In another case we gave an ex-CFO, now CEO, a document at the end of an assignment. He immediately went to the last page to see what the cost would be. The document had no cost as it was pointing out how the CEO’s performance measurement system negated any attempts to improve the organization and suggesting some changes to allow effective change. He refused to change anything but still expected his staff to embrace change.

When you think about it most investment and project management processes are solely focused on ‘controlling cost’. Until we get away from this myopic concentration on cost we cannot move forward towards maximising value.

In any profession you have a range of skill sets and competencies. Some accountants are only good for adding up numbers; others can run a finance operation and a few are great finance operators. In my experience it is only this last group that are interested in value; the rest are only interested in cost. (Many don’t even seem to understand the concept of ‘value’)

So, how do we change the attitude of a flexible(!) profession like accounting?

Any ideas? Please post your comments below.

© Jed Simms, Australia 2009

Our approach to risk management has simplified the standard’s approach so that it is more relevant to projects. Our approach is designed to highlight high-risks to the project that may not rate as high-risk on the standard’s organization level-oriented scale.

Alignment and adaptations

The standard’s concept of ‘Context’ we have incorporated as project-specific, measurable “Environment” risks.

With the Likelihood ratings, in the standard there are up to seven levels (A->G; Almost certain to Barely conceivable). We have simplified these ratings as follows

Similarly, with the Consequences ratings, in the standard there are 5 levels up to catastrophe (V). We have simplified this rating system as follows

Otherwise, the same principles apply — selecting and prioritising those risks that need treatment (management), treatment/management of the risks and ongoing review.

We have extended the ‘treatment’ of risks to incorporate risk management as part of the project’s standard outcomes/activity/change planning process, so that risks are not managed, monitored or reported differently to other project activities — simplifying the overall project management process.

Additions

We have added the concept of “Leading indicators of failure” — areas where progressive or cumulative events can, over time, lead to (potential) disaster on one scale or another.

We have also identified separately “Critical Success Factors” which we have defined as “things that need to exist or go right that are beyond the management of the project team”. These CSFs are identified for the project governance team to manage.

Practitioners

Practitioners conversant with the Risk Standard will find our Project Risk Management approach very similar and complementary but simpler and more targeted in its assessment ratings.

While both VDM and Val-IT are value-oriented, Val-IT is very IT-centric whereas VDM is business-strategy centric. For example, in Val-IT the ‘Executive’ has no role in business case generation, in VDM the executive Sponsor governs and ‘owns’ the business case.

Val-IT is primarily a framework that says what needs to be done. VDM is a process that spells out ‘how to …’ deliver the value. The majority of the Val-IT components are included in one or more of our VDM processes. We don’t fragment the approach to project value as much as Val-IT does, we make it an end-to-end process.

VDM takes the Val-IT emphasis on value and provides the business strategy perspective and “How to..” guidance within an overall value and project delivery context — ie we translate Val-IT’s intent into practical business processes and value. 

Alignment and adaptations

VDM simplifies, adds and expands the following Val-IT areas:

Val-IT defines 39 tasks to be completed to successfully select the right projects and deliver the value. VDM covers all but two of these tasks within its processes. The two omitted — determine target portfolio mix and perform gap analysis — are deliberately omitted as alternative, more business strategy-based alternative approaches are provided within VDM.

We take the tasks and intent of Val-IT and convert these into processes, detailed process steps, workshop and other accompanying material to ensure the business value is identified and delivered.

At the detail level our processes are business-based and do not include all of Val-IT’s specific IT characteristics, making them more usable in non-IT environments and on non-IT projects. Indeed, as one of our premises is that there is no such thing as IT projects, only change projects, some of the Val-IT elements are irrelevant to Value Delivery Management.

Additions

In addition we have added a range of overlay processes to the investment management processes including

• project governance – the roles, responsibilities and activities required of investment committees, sponsors, steering committees and PPMOs
• executive management – a series of tools and other guides for executives not directly involved in projects to understand the issues and requirements of projects and their successful delivery.

Practitioners

CobiT Val-IT practitioners will find our Value Delivery Management approaches take their base framework and translates it into practical steps that all project parties can action, plus adding some new dimensions in some key areas.

It is primarily a guide to project management approaches (rather than a full-scale project delivery methodology) and is organized into nine primary areas. Value Delivery Management (VDM) impacts five of these areas.

VDM represents an overlay to PMBOK and adds a new emphasis on value management.

Alignment and adaptations

VDM adds and expands to the following five PMBOK areas:

1. Communications
   Enhanced communications and stakeholder management approaches to more specifically target, manage and leverage stakeholders to ensure the success of the project and the realization of its value.
2. Risk
   Simplified and enhanced risk management processes to better tailor effort to the nature of the risk and the agreed risk appetites, while also simplifying and incorporating how the risks are managed into the project management mainstream. Also we add new emphasis on risks to benefits realization.
3. Cost
   Repositioning of cost management within an overall project ‘profit and loss’ approach to value management so as to enable the generation of the maximum nett profit/value from the project.
4. Scope
   Expansion of scope management approaches to include both opportunity and solution scopes.

   Refocusing of requirements definitions onto process and information needs to enable a simple, straight-line alignment between organizational strategy, processes and systems.

5. Integration
   Expansion of Project Charter documentation to be a living master control document for the whole project, incorporating project approach, resources, costs, sign-offs, etc. and being the base for the business case and its realization — thereby building the value proposition into the of the core project..

Additions

In addition VDM adds a range of overlay processes including

• investment governance – the roles, responsibilities and activities required of investment committees
• portfolio management – the processes and PPMO roles in relation to project selection, prioritisation and portfolio analysis and tracking
• project governance – the roles, responsibilities and activities required of sponsors and governance teams
• benefits management – the end-to-end processes for benefits identification, quantification and delivery management — the raison d’etre of projects

and much, much more

PMBOK Practitioners

PMBOK practitioners will find our Value Delivery Management approaches build on their base project management knowledge and skill set, but now adding a new (value) lens and new dimensions in some key areas that all increase the business value delivered from their projects.

Post your comments to the blog.

© Jed Simms, Australia, 2009

The ILM was designed by Cranfield University to enable IT departments to link IT investments to business benefits so as to overcome the often large conceptual gap between all of the investment in IT and the business results desired.

The ILM has five key sections

The idea is that you can read right to centre and left to centre to see the benefits that arise from your actions and technology investments. All of this is done in  ‘loosey-goosy’ language that requires separate KPIs to be defined by which the benefits can be measured. All a bit vague and unmeasurable (the exact opposite to the Value Equation).

The ILM is restricted to one page and therefore deliberately restricts the number of benefits to, often three or four. Hardly a vehicle for value maximization!

Where the ILM is good is as a simple thinking tool early on in a project. What are we trying to achieve? What is the problem we’re solving? What types of benefits are we aiming for? All good questions and many organizations have found the ILM useful in clarifying the answers to these types of questions in the conceptual phase.

But a benefits management tool it is not. It fails on almost every count. The actions are unmeasurable; the benefits are unmeasurable, the KPIs are often not closely related to the benefits and how they’ll be delivered is not defined, it doesn’t align costs to anything in particular and so on. Indeed, if you actually read the book you’ll see that it ends with the generation of the ILM and does not cover benefits realization. Whoops, what an omission.

So, while the ILM helps organizations think through their initial ideas it is not a real benefits management tool; and if you rely on it for end-to-end benefits management you’ll fail.

Any thoughts? Please post your comments below.

© Jed Simms, Australia, 2009

The double change triangle™

What this means is that

• if you are considering change you need to consider all seven dimensions.
• when you look at your change management processes they need to explicitly acknowledge and deal with each of the seven dimensions
• you need to be able to assess and address each of the seven dimensions in making change.

More experienced practitioners will immediately see why their people-process-technology approach to change has left holes and not delivered the desired smooth or effective change at times.

For example, a project to realign and restructure a department can involve

1. Strategy — how does this impact or is it impacted by the strategy? Is it consistent?
2. People — who is impacted and by how much? Are they up to the new changes?
3. Structure — what will be the new structure and specific accountabilities?
4. Infrastructure — what new space, equipment, physical networks, etc will be required?
5. Information — what changes to the information/reporting/measurement flows will be required?
6. Processes — what processes will change, how and why? What systems changes are required?
7. Culture — how will this challenge the mindsets and belief systems? How radical a change is this to the current ways of thinking?

Trying to achieve just an organizational change without all seven dimensions is a recipe for disaster.

What do you think? Do you think the P-P-T triangle meets all of your needs? Comments to the blog

© Jed Simms, Australia, 2009

The final two elements are direction (strategy) and means (information).

Strategy Many organizations complain that they “don’t have a strategy”; by which they mean they don’t have a written, documented “strategic plan” document. But every organization has a strategy even if it is not written down or even consistent.

To effect change you have to understand the strategy, what’s behind the thinking and direction of the organization. Is it business unit autonomy or central services? Market leadership or specialized services the big boys don’t do? Product specific or outlet focused? And so on.

Actually you need to differentiate between what the strategy is (as is being done in practice) and the strategic intent (what is believed should be happening).

For example, an electricity utility had a strategy of becoming a multi-utility utility, taking on gas, water and telecommunications. Meanwhile, its real strategy-in-practice was focused on minimising the chances of power failure with no action being taken to realize the greater strategy. A change strategy to implement a multi-utility utility would not have gone far despite the strategic intent. If you believe the spoken strategy and ignore the actual strategy you will be undone.

Information I separate information from technology, systems and processes as it is the lifeblood of an organization and needs a separate focus.

For example, some years ago I conducted a little experiment in a manufacturing company. I asked, “What information does a shop floor worker need to do an excellent job?” We listed over 50 items and then ticked off which information items they received — less than 50%! I’ve repeated this experiment over and over again in different industries with varying results but all around the 50% mark.

There seems to be an assumption that systems will automatically provide the necessary information. Not so. Just think about what information you’d like to know about your customers and then compare that to what information you have.

Information is a separate entity that can make a significant difference to how people work, how they spend their time and how they can adopt change. It is a significantly opportunity lever in that if you can promise them that they will have the information they need to do an excellent job in their new role, then you can more easily ‘sell’ change. One recent survey found that managers spent around 30% of their time “looking for information”. This is just one dimension of the opportunity.

Failure to pull information out from the processes, systems or technology (depending on where you normally bury it) results in information being ignored, assumed or ‘hoped for’ when it is a major change lever.

Next week, bringing it all together.

What do you think? Do you thing the P-P-T triangle meets all of your needs? Please post your comments below

People don’t work in a vacuum. There are two dimensions outside of their control that directly impact how they work — Structure and Culture.

Although structure is supposed to follow strategy this is not always the case; especially where the strategy is not clear or consistent. But your structure, how accountabilities and roles are divided up can directly impact how people work. And the visible structure does not need to change for things to change.

For example bank managers are still bank managers but their power and authority has largely been eliminated. They are now staff managers rather than lenders or account managers. From the outside the structure looks the same, but the reality is the accountabilities have been radically changed.

So, structure is more than just who reports to whom, but also how the roles relate and how accountability and authority is assigned.

Changes to any of these structural dimensions need to be carefully managed so that people don’t end up with non-jobs (all accountability and no authority) or dead-end jobs or inappropriate reporting lines, and so on. Especially as some of these changes can often be made without the physical structure seeming to change.

Culture is best defined as “how we do things around here”. Culture is partly driven from the top of the organization (how the management behaves rather than what it says) but can be very resilient at the lower levels.

If you want to make lasting change you have to align the culture and this is far more than just people – process – technology; this is about behaviour, belief systems and perceived reward systems. (“Perceived” in terms of what is seen to be rewarded in practice and historically.)

To understand the impact of persistent culture, some years ago I sensed a disconnect between the intent of the manufacturing processes and what was happening on the shop floor. Then I realized that the processes were focused on tight manufacturing control based on small order volumes, but the culture was based on ‘economies of scale’ that saw small manufacturing volumes as inefficient and often overrode the orders and made ‘economic quantities’. The shop floor staff saw ‘efficiency’ as a major rewarded manufacturing measure; management saw low inventories as its key corporate measure. Clash!

Major change needs to assess the drivers of the current culture to see if they need to be changed to facilitate the new ways of operating. And to change culture you need to change behaviour and belief systems. Otherwise, all the people change in the world will be to little avail if the culture persists to undermine your changes.

So now we have people – process – technology – structure – culture — next week the final two elements.

What do you think? Do you thing the P-P-T triangle meets all of your needs? Comments to the blog

© Jed Simms, Australia, 2009

I was in an art gallery recently when I saw a painting that was inappropriately framed. “How should it be framed?” asked the gallery owner when I said this out loud, “I don’t know, but I do know that is not right,” was all I could say.

We all have situations where we know something is not right but don’t know what or how to correct it.

I’ve always had this feeling with the infamous “people-process-technology” triangle. I’ve always known it was flawed but did not know why.

Now, eventually, I’ve turned my mind to it and found it’s the wrong triangle!

Yes, people, process and technology are critical elements in change, but they are only three of seven vital elements that make up the greater change triangle. Unless all seven elements of the greater triangle are taken into account your change program will be compromised and your project will lose, miss or destroy value.

Indeed, it is these other four elements that often make the difference between “implemented” and “successful, effective” change.

If we’re managing less than half of the change criteria, no wonder we’ve been getting change so wrong for so long!

Even the basic three change elements need some clarification

1. People Should include skills, competencies, attributes and attitudes — what makes your people tick, and their performance
2. Processes Should include process flows, systems (which are automated processes), methodologies, etc
3. Technology I think this is better called ‘Infrastructure’ so it can cover also property, facilities, major equipment and any other ‘asset’ provided to enable the organization’s operations.

Next week I’ll reveal two of the remaining four change elements.

What do you think? Do you thing the P-P-T triangle meets all of your needs? Post your comments below.

© Jed Simms, Australia, 2009

If your organization wants to be sure that it is making the most appropriate use of IT, in the most appropriate way, and is protected against the risk of failure, Governance of IT will be of interest to you.

Governance of IT is a topic of significant importance for Board and Executive levels as they recognize the importance of IT to their organizations and move to effectively direct and control it.

Mark Toomey has been the pioneer behind firstly the Australian Standard for governance of IT and now the international standard. He also publishes a regular newsletter on the topic.

He has just published his latest newsletter which he has agreed to make available to you all. If you go to http://www.infonomics.com.au/Newsletter.htm you can sign up for this newsletter and access real thought leadership in this important area.

Mark also has a book coming out soon on Governance of IT which you can find out about by subscribing to his newsletter service.

Jed Simms