BC Architect’s Fellowship

Agenda

• Introductions• Explore Alignment• Discuss Intangibles• Highlight Example of One Approach

Setting the Stage

• Have you struggled with investment prioritization?

• Why is it so hard to create a business case for IT projects?

• Do you struggle aligning your IT efforts to the business strategy?

• How do you communicate with Executives and obtain their sponsorship?

1-3yearse.g. Project A

4+ yearse.g. Project B

Foundatione.g. Project C

Long TermObjectives

Short TermObjectives

Capability Developing Objectives

Rate Investment Yr 1 Yr 2 Yr 3 NPVProject A 5% (500)$ 500 250 0 $193.28Project B 5% (500)$ 100 200 800 $445.44Project C 5% (500)$ -50 0 200 ($357.00)

A+B+C 5% (1,500)$ 550$ 450$ 1,000$ $281.72

Example Study:

Ken, VP Operations Julie, CIO

Situation: Economic hardship. Extreme capital project scrutiny.

Challenge: Architecture initiative would not give a positive return on investment. Initiative is important – future initiatives dependant upon it.

Standing on its own, the collaboration architecture project appeared to be a poor investment.

She needed to take a different approach. Rate Investment Yr 1 Yr 2 Yr 3 NPV

Project A 5% ? ? ? ? $0.00Project B 5% ? ? ? ? $0.00Project C 5% (500)$ ($50) $0 $200 ($357.00)

A+B+C 5% (500)$ (50)$ -$ 200$ ($357.00)

Valuing the intangible - Why is this hard?

Because… • Value creation is indirect. • Value is contextual. • Value is potential. • Assets are bundled.

1-3yearse.g. Project A

4+ yearse.g. Project B

Foundatione.g. Project C

Long TermObjectives

Short TermObjectives

CollaborativeCapabilities

Connected Business Framework

Connected Business Framework

Connected Partner / Member

Connected

Worker

Connected

Services

CBA Concepts

1. Balanced Scorecard2. Strategy Map3. Capability Identification4. Capability Maturity5. Alignment

Ken, VP Operations - Julie, CIO

Balanced Scorecard

CBA Concepts – BSC & Strategy Map

1. Workgroup

Collaboration

2. Seamless Communic

ations

3. Leveraging Knowledge

and Expertise

4. Innovation & Process

Improvement

5. Employee Engagement

Ken, VP Operations - Julie, CIO

Julie’s Collaboration Architecture Initiative will develop the following capabilities:

1. Workers ability to ‘labor together’ for the purposes of creating business value through aggregated ideas, information and expertise.

2. Ability for information to be communicated effectively between workers, across workgroups and beyond organisational boundaries.

3. Ability to capture and access expertise, knowledge and intellectual assets produced through any business activity.

4. Ability to innovate on and transform work patterns within the organisation as a means to develop increased business value.

5. The ability to engage workers and align operational activity to achieve strategic outcomes.

CBA Concepts – Capability Identification

Normalized

Rationalized

Optimized

Harmonized

CBA Concepts – Capability Maturity

Calculating Alignment…

Step 1:Identify Objectives

Step 2:Prioritize Objectives

Step 3:Determine Contribution Level for each capability to objectives. (First Pass then Calibrated)

Step 4: Calculate Correlation = sum(weighting x contribution)

CBA Concepts – Alignment

Correlation Guidelines

10+ steps required to reach objective 7 - 10 linkages required to reach objective5 -7 linkages required to reach objective3 -5 linkages required to reach objective1 -2 linkages required to reach objective

Improved leveraging of knowledge and expertise

Enable the transition of knowledge from one employee to another.

Greater efficiency in transforming the workforce

Greater agility to adopt new processes Ability to develop new card offerings faster

Capability Developed

Scorecard Objective

CBA Concepts – Alignment

Example of a Substantially Correlated Capability

Correlation is calculated as a series a cause-and-effect relationships

Calculating Relative Benefit

Determine the benefit of the corporate objective, not the capability.

Seamless Communications

Workgroup Collaboration

Work Pattern Innovation and Transformation

Leveraging Knowledge and

Expertise

Worker Engagement and

Alignment

Relative Return

Rela

tive

Alig

nmen

t

Ken, VP Operations - Julie, CIO

Seamless Communications

Workgroup Collaboration

Work Pattern Innovation and Transformation

Leveraging Knowledge and

Expertise

Worker Engagement and

Alignment

Harmonised

Optimised

Rationalised

Normalised

Harmonised

Optimised

Rationalised

Normalised

Assessed Maturity Level by Capability

Seamless Communications

Workgroup Collaboration

Work Pattern Innovation and Transformation

Leveraging Knowledge and

Expertise

Worker Engagement and

Alignment

Future State

Current State

Harmonised

Optimised

Rationalised

Normalised

Harmonised

Optimised

Rationalised

Normalised

Future-State vs. Current State Maturity by Capability

Agenda

• Introductions• Discuss Alignment• Explore Intangibles• Share One Approach

Seamless Communications Workgroup Collaboration Work Pattern Innovation and Transformation Leveraging Knowledge and Expertise Worker Engagement and Alignment

Ability for information to be communicated effectively between workers, across workgroups and beyond organisational boundaries.

Workers ability to connect for the purposes of creating business value through aggregated ideas, information and expertise.

Ability to innovate on and transform work patterns within the organisation as a means to develop increased business value.

Ability to capture and access expertise, knowledge and intellectual assets produced through any business activity.

The ability to engage workers and align operational activity to achieve strategic outcomes.

Workers use ad hoc emails, instant messaging, distribution lists and phone calls to disseminate information through the organization though informal networks.

Workers collaborate on an ad hoc basis, generally through common work areas (meeting rooms) or telephone conferences established through manual scheduling.

Work patterns are generally understood and innovation is welcome with much of it propagated informally through person-to-person training.

Knowledge is captured in ad-hoc process; documented knowledge is not universally or centrally accessible, but it is generally captured.

The strategy of the company is well defined that has been communicated to every employee in the organization.

Workers and workgroups demonstrate a fairly standard use of typical communications modes (i.e. phone/conferencing, email, voice messaging).

Worker collaboration is generally delivered through consistent means (knowledge/materials centrally managed and accessed, centrally and universally accessible meetings physical/virtual meeting space).

Work patterns are defined and documented in each of the work groups. Workflow measurement is understood and quality of work is demonstrable.

Capture and reuse of knowledge at group level, mainly document and paper-based; sourcing and applying knowledge typically requires some experience;

The strategy of the company has been broken down into quantifiable targets which are understood and achievable throughout the organization.

Organisation does not generally suffer from "over" or "under" communication. Workers generally feel they are connected without feeling overwhelmed by low-priority or out-of-context email, voicemail, instant messages, etc.

Collaborative methods, approaches and facilities (or tools) are designed for accessibility and ease of use.

Individuals recognise their role in work pattern enhancement and are engaged to participate in initiatives mandated to deliver innovation.

Workers capture and reuse knowledge through central and accessible repositories. Knowledge management through process and policy is a cultural and organisational capability.

The strategy of the company is believed by the workers who use the targets that are defined in the strategy to create their daily work plans.

Organisation provides the ability for workers to "opt in/out" of channels of communication based on their role, interest, project/program context, events, etc.

Collaborative methods, approaches and facilities (or tools) are provided to workers and internal workgroups based on function, ability to leverage, access.

Workers are actively solicited and encouraged to contribute ideas for work pattern innovation; there are cross-functional group(s) that challenge work patterns, measures, alignment and quality.

Capture and reuse of knowledge across organisational work groups is seamless. All major workgroups leverage the common framework and methods consistently.

Worker motivations, measures and compensation are aligned to strategic outcomes.

Communication is shared as a function of role, context, interest, expertise/capability, capacity and other factors.

The collaborative facilities, tools and approaches [I, my workgroup, the organisation] use are easily leveraged and accessible for collaboration with those outside [my direct team, my workgroup, the organisation].

Work pattern innovation is the responsibility of every member of the work group, and workers are equipped to seek innovation in unconventional ways and from disparate sources. Improvements are quantified and actioned in a timely manner and a direct link to improved outcomes can be measured and demonstrated.

Generation and sharing of knowledge extends to a community of stakeholders (partners, customers, etc.) which provides both enhanced support to customers and direct product/service input and feedback to organisations.

Worker measures, targets, commitments and activities are strategically aligned with corporate objectives as well as objectives of external stakeholders, customers and partners.

Capability IdentificationCBA Concepts – Capability Identification

CBADay 1

Strategy AlignmentDay 2

2Cap AssessmentDay 3

2Cap Development Plan

Workshop 1aExecutive Briefing

and Strategy Review

Workshop 1bSr. Management Briefing

and Strategy Review

Workshop 1cMid-Management Briefing

and Strategy Review

9am

10am

11am

12pm

1pm

2pm

3pm

4pm

5pm

Workshop 2aCurrent State Assessment(Capabilities & Capacity)

Executive & Sr. Management

Workshop 2bCurrent State Assessment(Capabilities & Capacity)

Mid-Management and Line Staff

Workshop 3aReview Roadmap

(Capabilities & Capacity)

Executive & Sr. Management

Workshop 3bReview Roadmap

(Capabilities & Capacity)

Mid-Management and Line Staff

Strategy Alignment Interview(25 Questions)

Future State Assessment(25 Questions)

Future State Assessment(25 Questions)

Current State Assessment(25 Questions)

Current State Assessment(25 Questions)

Review Roadmap (Capabilities & Capacity Development Plan)

Review Roadmap (Capabilities & Capacity Development Plan)

Strategy Map

Disclaimer: Efficacy before Alignment

• Alignment trap – having an effective IT environment is a pre-requisite to seeking alignment.

Three key principles are useful in moving organizations to high effectiveness:

1. Simplify. 2. "Rightsource" capabilities. 3. Focus on value delivery. complete projects on

time, on budget, and with IT functionality that delivers what was requested by the business.

- Bain

Project TypesRate Investment Year 1 Year 2 Year3 NPV

Project A 5% (500)$ 200$ 300$ 500$ $375.72Project B 5% (500)$ 1,000$ 200$ 100$ $685.88Project C 5% (500)$ -$ -$ 1,000$ $346.51

Each cash inflow/outflow is discounted back to its present value (PV). Then they are summed.Therefore NPV is the sum of all terms , where

t - the time of the cash flowi - the discount rate (the rate of return that could be earned on an investment in the financial markets with similar risk.)Rt - the net cash flow (the amount of cash, inflow minus outflow) at time t .

Other Types of Measures

• Internal Rate of Return (IRR)

Investment Year 1 Year 2 Year3 IRR

Project A (500)$ 200$ 400$ 500$ 44%Project B (500)$ 1,000$ 200$ 100$ 122%Project C (500)$ -$ -$ 1,000$ 26%

Other types of Measures

References

Connecting the dots : aligning projects with objectives in unpredictable times / Cathleen Benko, F. Warren McFarlan.

Strategy Maps: Converting Intangible Assets into Tangible Outcomes / Robert S. Kaplan and David P. Norton

The Balanced Scorecard: Translating Strategy into Action / Robert S. Kaplan and David P. Norton