Relating Enterprise Strategy to Business Outcomes

1. Brainstorm DC 2008
Relating Enterprise Strategy
to Business Outcomes
Kenneth L. Mullins
Chief Engineer, Enterprise Transformation
Federally Funded Research and Development
Center for Enterprise Modernization
Tuesday, June 24,
1
2008

2. Relating Enterprise Strategy
to Business Outcomes
Three Important Ingredients:
Performance Management
Portfolio Management
Program and Project Management
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3. Transforming an Enterprise
Clarify the Scope of the Enterprise
Comprehend the Mission of the Enterprise, its Vision, Goals & Objectives
Understand How the Business Operates – Look for Improvement
Opportunities
Determine What is Needed to Enhance Mission Capabilities
Capture and Socialize “Current” and “Desired States” (of the Enterprise)
Appreciate the Gaps and Obstacles that Separate Them
Engage & Persuade Affected Stakeholders to Commit to a Journey of
Transformation
Devise a Transition Strategy Aimed at Closing the Identified Gaps
Establish a Robust Decision Making Process (a.k.a. “Governance”)
Sustain the Governance Process at CMMI-like Level 3 (at least)
Subject Capital Investment Decisions to Rigorous Review (of entire
Portfolio)
Manage Acquisition & Control Implementation of Initiatives & Solutions
– to Ensure Delivery on the Promise of the Approved Business Cases
Use the Collected Data to Inform the Next Investment Review Cycle
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4. So, What’s the Problem?
Does this Look Like Your
Does this Sound Familiar?
Current Department or
Agency IT Operations?
Little fact-based analysis for decision
making
No common business case framework
Outdated decision support processes
identify risks and issues after the fact
Little or no formal review in flight
Little transparency into processes
Large variability in terms of project
S
E
performance
R
V
I
C
E
No long term solutions for aging, legacy
systems, applications, and infrastructure
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5. First Things First: Understand the Expectations
of Your Government Stakeholders
Long Term
Short Term Midterm
Process simplification Fewer, more-
Process simplification Optimization of
Fewer, more- Optimization of
manageable projects Investments
More transparency manageable projects Investments
More transparency
in your IT spending Tangible evidence of
in your IT spending Life-cycle planning
Tangible evidence of Life-cycle planning
savings and benefits to support “Target” EA
Best practice sharing savings and benefits to support “Target” EA
Best practice sharing
and reuse Better alignment of IT
and reuse Agility in dealing
Better alignment of IT Agility in dealing
with business needs with budget changes
Stronger arguments with business needs with budget changes
Stronger arguments
and business needs
for funding needs Effective controls and business needs
for funding needs Effective controls
for large, complex More-consistent
Useful Enterprise for large, complex More-consistent
Useful Enterprise
projects realization of ROI and
Architecture projects realization of ROI and
Architecture
benefits
More-flexible IT benefits
Consolidation More-flexible IT
Consolidation
planning Continuity of approach
opportunities and cost planning Continuity of approach
opportunities and cost
rather than perpetual
savings (e.g., Better understanding rather than perpetual
savings (e.g., Better understanding
reinvention
application licensing, of evolving IT staffing reinvention
application licensing, of evolving IT staffing
outsourcing) needs
outsourcing) needs
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6. Advances in Modern Technology Also Affect the
Expectations of Your Stakeholders
Technology convergence is rapidly transforming the impact of
IT from mere cost reduction to innovation enablement
Electronic storefronts, Communication,
Online banking, collaboration and content
Customer contact centers
Mobile phone,
digital lifestyle
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7. Changing Operational Requirements Likewise
Affect Your Business Stakeholders’ Expectations
Greater
Greater Need
Greater Need
Greater Need for Need for
for Enterprise
Communications for Business Enterprise
Content
and Collaboration Intelligence Search
Management
Capability
Increasing Needs for Other, Agile Business Services
Ongoing Need for Secure, Well-Managed Infrastructure
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8. Questions Frequently Asked by Our Customers
How is portfolio management delivering better value in
government decision making?
What are the key practices that distinguish different maturity
levels of government organizations?
What are the key lessons learned to date from
implementations in different government settings?
What criteria and categories should be used for assessing
government IT investment proposals?
How can the value of IT be defined in a government
context?
How can government IT programs be assessed to ascertain
their real value, review objectives and rebalance resources?
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9. The Infrastructure Example: What an Optimized
Infrastructure Profile Might Look Like
Workspaces & Portals
Messaging
Presence
Web Conferencing
Doc & Records Mgmt
Web Content Mgmt
Forms Mgmt
Search
Reporting & Analysis
Performance Mgmt
Data Warehousing
Improved Collaboration and Information Sharing
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Secure Information Portal for Executive Officers

10. What a “Good Case” Agency Infrastructure
Looks More Like Today
Workspaces & Portals
Messaging
Presence
Web Conferencing
Doc & Records Mgmt
Web Content Mgmt
Forms Mgmt
Search
Reporting & Analysis
Performance Mgmt
Data Warehousing
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11. Our Lessons Learned
Success depends on ability of management to manage change
Need to balance the pace of implementation with organizational readiness
and maturity
Don't turn the improvement exercise into an attempt to just quot;find the right
tool“
Recognize the interaction of governance, processes and people, which
are all required to enable an organization to effectively change the way it
does business
Focus on value, risks and prioritization – while
actively engaging key stakeholders
Avoid introducing new processes for one-time (e.g.,
annual budget) decisions
Clarify the application of governance to Performance
Management, Portfolio Management, and Program /
Project Management
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12. Types of Agency Investment Decisions (and
their Associated Considerations)
Step up key areas critical to multiple initiatives?
Documents and records management, electronic
forms
Workspaces and portals infrastructure
Reporting and analysis
Projected Benefits?
Lower TCO
• Standardized infrastructure
• Centralized management
• Leverage across enterprise
and future projects
Enhanced ROI for existing IT investments.
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13. Decision Support: Theory, Concept, or Reality?
In-Progress Alignment Enterprise Strategy Risk/Value
In-Progress Alignment Enterprise Strategy Risk/Value
Reviews with Drivers & Objectives Tradeoffs
Reviews with Drivers & Objectives Tradeoffs
Benefits
Costs
Realization
Benefits
Risks Approved Operational
Portfolios
Skills
Client
Needs
Program &
Business case policy
review & approval outcomes
Initial Budgets Staffing Dependencies
triage
Time Cross- Project to
boundaries project
Constraints
Projects, ideas
& alternatives:
Federal Laws and Regulations
Enterprise-
wide and OMB Guidance, Directives, Assessments
specific
GAO Reviews and Audits
agencies,
Agency IG Reviews and Audits
departments
or programs
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14. Crafting the Business Case for a Government
Project
Costs
Head count
• What problem must be solved?
Transformation
• Which stakeholders does this Policy objectives
problem affect? Private partnerships
Operational
efficiency
• What solutions are available?
Greater participation
• What are the benefits of each
Closing the digital divide
solution? Economic impact
• What is the relative cost of each ROI Greater transparency
Greater accountability
solution?
More-effective policy
• Which stakeholders are affected by
making
the solution?
Customer
• How can the solutions satisfy service
stakeholders’ expectations? Constituent value
Lower constituent cost
• How will the solutions be funded?
Greater availability
• What other problems go unsolved? Constituent centricity
Fewer, more-effective interactions
Single point of contact

15. What Is Value, Anyhow?
… and how do you know if you’re getting
it?
Lower Costs — IT and Operating
Enhanced Revenue
lue
Va
Improved Quality
Value
?
Value
e
lu
Va Valu
New Services
e
e
lu
Va
Better Service
Faster Time to Implementation
Fulfilling strategic objectives
Positive social impact (e.g., Green IT)
Economic development
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16. Government ROI vs. Value of Investment (VOI)
ROI VOI
Example: Example:
Enterprise-wide
Increased Service
service innovation
levels
Scope of
Business Synergistic
Objectives
Example:
Example:
Lower cost
Employee
of service
Initiative knowledge
delivery
-Specific
Tangible Intangible
Scope of Value Objectives
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17. Government Performance Framework
Strategic Return
Political Consensus and Social and Economic
Policy Alignment
Participation Development
Management
Customer Constituent Supplier/Partner Internal Operational
Service Mgmt. Responsiveness Effectiveness Efficiency
Customer Value
Operational Efficiency
Support
Human Resources IT Finance and Regulatory
Services
Responsiveness Responsiveness Responsiveness
Constituent
Total Cost of Use
On-Time
Value Increase
Improvement
Delivery
Customer Care
Service
Constituent
Service Accuracy
Performance
Performance
Responsiveness
KPI Effectiveness
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18. Different Initiatives Require Different Measures
Utility Enhancement Leading-Edge
Increased output, Better business
Cost savings
Objective:
profit or revenue models
Best-in-class Unique
Economies of
Value Driver:
processes capabilities
scale
Immature, skills Cutting edge, rare
Mature,
Technology:
scarce, skills,
well-supported,
application-centric e-business-
platform-centric
centric
Integration-based Interconnection-
Procedure-based
Delivery Risk:
(moderate) based (high)
(low)
Responsiveness,
ROI, TCO, ROI, benchmark,
Metrics:
number of changes financial review
benchmark
innovation
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19. VOI Framework — Timing and Scope are
Important Considerations
Beneficiary
Extended
Innovation
Enterprise
IT focused on the
team and the organization
Organization example, collaboration,
Collaboration
b
or Team connectivity, or innovation
initiatives)
Connectivity
Increasing
Individual Productivity
Strategic
Tactical
Scope of IT or Business Initiative
Business
Value
IT Focused on
Individuals
(for example,
Time to Value
productivity initiatives)
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20. Decision Support Criteria Should
Improve Transparency of Processes
Customer-
Determined
Project Business Cases Relevance Level
Mission, Program, Business Process
25% Risk-adjusted ROI (+ VOI)
Priorities/Needs
30% Economy, efficiency,
Financial/Benefit Cost Analysis
effectiveness, empowerment
Risk Factors/Probabilities Affecting Technology, business, project,
25%
Outcomes resource, customer
Enterprise Architecture and Standards Fit
20% Reference models, interoperability,
sequencing, data sharing
Strategic Alignment,
Prioritization Criteria
Optimized ROI
IT Portfolio
1. Addresses Department-wide Action Plan
Optimized Risk
$$ linked
2. Alignment with Business goals
New Projects
3. Level of cross-Agency collaboration
to program
4. Project visibility or political sensitivity Infrastructure
Optimized and Ongoing and policy
Utility
5. Amount of process change required
Enterprise O&M
6. Level of coordination Applications needs and
7. Project size in staff and budget
Strategy Impact results
8. Level of technology customization.
Business Applications
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21. Consider Multi-Year Strategy for
Implementing Shared Services
FY-10
FY008 FY-09
Full Operational
Continue Proving Start to Move
Key
the Concept to Scale
Themes Capability
Productive Use Accelerated Adoption Accelerated Adoption
Emphasis and Productive Use and Productive Use
Limited: Internal Expanded Specific classes of
Technology
Infrastructure services and
Coverage Optimization technology shared
Delivery Enterprise ES Led; Business More Mature Business
Services (ES) Partner engagement, Partner relationships
Model
Led, Initiate and Partner support Newly developed
Pilots with New development and services and pilots
Partners pilots continue as continue as mature
mature solutions services are shared
transition to production among Business Units
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22. Long-Term Value of Investment Logic Maps
Consider the life cycle phase of each investment
Concept & Implementation Operation
Planning
Feasibility
Investment Lifecycle
Investment Benefit
Business
Investment
Reviews Reports
Case
Logic Map
Facilitated
Program
Investment Benefit Mgmt Sessions
Reviews
Concept Brief Plan
Don’t lose sight of the your value proposition
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23. Ways to improve VOI Framework
Measure benefits through public value and not
exclusively business value metrics
Set and measure targets in terms of increased
service levels, decreased operational costs and
strategic return
Monitor the value projected vs. the value delivered
throughout the life cycle of each initiative
Adapt the model over time to make sure it
continues to support the strategy and goals of the
business
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24. Graduate from Project Management – Embrace
Portfolio Management
Strategic
Portfolio Scope Definition
Overall Investment, Benefit, Risk Optimization
Active Portfolio Performance Monitoring
Business Environment Change Adaptation
Portfolio
Comprehensive Program Planning
Management
Change and Risk Management
Coordination of Project Delivery
Scope Measurement of Results Program
of
Management
Business/IT Collaboration
Work
Initiation Deliverables
Project
Budget Scope
Schedule Risks Management
Resources Metrics
Scope of Initiatives
Tactical IT-Centric Business/IT Enterprise
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25. Better Views Provided by Portfolio Analyses
Portfolio Assessments Provide Valuable Input into Strategic Planning,
Enterprise Architecture Development, and Enterprise Transition Planning
Are cost-saving Departments/Agencies
opportunities missing that A C
B D
would leverage common
Admin.
application needs? $$
Systems, Business
New Development
Planning,
$$
Cross-Business Unit
Other
Major Application
12%
22%
Enterprise Infrastructure
Enhancements
9% $$
11%
Infrastructure, App. Support/ $$ $$ $$ $$
46%
Telecom, End- Maintenance
User Support 2010
MAINTAIN/
REPOSITION ENHANCE
Where are potential cost savings and
how can money be reallocated to fund 2009
transformation or critical process MIGRATE/RE-
ELIMINATE ENGINEER
improvement priorities? REPOSITION
Excellent 2008
How can we get a clear
MIGRATE/RE-
Soundness
Technical
ELIMINATE ENGINEER
understanding of quot;life-
cyclequot; strategies for
existing application and
system investments?
ELIMINATE
Poor
Low High
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Business Value

26. Balancing the Investment Portfolio
Tradeoffs Are Needed While Optimizing Overall ROI
for Acceptable Levels of Risk
Low-risk/high-reward;
Long-term, minimal
short-term/important
transformation initiatives
transformation initiatives “To-Be” Portfolio
High Eliminate
Eliminate Quick Wins,
High Impact H
B I
Reward
Increasing Value
A
G
Low
Categorize by
High
Risk
Risk & Reward E F
C
D
Increasing Risk
Consider
Case-by-Case
Eliminate
Eliminate High-risk/high-reward;
High-risk, low reward Low-risk/low-reward
initiatives initiatives
Real Test is the ability to stop, cancel, or postpone low-
value, high risk Investments – already in progress
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27. Portfolio Management Needs to be Orchestrated
by Robust Governance Mechanisms
IT Governance Strategy
IT Governance
Goals
Domains
Principles and Policies
Decision Rights
Styles
Supply
Demand
Governance
Governance
IT Governance Processes
How Can IT Best
What Are the
Satisfy Business
Business
Needs?
Needs?
Business Management IT Management Primary
Primary Responsibility Responsibility
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28. Create a Culture of Disciplined Decision Making
Are you doing the
Are you doing the right thing?
right thing right?
Roles
Membership
Are the specific domains requiring
-- Approve IT Portfolio
Agency Head
decision rights and inputs established?
-- IT impact on Strategic
(Chair)
Executive Directions
Deputy Sec.
Committee
Is the structure of each group making,
-- Alignment of IT Investments
Enterprise-wide
COS,CIO,CFO,
-- Review all major IT decisions
approving, and overseeing decisions
Department
-- Decide direction of IT
Heads
clearly established?
Is decision-making guidance and
IRB recommends portfolio changes; EC accepts / rejects
authority within each group and across
Roles
Membership
groups clear?
-- Monitor IT programs/policies
Investment CIO (Chair),
-- Propose policies & standards
Review Board Senior Business
Have adequate steps been taken to
-- Coordinate IT issues
Directors (CoChair),
ensure that information and analyses
-- Recommend project approval,
CFO/Finance
disapproval, termination
used for decisions is reliable and
Unit CIOs
constructed using agreed upon
approaches?
ITRB reviews portfolio/projects; ARB reviews EA issues
Business Units
Roles
Membership
Is a regular meeting schedule adhered
Information
-- Specialized Review Boards
Technology Deputy CIO (Chair), to and out-of-cycle meeting criteria
-- Review project milestones
Review Dept CIOs, CISO,
established for pressing problems or
-- Technical issue assistance
Boards CTO,
-- Make recommendations to Agency exceptions?
Business Line
CIO about project status
Directors
6/24/2008 28

29. Process Maturity Is Fundamental to Achieving
Successful Business Outcomes
Investment benchmarking and
Optimizing Leveraging
change management techniques are
for Strategic
Monitor, Sense, and deployed for strategic
Outcomes mission/business outcomes.
Respond accordingly
Improving
Managing Process evaluation techniques focus
Investment on improvement of portfolio
Robust mechanisms for
performance and management.
Process
measuring progress
Developing Comprehensive selection and
Governing
Complete control processes with benefit and
Improve decision making, risk criteria linked to mission.
Portfolio
across the portfolio
Building Repeatable investment controls in
Communicating
Investment place and key foundational
Enterprise and Business capabilities in place.
Foundation
Domain Level viewpoints
Admitting Little awareness of investment
Creating
There’s room for improvement management techniques. Processes
Investment are ad hoc and project-centric-
Awareness focused, and outcomes vary widely.
6/24/2008 29

30. Signs of Maturity: Integrated, Instantiated,
Repeatable (and Helpful) Processes
Proactive Management
Disciplined Portfolio of Benefits
Management Benefits Realization
Selection Criteria Planning
Investment Appraisal Data Validation
Solid Performance
Portfolio Prioritization Transparent Reporting
Management
Delivery Plans
Signs of Investment
Evidence-based Portfolio Dashboard
Success:
Decisions
Performance Reviews
Validating scale and
Project achievability,
Monthly and Six- quality of benefits
affordability,
month Progress and
accountability Project and business
Issues Reporting
line owner involved
Clear Alignment with
Managing Project
business priorities Capture of cross-
Delivery: system benefits and
Portfolio adjustments
Transparent, line-of- wider public value
made as necessary
sight reporting
Funding continuation
linked to realization of
predicted benefits
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31. Many Improvement Opportunities Remain
METRICS
Lack of baselines
Over-specified and unbalanced measurements
Deriving quantitative from qualitative measures
PROCESS
Compliance with Acquisition best practices
Addressing unfunded mandates
MANAGEMENT
Requires broad, cultural change
Requires continued support from executives
Problems with making strategic goals operational
Reluctance to “kill” underperforming projects
GOVERNANCE
Centralized vs. distributed decision-making
Inadequate decision-support mechanisms, e.g., EA
6/24/2008 31

32. Any Questions?
POC for more information about
Relating Enterprise Strategy to
Business Outcomes:
Ken Mullins kmullins@mitre.org
(703) 983-3349
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33. Reference Slides
Additional detail on some topics
6/24/2008 33

34. Technical Capability Benchmarks for
Business Infrastructure Optimization
From: Basic e-mail & phone, with ad-hoc teaming
To: Secure unified business communications &
collaboration beyond firewall
From: Content on files shares & poor discoverability
To: Federated documents & records mgmt with
integrated search capabilities
From: Data silos & manual analysis
To: Real-time, strategy-driven closed loop analysis
6/24/2008 34

35. Stages of Infrastructure Optimization
Basic Standardized Rationalized Dynamic
Data silos, custom and IT Disconnected scorecards and Infrastructure for enterprise-wide
enterprise- Real time closed loop and
dependent reporting, IT dependant reporting and centralized scorecards and self-
self- proactive analysis
analysis on subject-oriented
subject- service reporting
Limited automation of data
data
management Centralized data management
Automation of data loading
Business Performance
Manually entered KPIs and Departmental scorecards Strategy driven enterprise wide
static documents to track where KPI sourced from scorecards
performance database Automated tools for budgeting,
planning, forecasting
Reporting and Analysis
Static decentralized and IT driven Parameterized Business Intelligence or
User-driven report building,
User-
highly IT dependent reports reporting from defined Business Activity Monitoring
definition, scheduling
(several reporting tools) data sources within business process
and subscription
automation (Embedded
Standalone spreadsheet Analytical tool connecting to Wizard-based publishing of data
Wizard-
reporting, BAM, Master data
based analysis subject-oriented data
subject- from front-end analytical
front-
management)
applications and Web-based
Web-
Richer visualization
interactive analysis
Predictive analytics
Data Warehousing
Public IM, ad-hoc use
ad- Basic ETL packages to load
Centralized and managed data
for daily business subject/ functional datamart
warehouse
Sporadic use of
Automated ETL design,
web conferencing
implementation and maintenance
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