Getting the Right Projects on the Bus

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Getting the Right Projects on the Bus

• Joe Kerr
• University at Buffalo
• June 2005

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Agenda

• Introduction
• Learning Objectives
• Institution / IT Alignment
• Introductory examples
• Framework
• Pillars
• Process
• People
• Cases and Exercise
• Conclusion

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Introduction

• Joe Kerr
• University at Buffalo
• Technology Services
• jkerr_at_business.buffalo.edu
• [phone] x1449
• Achieving Business Value from Technology
• Tony Murphy Gartner

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Learning Objectives

• This is not about how to run a project
• Describe Institution/IT Alignment Need
• Identify a framework for evaluating IT
  Investments / Projects.
• Integrate IT decision making into organization
  thinking.
• Organization needs to know its priorities.
• Quick Summary of how framework fits with a
  process and people.

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Institution/IT Alignment

• Need Alignment of Institution with IT Projects
  and Investments
• Huge investments made in technology, are they for
  the best choices?
• Institution must drive technology, the enabler
• Institution needs clear communicated vision and
  process for evaluating and prioritizing projects.
  
• What are the primary objectives? Strategy?
• What is the best use of resources? What is
  expected payback?
• How does it all fit together?
• What are the risks?
• What is impact on operations?
• How do we get consensus?
• IT Governance

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Institution / IT Alignment

• Case Studies
• Issues not with successful project execution.
• All of the projects were executed on time, within
  budget, and delivered their objectives, but in
  the end had to be scrapped
• Something missing in evaluation of whether IT
  project was good to do.

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Institution / IT AlignmentCase example

• UB IFR Budget Process Streamlining
• Web enabled IFR Project Director ability to
  update Program Statement, projections, budget,
  and justification
• Automated annual budget process
• Would reduce administrative burden on customer
• Project on-time, in budget, to meet objectives
• So, what was the problem?

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Institution / IT AlignmentCase Example

• IFR Budget Project Problem
• After Provost went through IFR Budget process,
  prior to automation, she was un-impressed with
  how tedious it was and wanted it overhauled,
  which we thought was good since the project was
  active for the next cycle
• Except, the whole underlying process was
  practically eliminated, negating the work that
  was done.

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Framework

• Pillars (What)
• Strategic Alignment
• Business Process Impact
• Architecture
• Direct Payback
• Risk

• Process (How)
• How to apply the pillars
• Weight relative importance
• Define business specific value standards
• Analyze and manage IT Initiatives against them
• Keep them up to date

• People (Who)
• Define organizational roles
• Govern the process
• Assure the process is consistently applied

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Framework Pillars (What)

• Strategic Alignment
• Will this investment help us achieve our
  strategic goals?
• Will the students know we did the project?
• Will faculty know?
• Will it make our researchers more competitive?
• Will it make the institution more competitive?
• IT is a Strategic Resource
• Closer integration of Institution / IT
• IT enables new businesses and directions, not
  just cost centers. Recruitment on-line, On-line
  courses / SUNY Engineering Degree, Sabre
  reservation, Amazon
• Assist with Strategic Decision Making

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Framework - Pillars

• Strategic Alignment
• Projects could be for Organized Abandonment
• Every product, service, market, end-user,
  customer on trial for its life.
• If we didnt already do it, would we start? If
  answer is no, take action.
• Ex Abandonment of High School placement
  counselor as a Distribution channel for Higher
  Education.
• Does the Initiative create value?

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Framework - Pillars

• Business Process Impact
• Issues
• Command and control org structures
• Too much checking and reconciling
• To much rework, errors, credits, etc.
• Focus on effort not results
• Re-keying of data between systems
• Ineffective asset management high inventories
• Unnecessary complexity
• Focus on tasks not processes
• Bureaucracy Structure and controls put in place
  to manage incompetence. (From Good to Great)

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Framework - Pillars

• Business Process Impact
• e-Business leading to extensive growth in
  e-commerce and integration between business
  partners. SUNY Portal, Application Processing
  Center, SUNY Security/Federated Model
• Requires more process flexibility, open
  standards, adherence to standards
• Consider entire value chain.
• Student buys a major, courses scheduled through
  entire program?
• Focus on core capabilities.
• Link a variety of suppliers to customers,
  Libraries, courses at different institutions,
  International programs
• Customize services and solutions to customer
  need. EMBA services
• Focus away from hierarchical relationships to
  flexible relationships and roles.

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Framework - Pillars

• Business Process Impact
• Critical importance in all enterprise operations
• Business processes, especially those that span
  trading partners, are enabled by IT and crucially
  dependent on it.
• Any IT Investment that fails to take this
  perspective risks failure.
• Processes today are highly dependent on disparate
  applications.
• Latest Enterprise software architected around
  processes
• ERP, CRM, Manufacturing, E-Commerce, Sales Force
• Impact of systems on work process
• Strategic implications of imbedding processes in
  software and adopting industry best practices.

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Framework - Pillars

• Architecture
• Needs
• Anywhere, anytime speed based, agile systems that
  are flexible and provide choices to customer.
  SOA? Web Services? Portlets?
• Non-Technical management doesnt need to
  understand architecture technologies themselves,
  but instead understand implications of not doing
  it right, and guiding principles.
• What makes up IT Architecture?

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Framework Pillars Architecture

• Computing Infra-Structure
• Operating Systems
• Middleware
• App Development
• Applications
• Database

• Network
• Enterprise
• Infra-structure Services
• Infra-structure Management
• Security

• Office Info Systems
• Messaging
• Workgroup
• Web Server and Browser
• Personal Productivity
• Document Management

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Framework - Pillars

• Architecture
• Maximize application portability or inter
  operability through hardware and software
  consistency.
• Reduce number of redundant products in use,
  thereby reduce amount of knowledge staff need to
  maintain and specialize in.
• Reduce procurement effort, once standard set
  dont have to continually research which product
  to purchase.
• Achieve savings through larger investments in
  specific vendors, build relationships.

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Framework - Pillars

• Direct Payback
• Financial Return
• Project Champion
• Many large projects involve significant change in
  business process, models, and approaches.
• Makes estimating more difficult, therefore
  analysis is less reliable.
• How do you measure benefits like increased
  productivity? Can the benefits be extracted from
  organization? Help Desk making customers more
  efficient example.

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Framework - Pillars

• Direct Payback
• What is Quality and how is it measured?
• Major commercial bank defined performance
  improvement as offering new and advanced
  products. Invested a lot of money. Offered at
  branches through tellers. Introduction caused
  rapid loss in customers because customers defined
  quality as not having to wait in line. Customers
  did think products were valuable, but not when
  coming to a teller.
• Bank recovered and achieved improvements by
  moving services to tables with big signs.
• Also demonstrates need to reduce risk through
  piloting.

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Framework - Pillars

• Direct Payback
• Benefits
• Tangible and Intangible Happier Students?
• Cost Savings
• Staff Displacement Headcount reduction
• Quality Control
• Reduced Computer Costs
• Revenue Creation
• New Products
• Increased Sales Revenue Web Insurance ex.

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Framework - Pillars

• Risk
• Organizational Risk
• Strength of Alignment with Business Objectives
• Culture
• Organizational Preparedness
• Management Support
• Project Management Skills
• Size and Duration
• Complexity
• Functional Uncertainty

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Framework - Pillars

• Risk
• Hardware and Vendor
• Capacity for Testing
• Business Continuity Planning (24x7) and fast
  recovery times
• New Technology
• e-Business and Integration
• Staff Risks
• User Commitment and Stability
• Staff Stability

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Framework - Pillars

• Risk
• External Environment
• Competitive Action
• Government Legislation
• Economy

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Framework

• Pillars (What)
• Strategic Alignment
• Business Process Impact
• Architecture
• Direct Payback
• Risk

• Process (How)
• How to apply the pillars
• Weight relative importance
• Define business specific value standards
• Analyze and manage IT Initiatives against them
• Keep them up to date

• People (Who)
• Define organizational roles
• Govern the process
• Assure the process is consistently applied

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Framework - Process

• IT Value Ground Rules
• IT Value Standards
• IT Value Analysis
• Value Driven IT Project Management
• IT Value Management

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Framework - Process

• 1.) IT Value Ground Rules Weight relative
  importance of each Pillar
• Strategic Alignment 30
• Business Process Impact 20
• Architecture 20
• Direct Payback 25
• Risk 5

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Framework - Process

• 2.) Defining IT Value Standards Decompose 5
  Pillars into series of standards or questions
  under each Pillar. List as positives, score on a
  scale of 0 10. Ranking can be more detailed on
  each Value Standard.
• Strategic Alignment
• Students are directly positively impacted?
• Good for the Brand?
• Directly improves administrative customer
  service?
• Faculty are directly positively impacted?
• Empowers staff to make better decisions?
• Enables innovation and competitiveness?

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Framework - Process

• 2.) Defining IT Value Standards
• Business Process Impact
• Makes processes more flexible?
• Eliminates non-value add activities?
• Uses one book of record?
• Makes Process more efficient?
• Easier for students to perform administrative
  tasks? (i.e. add / drop classes)
• Improves Faculty / Student communication?

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Framework - Process

• 2.) Defining IT Value Standards
• Architecture
• Uses Oracle for database?
• Uses Java for development?
• Delivered through Internet Explorer?
• Integrates with ERP data?
• Consistent with IPEDS?

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Framework - Process

• 2.) Defining IT Value Standards
• Direct Payback
• Directly measurable cost savings?
• Increases revenue ?
• Increases profit margin?
• Increases productivity?
• Return greater than cost of capital?
• Payback within 18 months?
• Increases quality of student applicant pool?
• Increases research dollars?

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Framework - Process

• 2.) Defining IT Value Standards
• Risk
• Project is small
• Project is not complex
• Project will take less than 6 months to complete
• Senior Management is very committed to project
• Project customers are very committed to the
  project
• Vendor partners are reliable
• Technology is proven

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Framework - Process

• 3.) IT Value Analysis Score project against each
  value standard to help evaluate the project.

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Framework Process Interpretation of Scores
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Framework - Process

• 4.) IT Value Project Management
• Phased Assessments
• Sign Off, Development, Implementation, and
  post-implementation
• Are Assumptions still valid?
• Benefits still relevant and as planned?
• Risks being managed?
• On schedule?

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Framework - Process

• 4.) IT Value Project Management
• Assumptions Assessment
• At Beginning of project clearly and fully spell
  out assumptions
• Quantify where possible
• Accountability for assumptions
• Re-Evaluate through out project life cycle

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Framework - Process

• 4.) IT Value Project Management
• Risk Assessment and Management
• Are original risks still an issue?
• If risk happens, is it mitigated?
• Are there new risks?
• Have the risks changed the dynamic of the
  project?

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Framework - Process

• 5.) IT Value Achievement
• Accountabilities
• Benefits individual is responsible clearly
  defined with before and after metrics.
• Accountabilities agreed upon at investment stage.
• Accountable manager must have adequate resources
  and tools to do the job.
• Clear distinction between business and IT
  accountabilities.
• Change management procedure in place.
• Reinforce accountabilities periodically during
  project life cycle.

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Framework - Process

• 5.) IT Value Management
• Benefits Realization Timeframe
• Continue to manage solution after project ends to
  insure achievement of results over time.
• Manage IT and processes to insure healthy
  environment for continued return on investment.

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Framework

• Pillars (What)
• Strategic Alignment
• Business Process Impact
• Architecture
• Direct Payback
• Risk

• Process (How)
• How to apply the pillars
• Weight relative importance
• Define business specific value standards
• Analyze and manage IT Initiatives against them
• Keep them up to date

• People (Who)
• Define organizational roles
• Govern the process
• Assure the process is consistently applied

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Framework - People

• People (Who)
• Define organizational roles
• Govern the process
• Assure the process is consistently applied

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Cases and Exercise

• Case Bank The Secretive Bank
• Wanted to increase offerings and have unified
  view of customer.
• Solution Data warehouse with clear ROI.
• Started project, about 75 complete, all on
  target

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Cases and Exercise

• Symptom After project started Board announced
  takeover of another bank with different technical
  infra-structure and culture that forced the
  scrapping of the project.
• Problem Strategic Alignment missing and
  Architecture issues

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Cases and Exercise

• Case Manufacturing Gung Ho CEO
• Loosing money, saw opportunity to sell product at
  intermediate stages
• Need to capture product costs at intermediate
  stages, accommodate a new wholesale sales
  network, and manage more complex inventory
  control.
• Did detailed requirements definition
• Leveraged existing systems
• Project on time, supported intermediate sales,
  opened new markets, and accurately tracked costs.
• So, what was the problem?

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Cases and Exercise

• Heavy Manufacturing (Gung Ho CEO)
• New system rigidly tied to existing process
  steps, major impediment to process re-design.
• Existing systems 10 years old (hardware and
  software, costly to maintain
• Wanted to do CRM, workflow, and supply chain
  management, but existing systems would not
  support it
• System had to be re-written after 1 year.
• What was problem?

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Cases and Exercise

• Gung Ho CEO Problem
• Solution addressed business need and delivered
  solution, but done in isolation from Technical
  Infra Structure and Process Impact
  considerations.

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Cases and Exercise

• Bank 2 Silo Myopia
• Had 4 main market areas Retail, Corporate,
  Investments, Finance
• 4 different marketing campaigns competing for
  some of the same customers. 40 different source
  databases
• Built 3 data marts for Customer, Products/cross
  selling, and Finance / Profitability data.
• Added a fourth for credit risk management.
• Symptoms Lacked flexibility to adapt to business
  change, could not take advantage of decision
  making tools, did not consolidate information

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Cases and Exercise

• Silo Myopia Problem
• Focused on immediate need, not process or IT
  Architecture

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Cases and Exercise

• Telecommunications Equipment Provider Who feels
  the Pain should see the most gain.
• Custom work for design and development of
  hardware and software for major telcos.
• Sales force focused on sale, not getting order
  entered correctly.
• Cause order and production problems.
• Created automated system for sales to enter order
  and configuration information.
• During training / rollout sales force found
  difficult to use, and would not use in field.
  System scrapped.

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Cases and Exercise

• Telco Problem
• Did not assess business and process risk. Would
  solution customer be committed to its success?

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Cases and Exercise

• Sporting Goods Manufacturer The ZAPped
  Manufacturer
• Implemented an ERP to get cost savings,
  consolidated financial view, and plant
  efficiences.
• After 9 months everything worse, finger pointing,
  costs up.

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Cases and Exercise

• The ZAPed Manufacturer Problem
• No Accountability for the total solution or use
  of metrics to measure success.
• Each person focused on their own area, not the
  total solution.
• Example Parts solution worked, but no one
  addressed loading of legacy inventory and
  ordering information.

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Cases and Exercise

• Exercise
• Develop 5 Pillar weighting and value standards
  for the University at Buffalo

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UB Pillars

• Weighting
• Strategic Alignment
• Business Process Impact
• Architecture
• Direct Payback
• Risk
• What goes into the thinking on the weighting,
  where do you think it would come out?

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UB Pillars

• IT Value Standards
• Strategic Alignment
• Business Process Impact
• Architecture
• Direct Payback
• Risk

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Conclusion

• IT Initiatives need to be evaluated in context of
  organization. Emphasis on just one aspect can
  lead to failure.
• Develop a framework and apply it consistently.
• Communicate clear understanding of process and
  priorities.
• Senior Management Commitment to process.
• Consistently apply evaluation process and
  re-evaluate.