Solving the Value Realization Conundrum

Transcription

1 A Point of View Solving the Value Realization Conundrum Organizations have and continue to invest in large-scale technology enabled business transformation in order to capitalize on new business opportunities, create efficiencies, reduce costs and increase enterprise performance. Too often, though, the value the organization strives to achieve isn't realized- the project delivers too little, and the costs are unexpectedly too high. Given this performance, it should be expected that most business and IT leaders anticipate their technology transformation projects to have a high degree of risk, both to the business and to the individuals responsible for the projects. We believe a primary cause for under-performance is that many projects start with a vague (or non-existent) definition of business objectives and an equally vague governance structure to manage the achievement of what they've defined. Consequently, the objective of most projects involving technology the improvement of some aspect of the business is out of sync with the management and execution of the project itself. Only a handful of companies who invest in a formal business case for their IT projects are able to realize measurable value from their initiatives. Expecting to realize benefits from technology projects without having a clear and committed path to measure and manage performance is a mistake too many businesses continue to make today. The Lifecycle of Technology Value We believe the answer lies in fundamentally changing the way companies approach the difficult task of managing value throughout the entire technology lifecycle. Most technology projects are justified and approved by the development of a business case. While some definition of intended value is typically included, this is often at a level that makes it difficult to incorporate the realization of value into active project management. Changing this practice requires a seed change in organizational culture by defining and embedding value throughout and across the entire technology lifecycle. The goal is to create a bridge between the higher-level strategic objectives and goals inherent to the business case and the specific categories of business value and improvements that should emergeas a result of the investment in technology. When companies adopt this formal discipline to define, design, and manage value throughout a project's lifecycle, they are more likely to realize anticipated benefits, enjoying a greater return on investment, with projects delivering the intended and desired value. Accomplishing this requires a discipline to make the focus on realizing value a part of the project's DNA, running across all phases of technology-enabled business transformation. The value DNA is primarily expressed during transformational projects in three stages: insight, transform and evolve. These stages are described in detail below Figure 1 : Realizing technology value

2 Insight At the beginning of any initiative, we believe it is essential to establish clarity of project purpose among both IT and business leaders through the formation of a business case. In order to emerge from this phase with the information and detail necessary to embed value DNA throughout the project, we believe a business case should focus on: Assessing major gaps between strategic capabilities and current performance Diagnosing the current state gap between actual and required business capabilities Analyzing application portfolio and enterprise architecture options Defining the program governance approach and guiding principals Developing alternative solution deployment strategies Evaluating the degree of current and potential process and/or data harmonization Providing relevant data and insight into the primary drivers of cost Measuring change readiness and strategic alignment Evaluating overall program risks and potential mitigation strategies This approach serves to create a foundational connection between strategic objectives and the ability to define specific categories of business benefits and improvements. In short, effective transformation requires alignment between objectives, activities, and outcomes. The integrated nature of this approach paves the way for determining how to then apply this committed definition of value to the ongoing DNA of project success. Embedding value into the implementation DNA occurs when the benefits are aligned to all the elements of the implementation effort. Transform As noted, most businesses have difficulties in operationalizing their business strategy because they do not align the elements of value, as defined in the business case, into the inner workings of their projects. This makes benefit targeting, tracking and measuring challenging. We believe that building business benefits into each project phase is a critical success factor, necessitating the evolution of the typical program governance structure by establishing a Value Management Office (VMO). The VMO typically runs in parallel with the Program Management Office (PMO). While the PMO is focused on managing project operations, like time, cost, and complexity, the VMO is chartered to ensure the activities are aligned with the business'objectives. Specifically, the VMO activities would include: Validating and refining the business case as the project evolves Integrating a Value Realization Framework (VRF) into global design efforts Coordinating benefit ownership, communications, and reporting Ensuring a performance baseline for all key value and/or benefit metrics The VMO is primarily intended as a collaborating entity: working with the business benefit owners to build out the benefit story, then working closely with the PMO and functional leaders to blend benefits into project design work and ultimately being the conduit to benefit owners on an ongoing basis. The risk of not putting a VMO in place is to expect the PMO to also focus on ensuring benefit targets. Since the PMO is charged with managing time, cost and complexity, the PMO could be very challenged to manage the realization of benefits. We believe this would create the risk of 'value leakage', i.e., a significant difference between planned and actual benefits realized. 2

3 Evolve The planning of value and embedding of value realization into project DNA must now transition into active implementation. Organizations should apply an integrated blend of industry knowledge, leading practices and deep application and platform knowledge to lead design efforts that retain and reflect value DNA and lead to the realization of value. We believe that successful design is therefore best accomplished through alignment of the process and system design activities to the overall business goals and strategies of the organization, as depicted Figure 2: Key inputs for the design process consist of the overarching business goals and strategies defined for the program in conjunction with the current state pain points and opportunities for improvement that will be captured during design sessions. This information is incorporated into iterative Conference Room Pilots (CRPs) and ultimately the finalized design. A design and process harmonization framework (see figure 3 for an illustrative, synoptic view) defines the desired level of business process integration and standardization for delivering optimal value and benefit to internal and external customers. This framework provides the means to organize business process and IT infrastructure capabilities that align to IT operating model objectives such as standardization or unification. This approach differentiates foundational and core processes to enable alignment with organizational efficiency, productivity needs and eventually build and nurture innovation to drive excellence in business processes. It is critical to prioritize what s truly required in order to direct investment on processes that drive differentiation and value, while standardizing the processes that don t. Candidates for unique focus and investment are those that drive process excellence and differentiation and that in turn drive business transformation that enables desired benefits. Being able to support the new capabilities with a value realization approach allows for an extension of value DNA and benefit realization beyond a successful go-live. Working closely with support teams, an ongoing VMO closely shadows those support events that can negatively impact the long-term realization of value. Figure 2 : Value realization process Figure 3 : Design and process harmonization framework 3

4 Conclusion Committing to embedding value into all aspects of transformation initiatives will increase the likelihood of realizing expected benefits because it establishes the management discipline to keep the focus on the original rationale for the initiatives the value. We believe transformation teams must embrace this principle to succeed, both during the transformation project and the ongoing lifetime of the operation. About the author Rich Beckman, Partner, Value Realization, for the Transformation Practice part of Tata Consultancy Services' Enterprise Solutions business unit, has more than 20 years of experience leading the design, development, and deployment of IT strategy and transformation projects. In his current role, he works with clients across industry sectors to develop sustainable transformation frameworks that integrate IT and business strategies into one comprehensive initiative. 4

5 About TCS' Enterprise Solutions Unit With one of the most powerful IT consulting and services portfolios in the world, TCS' Enterprise Solutions help companies optimize data and workflow, manage risk and compliance, increase operational efficiency and productivity, and reach peak performance. TCS' Enterprise Solutions drive business transformations, empowering our clients to take advantage of emerging opportunities and market dynamics. From IT strategy and transformation to enterprise-wide software applications, we optimize technology and business processes. Through our Centers of Excellence and Innovation Labs, coupled with our functional business expertise, we develop custom industry solutions and accelerators. Our proven, repeatable and scalable methodology enables enterprises to realize the maximum business value from investments. Our success is bolstered by long-term strategic allianceswith the world's most advanced business software companies, helping us deliver better, faster, and more cost-effective solutions. Contact For more information us at: About Tata Consultancy Services Ltd (TCS) Tata Consultancy Services is an IT services, consulting and business solutions organization that delivers real results to global business, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT and IT-enabled infrastructure, engineering TM and assurance services. This is delivered through its unique Global Network Delivery Model, recognized as the benchmark of excellence in software development. A part of the Tata Group, India s largest industrial conglomerate, TCS has a global footprint and is listed on the National Stock Exchange and Bombay Stock Exchange in India. For more information, visit us at IT Services Business Solutions Consulting All content / information present here is the exclusive property of Tata Consultancy Services Limited (TCS). The content / information contained here is correct at the time of publishing. No material from here may be copied, modified, reproduced, republished, uploaded, transmitted, posted or distributed in any form without prior written permission from TCS. Unauthorized use of the content / information appearing here may violate copyright, trademark and other applicable laws, and could result in criminal or civil penalties. Copyright 2014 Tata Consultancy Services Limited TCS Design Services I M I 03 I 14