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Transparency inStrategic Portfolio ManagementReplacing the “White Elefants” with “Pearls”               Mr Cem Tanriover  ...
Objective_________________________________________________________________Key	  informa,on	  and	  technology	  (Por$olio	...
How?Two types of portfolios to be managed_________________________________________________________________Economic Portfol...
Proposed Approach_________________________________________________________________Value optimization results can be used t...
Value Maps guide project evaluation_________________________________________________________________Value maps, jointly de...
Portfolio Navigator™ calculates value_________________________________________________________________               Techn...
Value map templates calculate the impact of uncertainty on NPV____________________________________________________________...
The “tornado” chart identifiesthe three most important factors that drive value___________________________________________...
Portfolio Navigator™ addresses the “social” side of decision making_______________________________________________________...
Scenario 1: Evaluating a current portfolio_________________________________________________________________               ...
Innovation charts compare the risks and rewards of each project___________________________________________________________...
CFO charts show an optimized portfoliobased on contribution to value______________________________________________________...
The system automatically calculates cash flow reports_________________________________________________________________    ...
Managers have objective informationto guide optimization decisions (1)____________________________________________________...
Managers have objective informationto guide optimization decisions (2)____________________________________________________...
Scenario 2_________________________________________________________________              Scenario 2 illustrates how you ca...
Scenario 2: Updating project/portfolio valuewhen you have new information_________________________________________________...
Revise probability of technical success_________________________________________________________________R&D discovers a fo...
Revise market share data_________________________________________________________________Focus groups reveal that initial ...
Revise the project business model_________________________________________________________________Delay in launch time cau...
Review impact of uncertainty_________________________________________________________________  Initial Business Plan   Rev...
Review impact on value_________________________________________________________________            Revised Business Plan  ...
Review changes on “value on investment”_________________________________________________________________      Initial Busi...
Review affect on value, cost, and productivity_________________________________________________________________           ...
Assess the impact on risk vs. reward_________________________________________________________________                     ...
Do we have the resources to address the three critical factors?___________________________________________________________...
Value optimization results can be used toallocate resources to the most important projects________________________________...
Value optimization results can be used to allocate resources tothe most important projects________________________________...
Who is available to work on the project?_________________________________________________________________                 ...
Resources allocated:Review results one quarter later_________________________________________________________________    V...
Assess impact on decision-making_________________________________________________________________1.  Even though project v...
Benefits_________________________________________________________________1.    Brings teams, experts and managers into the...
How_________________________________________________________________                  Dummy Project/Portfolio Demo:       ...
Enterprise References_________________________________________________________________                         Zebrafish	  ...
Workshop References_________________________________________________________________ 1 SESAR Performance Assessment Worksh...
Expected Results for Decision Makers_________________________________________________________________                     ...
Questions ?_________________________________________________________________                                              ...
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Strategic Portolio Management Methodology

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The challenge: how to assess business value as objectively as possible, obtaining buy-in from finance, marketing, R&D and others who must make it happen?

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Strategic Portolio Management Methodology

  1. 1. Transparency inStrategic Portfolio ManagementReplacing the “White Elefants” with “Pearls” Mr Cem Tanriover Brussels Zebrafish  International  2011  ©  
  2. 2. Objective_________________________________________________________________Key  informa,on  and  technology  (Por$olio  Navigator™)    Ø Por$olio  Navigator™  solu1on  provides  vital  informa1on  to  teams,  managers  and  execu1ves  to  accelerate  decisions  that  op1mize  the  economic  value  of  projects  and  por$olios.  Ø This  is  a  web-­‐based  system  that  may  be  accessed  in  real-­‐1me  anywhere  there  is  a  connec1on  to  the  Internet.     Zebrafish  International  2011  ©   2  
  3. 3. How?Two types of portfolios to be managed_________________________________________________________________Economic Portfolio (strategic) Resource Portfolio (tactical)• Selecting valuable projects • Allocating resources• Feeding winners and killing losers • Meeting budget goals• Optimizing economic value • Meeting time to market requirements Portfolio Navigator™ RPM Zebrafish  International  2011  ©   3  
  4. 4. Proposed Approach_________________________________________________________________Value optimization results can be used to allocateresources to the most important projects Value analysis results returned to SAP RPM Optimized Scenario # 1 Optimized Scenario # 2 Optimized Scenario # 3 Zebrafish  International  2011  ©   4  
  5. 5. Value Maps guide project evaluation_________________________________________________________________Value maps, jointly developed byour team and client teams,describe the factors that driveproject value.The maps represent a powerfulunderlying mathematical enginethat calculates expected NPV,including adjustments for riskand uncertainty.Portfolio Navigator™ enables users to interact with value map modelsvia easy-to-use input screens. Users see instant results of theirchanges at project and portfolio levels. Zebrafish  International  2011  ©   5  
  6. 6. Portfolio Navigator™ calculates value_________________________________________________________________ Technical Issues Calculations Commercial Issues Cost Issues Zebrafish  International  2011  ©   6  
  7. 7. Value map templates calculate the impact of uncertainty on NPV_________________________________________________________________ “Tornado Charts” developed from Value Map analytics show the impact of uncertainty on NPV, identifying the most important drivers of upside value and highlighting downside risks. Zebrafish  International  2011  ©   7  
  8. 8. The “tornado” chart identifiesthe three most important factors that drive value_________________________________________________________________ Challenge: mitigate downside — apply resources to drive to the upside. Zebrafish  International  2011  ©   8  
  9. 9. Portfolio Navigator™ addresses the “social” side of decision making_________________________________________________________________ Zebrafish  International  2011  ©   9  
  10. 10. Scenario 1: Evaluating a current portfolio_________________________________________________________________ The portfolio contains 10 projects. How do these projects contribute to portfolio value? Zebrafish  International  2011  ©   10  
  11. 11. Innovation charts compare the risks and rewards of each project_________________________________________________________________The vertical axisshows the Probabilityof Technical SuccessThe horizontal axisshows the ExpectedCommercial Valuegiven technicalsuccess. Zebrafish  International  2011  ©   11  
  12. 12. CFO charts show an optimized portfoliobased on contribution to value_________________________________________________________________The CFO chart shows therelative “bang for thebuck” of each projectfrom the highest returnfor the investment (CP50)to the lowest return(CP06).If forced to cut budgetand retain as much valueas possible, you mightcut CP06 and CP11, theleast valuable projects.The balance of theprojects would returnportfolio value of around$270 million. Zebrafish  International  2011  ©   12  
  13. 13. The system automatically calculates cash flow reports_________________________________________________________________ Portfolio Navigator™ computes portfolio cash flow Zebrafish  International  2011  ©   13  
  14. 14. Managers have objective informationto guide optimization decisions (1)_________________________________________________________________The Innovation Chartencouragesconversation aroundportfolio optimizationissues Zebrafish  International  2011  ©   14  
  15. 15. Managers have objective informationto guide optimization decisions (2)_________________________________________________________________ Zebrafish  International  2011  ©   15  
  16. 16. Scenario 2_________________________________________________________________ Scenario 2 illustrates how you can quickly and easily update and evaluate the impact of new information on project/portfolio value. Zebrafish  International  2011  ©   16  
  17. 17. Scenario 2: Updating project/portfolio valuewhen you have new information_________________________________________________________________You receive information that causes you to re-evaluate Project CP50. 1.  R&D discovers a formulation problem that will delay development. They are confident they can produce results but it will take more time and money. 2.  Focus groups reveal that initial market acceptance will be more difficult and, therefore, will delay penetration and impact market share. 3.  Delay in launch time causes rethinking about price and margins given the uncertainty that a competitor may enter the market first. Zebrafish  International  2011  ©   17  
  18. 18. Revise probability of technical success_________________________________________________________________R&D discovers a formulation problem that will delay development. They areconfident they can produce results but it will take more time and money.The team lowers the Probability of Success factors. Overall Probability of Technical Success drops from 51% to 27% Zebrafish  International  2011  ©   18  
  19. 19. Revise market share data_________________________________________________________________Focus groups reveal that initial market acceptance will be more difficult and,therefore, will delay penetration and impact market share. Zebrafish  International  2011  ©   19  
  20. 20. Revise the project business model_________________________________________________________________Delay in launch time causes rethinking about price and marginsgiven the uncertainty that a competitor may enter the market first. Zebrafish  International  2011  ©   20  
  21. 21. Review impact of uncertainty_________________________________________________________________ Initial Business Plan Revised Forecast Combined Uncertainty Zebrafish  International  2011  ©   21  
  22. 22. Review impact on value_________________________________________________________________ Revised Business Plan Initial Business Plan Zebrafish  International  2011  ©   22  
  23. 23. Review changes on “value on investment”_________________________________________________________________ Initial Business Plan Revised Business Plan Zebrafish  International  2011  ©   23  
  24. 24. Review affect on value, cost, and productivity_________________________________________________________________ Initial Business Plan Revised Business Plan Zebrafish  International  2011  ©   24  
  25. 25. Assess the impact on risk vs. reward_________________________________________________________________ Zebrafish  International  2011  ©   25  
  26. 26. Do we have the resources to address the three critical factors?_________________________________________________________________ Value Optimization Resource Optimization Portfolio Navigator™ RPM Zebrafish  International  2011  ©   26  
  27. 27. Value optimization results can be used toallocate resources to the most important projects_________________________________________________________________ Value analysis results returned to SAP RPM Optimized Scenario # 1 Optimized Scenario # 2 Optimized Scenario # 3 Zebrafish  International  2011  ©   27  
  28. 28. Value optimization results can be used to allocate resources tothe most important projects_________________________________________________________________ Zebrafish  International  2011  ©   28  
  29. 29. Who is available to work on the project?_________________________________________________________________ Zebrafish  International  2011  ©   29  
  30. 30. Resources allocated:Review results one quarter later_________________________________________________________________ Value Optimization Resource Optimization Portfolio Navigator™ RPM Zebrafish  International  2011  ©   30  
  31. 31. Assess impact on decision-making_________________________________________________________________1.  Even though project value decreased from $189 million NPV to $133 million NPV2.  Project cost increased from $1.0 million NPV to 1.34 million NPV3.  CFO and Innovation charts reveal that CP50 remains the most potentially valuable product in the portfolio4.  The tornado chart indicates a need to focus resources on solving the formulation problem to penetrate the market as quickly as possible Zebrafish  International  2011  ©   31  
  32. 32. Benefits_________________________________________________________________1.  Brings teams, experts and managers into the decision-making process2.  Provides transparency to business cases3.  Accelerates decision-making4.  Facilitates collaboration and buy in by stakeholders5.  Provides clear understanding of key value drivers and the impact of risk and uncertainty6.  Eliminates re-working spreadsheets, saving time and money + maintaining version control7.  Provides instant on-line web access8.  improving portfolio value over time. Zebrafish  International  2011  ©   32  
  33. 33. How_________________________________________________________________ Dummy Project/Portfolio Demo: To organize a demo, we invite you to participate in a 1 hour-webinar. Zebrafish  International  2011  ©   33  
  34. 34. Enterprise References_________________________________________________________________ Zebrafish  International  2011  ©   34  
  35. 35. Workshop References_________________________________________________________________ 1 SESAR Performance Assessment Workshop 08-09-10/05/07, Paris, FR 2 NATS ADS-B RAD Workshop, 11-12/07/06,Fareham, UK 3 MATS ADS-B NRA Workshop, 06-07/08/07,Valetta, Malta 4 LVNL ADS-B RAD Workshop, 03-04/09/07,Maastricht, NL 5 DHMI ADS-B NRA Workshop, 16-17/10/07,Trabzon, Turkey 6 AENA SESAR Workshop 30/10/07, Madrid, Spain 7 HCMI Workshop 17-18/04/08,Rhodes, Greece 8 AENA ADS-B Workshop 12-13/08/08,Granada, Spain 9 Air Europa Business Case Workshop 25-26/11/08, Majorca, Spain10 Munich A-CDM Business Case Workshops 22/06/09 Brussels,Belgium11 Gatwick A-CDM Business Case Workshop 17/03/10 London, UK12 DFS A-CDM Business Case Workshops 09/09/10 Frankfurt, Germany Zebrafish  International  2011  ©   35  
  36. 36. Expected Results for Decision Makers_________________________________________________________________ Harvard  Business  Review  ©   Zebrafish  International  2011  ©   36  
  37. 37. Questions ?_________________________________________________________________ Harvard  Business  Review  ©   Zebrafish  International  2011  ©   37  

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