Jim Thorpe

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A Benefits Realization Approach to IT Investments

• Jim Thorpe
• The Thorp Network

2
Interest

• There are many different ways to ruin a company.
  Speculation is the fastest. IT is the most
  reliable Kempis et al 1999

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Interest

• 2004 Standish Group Report http//www.standishgrou
  p.com/
• 29 projects succeeded (delivered on time, on
  budget, with required features functions)
• 53 are challenged (late, over budget /or with
  less than the required features functions)
• 8 have failed (cancelled prior to completion or
  delivered and never used)
• Failures cost an estimated 145 billion

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Outline

• Value Successful IT Project
• Benefits Realization Approach
• Project Management
• DMR Results Chain
• Four Ares
• Full Cycle Governance
• Accountability, Measurement Change
• Sierra Mountain Bikes Case Study

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Question of Value

• Are our investments in technology providing the
  greatest value?
• Technology issue?
• Business issue?
• Implementing Change is a very different
  challenge than implementing technology.
• How do you define a successful IT project?
• Answers On time, on budget, expected
  functionality

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Successful IT Project

• Answer Delivers the expected Benefits to the
  organization.
• Silver Bullet thinking when it comes to IT
• Identifying Benefits wont make them happen.
• How Benefits are happen are most important.
• Benefits Realization is the new mindset.
• Most corporations die before they are 40 because
  IT investments are not better managed.

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New Approach

• How do we pick the winning IT investments?
• How do we ensure that we are getting value from
  these investments know that we are doing so?
• Benefits do not just happen with IT delivery.
• Benefits rarely happen according to plan.
• Benefits realization is a process that must be
  managed like any other business process.

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Benefits Realization Approach
Portfolio Management
Program Management
Management of Change
Project Management
Full Cycle of Governance
Accountability
Measurement
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Program Management

• Identify the desired business outcomes in terms
  of measurable benefits.
• Identifying all the elements of change needed to
  deliver the benefits

Organization(structure, culture)
Business Processes (management practices,
procedures)
Business Strategy
Information Technology
People(skills, experience)
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DMR Results Chain

• 4 core elements

The results sought necessary or intermediate outcomes in the chain to achieve and ultimate outcome for end benefits to be harvested.
Initiatives Actions that contribute to one or more outcomes.
Contributions The roles played by elements in the Results Chain, either initiatives or intermediate outcomes, in contributing to other initiatives or outcomes.
Hypotheses regarding conditions necessary to the realization of outcomes or initiatives. These are risks that desired outcomes may not be achieved.
Outcomes
Assumptions
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Example Results Chain
Order to delivery time is an important Buying
criteria
Assumptions
Reduce time to deliver product
Reduce time to process order
Outcomes
Outcomes
Initiative
Contribution
Contribution
Implement a new entry order system
Reduce order processing cycle(intermediate
outcome)
Increase sales
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Portfolio Management

• A structured grouping of business investment
  programs selected by management to achieve
  defined business results while meeting clear
  risk/reward standards.
• Categorize programs
• Prepare value cases for business oportunity
  programs
• Manage risk to increase value

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The Value Case

• Traditional business Focus 90 on costs 10 on
  benefits. Costs are detailed. Benefits are fuzzy.
  After ROI done, the business case is never
  revisited.
• Value cases include the full life cycle costs of
  the program. They are not static but instead
  dynamic.

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Four Ares

• 1. Are we doing the right thing?
• (Re)definition of business, program alignment.
• 2. Are we doing them the right way?
• Organizational structure, program integration.
• 3. Are we getting them done well?
• Organizational capability, support structure.
• 4. Are we getting the benefits?
• Proactive management of benefits realization
  process as a whole.

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Four Ares Graphically
Benefits
Alignment
4. Are we getting the benefits?
1. Are we doing the right thing?
2. Are we doing them the right way?
3. Are we getting them done well?
Integration
Capability/Efficiency
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Full Cycle Governance

• Required core components
• Value cases
• Stage gates
• Various gates from initial design to benefit
  realization
• Portfolio composition program decision options.
• Governance process and structure
• Senior Decision Board, Business Sponsors Value
  Management Office decide Portfolio Initiatives.

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Accountability

• Clear mandate and scope.
• Clear Lines of accountability.
• Relevant performance measures.
• Alignment with reward system.

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Measurement

• Make sure measures exist.
• Measure the right things.
• Measure things the right way.
• Make sure measurement systems guide decision and
  action

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Results Chain Measurement

• MEDIC
• Maintain e.g. A level of service maintained.
• Eliminate e.g. A function eliminated.
• Decrease e.g. Turnaround time decreased.
• Increase e.g. Revenue increased.
• Create e.g. A certain capacity created.

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Proactive Management Change

• The Anatomy of Change

Think
Awareness Need
Feel
Understanding Commitment
Do
Capability Action
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Conclusion

• Benefits Realization Approach is not easy.

Business Strategy
?
Portfolio of Business Programs
Business Programs
Business IT Projects
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Questions

• Q1. What is the value of IT as it relates to an
  organization using the Benefits Realization
  Approach?
• A1. Delivers the expected Benefits to the
  organization.
• Q2. What tool can you use to map out outcomes,
  initiatives and assumptions?
• A2. DMR Results Chain

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SMB-0 Project Benefits Realization

• Break up into 2 groups. Use SMB-0 case study.
• Each group draw Benefits Realization Approach DMR
  Results Chain for planning the project . (30 min
  discussion).
• Group A Browns Idea Group B Grays Idea
• Presentation by groups. (15 min per group).