Enterprise RIM: Building the Business Case. Steve Gens. Bethesda Maryland: February 25, Managing Partner Gens and Associates, Inc.

Transcription

1 Enterprise RIM: Building the Business Case Bethesda Maryland: February 25, 2014 Steve Gens Managing Partner Gens and Associates, Inc.

2 Disclaimer The views and opinions expressed in the following PowerPoint slides are those of the individual presenter and should not be attributed to Drug Information Association, Inc. ( DIA ), its directors, officers, employees, volunteers, members, chapters, councils, Special Interest Area Communities or affiliates, or any organization with which the presenter is employed or affiliated. These PowerPoint slides are the intellectual property of the individual presenter and are protected under the copyright laws of the United States of America and other countries. Used by permission. All rights reserved. Drug Information Association, DIA and DIA logo are registered trademarks or trademarks of Drug Information Association Inc. All other trademarks are the property of their respective owners. Drug Information Association 2

3 Agenda Key Principles Business Case Steps Quantitative and Qualitative Analysis Considerations Drug Information Association 3

4 Overview: Key Principles Know your audience Be clear on the business issue and your assumptions Show the evidence Separate tangible and non-tangible Build advocacy as part of the analysis progress Partner with Finance Understand executive positioning Drug Information Association 4

5 Business Case Steps Build and Approve Monitor Program Goals & Change Drivers Investment & Benefit Inventory Analytics Socialize & Approve Delivery Clear Objectives Goal Alignment Change Drivers Benefit Hypothesis Investment Types Benefit Matrix Cost Modeling Data Collection Plan (benchmarks / RFI / experts etc.) Run Scenarios (best case / most likely) Many Iterations / Cuts Financial Requirements (NPV, ROI etc.) Format for Audience Multiple Views Pre-Approval Process Advocacy Funding Gates Milestone Management Benefit Realization Plan Governance Risk Management Drug Information Association 5

6 What are the Change Drivers? Internal Drivers Examples Increasing workload requires scalable capabilities and efficiency gains Changing of a business model (central, regional, local) Support the increase in external collaboration & strategic partnerships Accurate & "real time" info required to demonstrate compliance Simplify number of systems and reduce TCO Increase productivity and efficiency due to headcount freeze Lack of automation with key functional areas such as supply release, change control, safety reporting, and label change External drivers HA collaboration requires more global consistency of response management HA inspections requiring "real time" information and potential of virtual inspections Evolving industry and HA information exchange standards Data standard compliance (e.g. IDMP) What is the key theme to your change? Is it an incremental, transitional, or transformational change? What are the core messages? Drug Information Association 6

7 What are the Investment Types? External Consulting Services Business Requirements & Process Work Program Office Change / Transition Management Expert Advisor Vendor Cost Licensing and Maintenance Fee Traditional Implementation mobilize, configure, migration analysis, test, validate, train etc. Customization Hardware or Sourcing (e.g. SaaS/Cloud) Data Migration Cost Project Management SME and extra hands to execute Internal FTE Internal What is your company requirements? All or just dedicated? Travel and Expense Estimation It adds up Contingency Base on cost confidence (10% - 20%) Exploratory Cost Proof of Concept Phase 0: Analysis of value What is your finance position on Capital vs. Expense? 7

8 Investment Modeling How Much? Key Points Utilize a high/low for each line item Use the average to high range (most underestimate investment & resource effort) What are the assumptions to each scenario (e.g. int./ext. resource ratio) Provide a rationale for the Contingency Factor and Travel Budget 8

9 Investment Model When is the Spend? Key Points What is the duration of each spend category? Are there dependencies? What is your financial policies (realizing software licenses, cap. vs. expense) 9

10 Addressing the Benefit Side Benefit Hypothesis what are they? System Consolidation (TCO) only counts if you decommission! Efficiency (manual processes to be automated how much?) Resource reduction, avoidance, unit cost, flexibility Risk Reduction Compliance Which are tangible vs intangible (clarify from finance or what counts) What is your baseline? Provide examples to bring home the benefit statements Drug Information Association 10

11 Data Collection Plan External Benchmarks (classic environmental scan) What are your peers doing? (common vs. unique challenges quantified) RFI Engage the vendors (learning process) Test assumptions (cost, timing, complexity) and strategies Internal Survey Measure process effectiveness, efficiency, and satisfaction Quantify local affiliate complexity, tool and time usage Estimated Allocation of Time in LOCs 61% 6% 33% Conduct system inventory (central, regional, and local systems) Interviews or Focus Groups Central Requests Qualitative for story telling and examples to support the benefit themes 11

12 Analytics Technical Five year benefit analysis Comparative analysis Return on Investment (ROI) Cross over point (positive return) Net Present Value (NPV) or Internal Rate of Return (IRR) Business Improved productivity (time spent) Volume projections Total cost of ownership Drug Information Association 12

13 Example: Analytics Example: Resource projections over time? Ramp up for the project Ramp down and give back Note: Most affiliates do not have a resource benefit (it is more a reallocation) It is important to understand if you have a positive return and when it is anticipated? Sunken cost (cost of doing business) Value returned Even an annual small cost delta adds up over a 5 year period $400K a year is 2 million! Drug Information Association 13

14 Running Scenarios and Iterations Expect many iterations as the business case is reviewed with different stakeholders and approver levels Once the base investment and return analysis is completed, you can have 5, 10, 15 iterations based on who is involved in the review, complexity of the project, and confidence in the approval process What are the typical request you should anticipate? What if we delay or accelerate the investment, what happens to the benefit return? What is the total benefit if we extend the analysis from 3 to 5 to 7 years? What is we break up the project into phases: what is the spend / benefit picture? How much is cost of doing business and what return should we expect? How does this project benefit compared to other capital request? Drug Information Association 14

15 Formats and Views What is the best format to express the data based on the audience? Are there preferences? Is there a standard? Balance text / visuals Simplicity and slide limits What are the headlines? Ensure assumptions are with the graphs Preparing for the meeting TCO Current ($mm) Future ($mm) Savings ($mm) Assumptions Run rate point Resource point Investment point (3) (4) (.4) Drug Information Association 15

16 Monitoring 1. More organizations are now tying the business benefit sold to the rewards system of key stakeholders 2. Monitoring and reporting of KPIs that were the basis of the business case is critical 3. For a large spend, you may need to have funding gates where money is released before the next phase - was the promise delivered, are the assumptions different 4. Monitoring is typically incorporated into the overall project or program governance Drug Information Association 16

17 Conclusion 1) The process is just as important as the business case data 2) Make sure your have clear and quantifiable evidence 3) Business Case development is a learning and change process Contact Information: sgens@gens-associates.com 17