The holy grail

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Integrating business and IT strategy and driving business performance and IT execution in a single integrated process transforms the way business gets value from IT.

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The holy grail

  1. 1. The Holy Grail: Linking Corporate and IT Strategy to IT execution How Portfolio, Program and Project management can be linked to optimize IT value realization and performance 08/02/11 Copyright: Crocus Hill Associates, All rights reserved
  2. 2. <ul><li>Over the years, businesses have complained that their IT costs are too high and the value received is too low </li></ul><ul><ul><li>IT hasn’t had the governance structure or management support to focus demand </li></ul></ul><ul><ul><li>It has worked on the ‘last screaming voice’ or the ‘biggest stick’ basis to determine priorities </li></ul></ul><ul><li>IT has struggled to keep pace with demand, especially in the face of declining budgets and growing tail of legacy </li></ul><ul><ul><li>Demand is infinite and comes from everywhere; jerked by ‘theme of the month’ or ‘what the CEO read on the airplane’ </li></ul></ul><ul><ul><li>80% of IT budget goes to legacy and operational support </li></ul></ul>Linking IT strategy to the business has been elusive 08/02/11 Copyright: Crocus Hill Associates, All rights reserved
  3. 3. <ul><li>IT direction is almost always ‘reactive’ to corporate strategy </li></ul><ul><ul><li>Historically IT is asked to come up with ideas to support the company direction </li></ul></ul><ul><ul><li>IT is almost never at the table when strategy is created </li></ul></ul><ul><li>Meanwhile IT requests come from everywhere without regard to strategic intent </li></ul><ul><ul><li>Pet projects and management whim still drive a significant part of demand </li></ul></ul><ul><ul><li>Little justification is required to put projects in the queue </li></ul></ul><ul><li>Historically (and currently Portfolio Management has been used defensively by IT to kill projects and rationalize costs but rarely driven into business strategy </li></ul><ul><ul><li>It has been seen by the business as a barrier to support and ‘gates, motes and hurdles ’ to control demand </li></ul></ul>The history of Portfolio Management is mixed 08/02/11 Copyright: Crocus Hill Associates, All rights reserved
  4. 4. <ul><li>In a recent engagement, we built IT planning into the business strategy process and provided clear information to the board allowing them to decide: </li></ul><ul><ul><li>What projects to fund in what order </li></ul></ul><ul><ul><li>What resources were needed to meet business timelines </li></ul></ul><ul><ul><li>What strategic value would result from these projects </li></ul></ul><ul><li>We integrated key IT management processes into the business planning process </li></ul><ul><ul><li>Linked critical business result dates to project completion dates driven by IT resource management and scheduling </li></ul></ul><ul><ul><li>Developed ‘closed loop’ feedback into business execution processes into IT execution (Project Management / PMO) processes </li></ul></ul>Integration into Business Strategy is Imperative for IT Funding and Credibility with Management 08/02/11 Copyright: Crocus Hill Associates, All rights reserved
  5. 5. <ul><li>IT / business alignment was in turmoil: </li></ul><ul><ul><li>IT leadership cried out for a single set of priorities </li></ul></ul><ul><ul><li>Business leadership cried out for delivery of results </li></ul></ul><ul><ul><li>Management was frustrated by lack of ability to deliver on plans for revenue growth and profitability because of systems delays </li></ul></ul><ul><li>IT was running 2+ concurrent projects for every development resource </li></ul><ul><ul><li>Projects were started because management mandated multiple ‘#1 priorities’ </li></ul></ul><ul><ul><li>IT was in a vice between all of the businesses and functions and there was no ‘court of last resort’ </li></ul></ul><ul><ul><li>Management thought that it was ok to ‘Hitch another wagon to the mule’ and just have them pull harder </li></ul></ul><ul><ul><li>As a result, no projects completed or at least were so severely behind plan that achievement revenue and profit goals was impossible </li></ul></ul>Client IT - Beginning Conditions 08/02/11 Copyright: Crocus Hill Associates, All rights reserved
  6. 6. <ul><li>Focus on value and supporting strategic opportunities rather than ‘making everyone happy’ by starting pet projects </li></ul><ul><ul><li>Integrating IT priorities into business strategic plans focused on tying revenue and business results to IT initiatives. </li></ul></ul><ul><li>Reduce the concurrent project load by 80 % </li></ul><ul><ul><li>There was rationalization of demand but it happened before projects were committed </li></ul></ul><ul><ul><li>Management drove the rationalization process, not IT </li></ul></ul><ul><ul><li>Integration of resource management and scheduling into strategy process brought funding / pace decisions into focus. </li></ul></ul><ul><li>Improve on time / budget delivery from 0% to 80% </li></ul><ul><ul><li>Integrated planning and PMO processes focused on ITs resource constraints and ability to execute as a key component of the planning effort </li></ul></ul><ul><li>Launch products on time for the first time in years </li></ul><ul><ul><li>Integration of Project Management, PMO and Strategic Planning retained focus on delivery and linked strategic opportunities into execution plans </li></ul></ul>Results - Through this work we were able to: 08/02/11 Copyright: Crocus Hill Associates, All rights reserved
  7. 7. <ul><li>Get governance right – put the stakeholders and decision makers together </li></ul><ul><ul><li>Get IT out of the middle of priorities and conflicting demands </li></ul></ul><ul><li>Integrate business and IT strategic planning processes </li></ul><ul><ul><li>Build idea generation into the strategic planning process </li></ul></ul><ul><ul><li>Get the opportunities described right (value, risk, size, costs) </li></ul></ul><ul><li>Assess opportunities on a portfolio basis </li></ul><ul><ul><li>Establish a business driven way to compare IT investments </li></ul></ul><ul><ul><li>Compare new ideas with current commitments and re plan </li></ul></ul><ul><ul><li>Bring governance into interactive sessions to decide priority, schedule and resources ‘on line’ </li></ul></ul><ul><li>Link management processes together and providing near real time feedback to stay in control </li></ul><ul><ul><li>Determine the real ‘ability to execute’ the IT group has (capacity, skills) </li></ul></ul><ul><ul><li>Build feedback loops into the processes to keep execution and planning synchronized and aligned with governance </li></ul></ul>Keys to Turnaround 08/02/11 Copyright: Crocus Hill Associates, All rights reserved
  8. 8. The Key is Linking the Management Processes and Providing Real Time Feedback to Stay in Control 08/02/11 Copyright: Crocus Hill Associates, All rights reserved Corporate Strategy IT Portfolio Management Program Management Project Management Governance Inside Loop Control Linking Planning and Execution Outside Loop Control Provide Execution Feedback to Planning
  9. 9. <ul><li>In this case we put governance bodies in all the areas where independent decisions are made: </li></ul><ul><ul><li>Autonomous business units </li></ul></ul><ul><ul><li>Shared services organizations etc. </li></ul></ul><ul><li>We tied them together at the corporate level to assure compliance with capital constraints and overall expense control </li></ul><ul><ul><li>Use the board level committee to challenge redundancy, divergence from standards etc. </li></ul></ul><ul><li>And we tied autonomous IT groups together in standards and architecture committees </li></ul><ul><ul><li>Drive synergy and standards </li></ul></ul><ul><ul><li>Manage the ‘we are different’ noise </li></ul></ul>Getting Governance Right 08/02/11 Copyright: Crocus Hill Associates, All rights reserved Board level: IT oversight Bus Unit: Cross functional Steering… Bus Unit: Cross functional Steering… Bus Unit: Cross functional Steering… Board level: IT oversight How much to spend How to organize How much to standardize What to spend it on How fast to go How to optimize What to share
  10. 10. <ul><li>Build IT planning into the brainstorming, goal setting and initiative planning process </li></ul><ul><ul><li>Bring IT leadership into business planning sessions </li></ul></ul><ul><ul><li>Give IT leaders a key role in planning and ‘what do we need to get it done’ sessions (focus explicitly on how IT changes support or drive Strategic Initiatives) </li></ul></ul><ul><li>Do a detailed profile of projects and which is more than a guess or SWAG at ‘ROI’ for value </li></ul><ul><ul><li>Explicitly identify how IT projects support business initiatives (how important is the initiative, how important is the project to the initiative </li></ul></ul><ul><ul><ul><li>Revenue initiatives drive marketing, sales and new product initiatives </li></ul></ul></ul><ul><ul><ul><li>Cost initiatives drive re engineering and process management projects </li></ul></ul></ul><ul><ul><ul><li>Measurements / KPI’s drive Business Intelligence initiatives </li></ul></ul></ul><ul><ul><li>Identify and quantify risks (size, complexity and novelty) </li></ul></ul><ul><ul><li>Build pro forma estimates for time and cost </li></ul></ul>Integrate Business and IT Strategic Planning processes 08/02/11 Copyright: Crocus Hill Associates, All rights reserved
  11. 11. Each project needs to be effectively profiled 08/02/11 Copyright: Crocus Hill Associates, All rights reserved Project Description Project Value <ul><li>Business Alignment: </li></ul><ul><ul><li>Strategic Initiative and </li></ul></ul><ul><ul><li>Business Objective Impact </li></ul></ul>Project Risks Project Costs Technical / Functional Process / Organization Size / Complexity / Novelty Business drivers Scope Definition of Success Alternatives to systems investment
  12. 12. Projects need to be evaluated on a portfolio basis with a rational scoring system 08/02/11 Copyright: Crocus Hill Associates, All rights reserved The balance of: Value And Risk Tangible Intangible Technical Organizational Drives selection of projects Manage Carefully Defer Low Hanging Fruit Fill In Value Risk Constrained by Resources Drives Schedule <ul><li>Activity Based Costing </li></ul><ul><li>History-based parametric estimation </li></ul>
  13. 13. <ul><li>We used ‘Heat Mapping’ for Value and Risk and a 9-box methodology for categorizing opportunities. </li></ul><ul><ul><li>Value and Risk – High Medium and Low using standard criteria </li></ul></ul><ul><ul><li>Risk Value tradeoffs for priority (low hanging fruit, High risk reward, fill in and defer… </li></ul></ul>Rationally establish priorities 08/02/11 Copyright: Crocus Hill Associates, All rights reserved
  14. 14. <ul><li>Once the business has set priorities based on value and risk, the problem turns to delivery of results </li></ul><ul><li>We found that there were two keys to aligning IT delivery dates with business-initiative dates </li></ul><ul><ul><li>Activity based costing for the IT organization </li></ul></ul><ul><ul><ul><li>Detailed breakdown of work and it’s drivers to understand ITs ability to commit resources to development work </li></ul></ul></ul><ul><ul><ul><li>This analysis also drove a ‘6 Sigma’ initiative to reduce structural costs and improve ITs ‘yield’ to work on business enhancement efforts (reducing maintenance, support and break fix work) </li></ul></ul></ul><ul><ul><li>Developing effective parametric estimates based on analysis of historical project information </li></ul></ul><ul><ul><ul><li>Analyzing similar projects and developing high level work-breakdown structures </li></ul></ul></ul><ul><ul><ul><li>Developing estimates in workshops with cross functional representation using pseudo ‘Delphi’ techniques </li></ul></ul></ul>Bridges between portfolio and program management 08/02/11 Copyright: Crocus Hill Associates, All rights reserved
  15. 15. <ul><li>Each project has a unique estimate by skill sets </li></ul><ul><ul><li>Project managers, business analysts, architects, developers, testing resources, subject matter experts etc. </li></ul></ul><ul><ul><li>Pro forma timelines were included to produce a ‘time phased’ view of resource needs for the project </li></ul></ul>We used history for Parametric estimates and ‘Delphi’ techniques to size and cost projects 08/02/11 Copyright: Crocus Hill Associates, All rights reserved
  16. 16. Summarizing Activity Value Analysis data Provides Capacity and Decision able Resources 08/02/11 Copyright: Crocus Hill Associates, All rights reserved Classifying and summarizing activity types from time sheet history provides insight into development capacity Classifying support work below this summary level provides the basis for total quality and lean efforts to streamline operations and provide improved ‘yield’ against ‘value driving’ projects.
  17. 17. <ul><li>We conducted interactive planning and scheduling meetings with the governance groups. </li></ul><ul><li>We drove the prioritization from the ‘Heat Map’ analysis and had board members ‘rank order’ the opportunities based on that input. </li></ul><ul><li>Using the capacity model from the activity value analysis, we loaded the projects onto the schedule based on the priorities established above. </li></ul><ul><ul><li>We worked the schedule interactively with the board to show where timelines and resources came into conflict. </li></ul></ul><ul><ul><li>Based on board input we rearranged the schedule (and consequently the initiative dates in the strategic plan) or increased the resource allocation (temporary skill capacity) and the IT budget to support that level of effort. </li></ul></ul>Bringing Demand and Capacity Together; Laying out a Business-Driven Timeline for Strategy Execution 08/02/11 Copyright: Crocus Hill Associates, All rights reserved
  18. 18. Board Priority Drives Scheduling 08/02/11 Copyright: Crocus Hill Associates, All rights reserved After Board review, projects are released for scheduling. Projects are loaded on the schedule based on Board priority rating Resources are encumbered by the project estimates from the profiles
  19. 19. Priority, Schedule and Resource Conflicts are Highlighted and Managed – Real time 08/02/11 Copyright: Crocus Hill Associates, All rights reserved Projects are loaded on the schedule based on Board priority and commitment dates in the strategic plan Capacity constraints are immediately visible for management attention Management can authorize temporary staff additions or changes in schedule to balance work and capacity Feedback from the decisions returns to the strategic plan, adjusting performance dates and the budget for temporary resources
  20. 20. <ul><li>Projects are managed weekly on schedule, milestone management and resource burn rates </li></ul><ul><ul><li>Bi weekly estimate to complete and estimate at complete are generated </li></ul></ul><ul><ul><li>This is compared with original project estimates and posted to the profiles by skill set </li></ul></ul><ul><li>The portfolio is re evaluated monthly to assure that future commitments are realistic </li></ul><ul><ul><li>Resource yield against projects are verified </li></ul></ul><ul><ul><li>Revised estimates are consolidated via the resources / scheduling tool </li></ul></ul><ul><li>Where project slippage or scope change impacts future projects, the governance Board is reconvened </li></ul><ul><ul><li>The Board can change schedule, priorities and decide resource changes to adjust expectations or meet established goals </li></ul></ul>Keeping the Plan Fresh Requires Feedback from the PMO and Project Management 08/02/11 Copyright: Crocus Hill Associates, All rights reserved
  21. 21. Making It All Work Requires Effective Management of Organization, Processes and Tools 08/02/11 Copyright: Crocus Hill Associates, All rights reserved Governance needs to be integrated into planning and execution processes to assure control Standard reporting and estimating processes are required to provide timely, relevant information Project and Program management needs to provide feedback to Planning and Governance A robust, integrated tool set is required to assure that the pieces stay connected
  22. 22. For more information 08/02/11 Copyright: Crocus Hill Associates, All rights reserved Additions, arguments, corrections or for a copy of this presentation: Contact us: Craig Bickel [email_address] 612 978 3737 – Cell 612 216 2403 – Direct

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