as a query prompt on each report so the user could select the data for the entire Program, a SOW Attachment, or even for an individual or group of Deliverables.
  • Also on the Work Manager side… We simplified the WBS template to help the Project Managers get more value out of their project plans and eliminate excessive resource assignment work(CLICK) Also in the WBS template, we added a new Phase to house the 3 Financial Payment Gates as Milestones where the forecasted and actual finish dates could be captured. The Project Manager had the option of manually maintaining these dates, or relationships could be used to link the Milestones to the completion of all relevant portions of the work plan.(CLICK) Then, on each Pay Gate Milestone, the Notes functionality was used to record the pre-defined Invoice Trigger criteria for each gate. This way the methodology was imbedded into the project plans to help ensure Project Managers knew exactly what was required to move the Deliverable forward.(Steve) – This is a great example of how the Planview solution can support the needs of the Project Manager, and at the same time bring the service delivery team and the back office closer together to improve the business.
  • The Financial Management module of Planview held the key to better fiscal management of the program. It provided both the PM’s and NASCO Management the real time views into the budget variance of any and all levels of the program…views they had never had before, and definitely not at the frequency the FM module could provide. Here’s what we did within FM…(CLICK) To separate our methodology from other projects in the database still billing as traditional Time & Materials, we created our own Work Financial Planning Model, defined our own Budget Versions and chose to display only the Accounts that were relevant for DBBM. (CLICK) Within the Budget Versions, we created placeholders to capture and hold the Baseline history of each Deliverable, beginning with the SOW budget amount being captured in the version named Initial Funding Baseline and on through as many Change Requests as might be needed over the life of a Deliverable. Also, there were versions to hold a snapshot of the project plan at each of the 3 Payment Gates. These would provide a detailed historical view that could uncover trending or information that could improve our project management performance in the future.(CLICK) We utilized the available security functionality to guard against unauthorized edits to key versions.(CLICK) To ensure that the data within FM was as current as possible and in sync with what would display in BusinessObjects reports, a Load Version job was scheduled to run daily just a few minutes before the reporting database refresh began.(CLICK) And finally, we used Lifecycle functionality to tie Work Manager to the FM design. For each new Deliverable, a sequence of steps ensured that the correct Rate Card was set and that the Initial Funding Baseline was captured, approved by the Finance department, then locked against editing.All of these details combined together to close the gaps that existed around real-time financial visibility into the program.
  • The last piece of the solution puzzle was reporting. The power of the on-screen, real-time views in Manager and FM were a giant leap forward in how NASCO was using Planview to meet the needs of the program and this new methodology, but not all of the data needs could be met within the user interface. Traditional reports were still needed to simplify status reporting and to provide visibility into the forecasted cash flow of the Deliverable Payment Gates.These are 4 of the key reports I built to address these needs using the BusinessObjects reporting solution that Planview provides within the application.(CLICK) The FM Validation report was created to help users become comfortable with the new Financial Management versions. On this report users could review the data held within every Budget Version for every Deliverable.(CLICK) The Payment Gate Tracking report provided the needed view into the forecast for when all of the Deliverable Payment Gates were scheduled for completion.
  • It also displayed any positive or negative schedule variance against the baselined dates for each gate. Along with displaying expected cash flow for the year, this report was used as the communication mechanism from the PMs to the Finance Dept to inform that a gate was ready for invoicing.
  • Once the payment gates were identified, Finance needed a standard template to use each month for generating the invoice to the Plan customer. They had been using an extensive Excel spreadsheet call the Invoice Master Template, but it had many fields that had to be updated by hand each month. Most of these fields were data points now held in Planview, so this report was created to mirror the Excel version, but populate the data points automatically, creating efficiency and higher accuracy.(CLICK) And last was the Variance Report, which provided the Program Manager and all interested parties a view into the financial health of the Deliverables with calculations such as Estimate At Complete variance, the % Variance at Complete and the Current Burn Rate.
  • So that’s an overview of the integrated solution we developed within Planview to support the business needs that came with this new budget and payment methodology. As we look back across its implementation we see a diverse set of benefits that it produced for NASCO:(CLICK) With the new methodology in place and the system support that Planview provided to the solution, there were several opportunities to let go of the old manual, time-consuming processes.(CLICK) Project and Program management strengthenedby having the tool designed to support the defined needs and processes of the business, and then provide the data needed for governance of those processes.(CLICK) And, as I mentioned previously, the visibility to timely and accurate data that’s now available is priceless. Our Finance department and all levels of Management that share in the responsibility of maintaining the fiscal health of our company benefit from the DBBM design.(CLICK) Those users involved in the DBBM Program enhanced their Planview skill set and became more proficient users of the tool.(CLICK) We’ve seen an increased confidence in the data coming from the tool, especially in the Financial Management area where data is easily accessed on-screen by any user with the necessary access rights. (CLICK) And, we’ve seen an increased level of general support for the use of Planview across the enterprise.
  • Steve – Thank you Sheri. That is a great example of how the challenges faced by a services business can be solved by using the right software. The Planview SRP solution is designed to help professional services businesses to improve their operations.etc
  • Hello! My name is Sheri Millar and I am one of the Planview System Analysts and System Administrators at NASCO. We’ve had PV installed since 2009 and currently have around 1700 users in the system. We use Planview primarily as a Project and Resource Management tool where we track and schedule all of our work and assign resources so that utilization can be managed. Then all resources (Associates and Contractors) track their daily effort in the timesheet functionality so that we have the actual data needed for billing our customers and our internal financial tracking. The NASCO story I have to share with you today is about a successful transition we made within our delivery, budget and payment model in order to meet the needs of one of our customers.
  • Transcript

    • 1. Changing the Game From Time-Based Billing to Deliverable-Based Billing – A Case Study on Making the Shift to Better Business Sheri Millar, NASCO Steve Beaumont , Planview
    • 2. Presenters Sheri Millar, Systems Analyst, NASCO • • • 10 years as system administrator and analyst with four different Planview customers – Commerce Bank, U.S. Central, Hallmark Cards, and NASCO Expert evangelist in best practices in program and project management and maintaining enterprise project frameworks and companion processes Key in the design, creation and implementation of Work and Request Lifecycles – Most recently to capture and track customer special requests through more than 20 business groups Steve Beaumont, SRP Solution Marketing Manager, Planview • • • © 2013 Planview, Inc. | 2 25-years experience as a management consultant Years with Deloitte, Coopers & Lybrand, and E&Y Currently owns the client-perspective for the Planview Services Resource Planning (SRP) technology solution | Confidential
    • 3. The Portfolio Management Advantage Maximize opportunity by balancing strategy with people and money Differentiate and build competitive advantage by driving innovation Strategy Create an agile, efficient organization Establish metrics in order to measure value Operations © 2013 Planview, Inc. | 3 | Confidential Financials
    • 4. Changing the Game From Time-Based Billing to Deliverable-Based Billing – A Case Study on Making the Shift to Better Business Sheri Millar, NASCO Steve Beaumont , Planview
    • 5. Who is NASCO? We Are Blue OUR LEGACY Formed in 1987 through a partnership between the major BlueCross® and BlueShield® Plans, NASCO set out to create a shared integrated administrative system to support national accounts. OUR RELEVANCE NASCO evolved from solely being a system for national accounts claim processing into a single-system solution that is capable of serving a Plan’s entire book of business. Today our evolution continues as we align with our customers around the creation of exchanges, consumer engagement and new network models/reimbursement methodologies. OUR FOCUS – NASCO IS DIFFERENT! • • • • • • • We Know - Processing claims and supporting the membership and billing for over 3200 accounts and 18.5 million members We Share - Offering a shared system – Capitalizing on commonalities across Blue Plans We Support - Offering a variety of business process outsourcing services to our Plan customers We Collaborate - Making the Blues more competitive by concentrating on the needs and issues facing Blue Plans We Innovate - Continually investing in innovation, like consumerism, health insurance exchanges and payment reimbursement models We Save - Consistently lowering Plan costs through growth, operational effectiveness, mutual investment and technology initiatives We Protect - Taking an enterprise view of risk, data management and information security and support through comprehensive auditing/reporting © 2013 Planview, Inc. | 5 | Confidential
    • 6. The Challenge Accrued Time & Materials Monthly Billing © 2013 Planview, Inc. | 6 | Confidential Billing When Key Portions of Work Are Completed
    • 7. The Solution… Deliverable Based Budget Methodology (DBBM) • Payment Gates: 1) Requirements & Design 2) Model Office 3) Production Implementation • Each gate has pre-defined success criteria that must be confirmed before invoicing occurs • Gates 1 & 2 are a % of the budget • Gate 3 final payment is a true-up of actual expense © 2013 Planview, Inc. | 7 | Confidential
    • 8. Challenges to the DBBM Solution Billing • Determine when key portions of work are completed and ready for invoicing Cash Flow • Revenue only comes at Payment Gates; still must cover outgoing labor expenses Visibility • How can we know what the Payment Gate forecast looks like for the year? Real Time Information • Need data immediately and without manual manipulation into report formats © 2013 Planview, Inc. | 8 | Confidential
    • 9. The Integrated Solution…to the DBBM Project Planning Project Financials © 2013 Planview, Inc. | 9 | Confidential Reporting
    • 10. The Integrated Solution…to the DBBM P L A N V I E W © 2013 Planview, Inc. | 10 Work Manager Financial Mgmt | Confidential Business Objects E N T E R P R I S E
    • 11. The Integrated Solution…to the DBBM Project Planning Planview Enterprise – Work Manager SOW Attachment Deliverable CSR SOW Attachment Deliverable Project 2013 Statement of Work (Program) CSR Deliverable Work Portfolios Structure: Parent Deliverable © 2013 Planview, Inc. | 11 | SOW Attachment Work Portfolios Structure: Parent SOW Project Confidential Work Portfolio Financial Management and BusinessObjects
    • 12. The Integrated Solution…to the DBBM Project Planning Planview Enterprise – Work Manager • Simplified WBS template • Added Financial Pay Gate Milestones • Notes functionality for Pay Gate success criteria © 2013 Planview, Inc. | 12 | Confidential
    • 13. The Integrated Solution…to the DBBM Project Financials Planview Enterprise – Financial Management (FM) • New FM Model, Versions and Accounts • Budget Versions for Baseline history • Security settings for each Version • Automated daily Load from Work Manager into Current Forecast • Lifecycles to ensure Versions were captured and locked when appropriate © 2013 Planview, Inc. | 13 | Confidential
    • 14. The Integrated Solution…to the DBBM Reporting Business Objects • DBBM FM Validation Every budget Version; review data across all at once • DBBM Payment Gate Tracking Cash Flow forecast; indicates Deliverable gates ready for invoicing • DBBM Invoice Master Template • DBBM Variance Report © 2013 Planview, Inc. | 14 | Confidential
    • 15. © 2013 Planview, Inc. | 15 | Confidential
    • 16. The Integrated Solution…to the DBBM Reporting Business Objects • DBBM FM Validation Every budget Version; review data across all at once • DBBM Payment Gate Tracking Cash Flow forecast; indicates Deliverable gates ready for invoicing • DBBM Invoice Master Template Standard template used to generate monthly invoice • DBBM Variance Report EAC variance, % Variance at Complete, Burn Rate © 2013 Planview, Inc. | 16 | Confidential
    • 17. Results & Benefits       Reduction of manual, time-consuming processes Enhanced Project/Program Management Increased visibility for Finance & Management Enhanced user skill set Increased confidence in the data from the tool Increased level of support for the use of Planview across the Enterprise © 2013 Planview, Inc. | 17 | Confidential
    • 18. Integrated Services Resource Planning © 2013 Planview, Inc. | 18 | Confidential
    • 19. Changing the Game: From Time-Based Billing to Deliverable-Based Billing Live question: Are you using Planview for resource planning and scheduling as well? © 2013 Planview, Inc. | 19 | Confidential
    • 20. Changing the Game: From Time-Based Billing to Deliverable-Based Billing Live question: What was Finance’s a part of creating DBBM? Was Finance able to articulate their requirements or were they more of a driver to this endeavor? © 2013 Planview, Inc. | 20 | Confidential
    • 21. Changing the Game: From Time-Based Billing to Deliverable-Based Billing Live question: Deployment? © 2013 Planview, Inc. | 21 | Confidential
    • 22. Changing the Game: From Time-Based Billing to Deliverable-Based Billing Live question: Is NASCO a typical or unusual use-case for the Planview Services Resource Planning (SRP) tool? © 2013 Planview, Inc. | 22 | Confidential
    • 23. Changing the Game: From Time-Based Billing to Deliverable-Based Billing Sheri Millar Systems Analyst, NASCO Steve Beaumont SRP Solution Marketing Manager, Planview Download these slides from SlideShare.net/Planview or request them by email to market@planview.com © 2013 Planview, Inc. | 23 | Confidential
    • 24. Thank You Additional Questions? Email us at market@planview.com Learn More At: Planview.com/Services Planview.com/SRPResources