Software Engineering, Project Management, and Effectiveness
Value Realization is hot. You can think of Value Realization as simply the value extracted from a process or project.
Business leaders want to understand the benefits they’ll get from their technology solutions. They also want to see the value of their investment deliver benefits and deliver real results along the way. And, of course, they also want to accelerate adoption so that they can speed up their value realization, as well as help avoid “value leakage".”
But how do you actually do Value Realization in the real world? …
This is a guest post by Blessing Sibanyoni. Blessing delivers advisory, IT architecture, and planning services to Microsoft’s top enterprise customers within the financial services sector. He has more than 17 years of experience in the IT field. He is currently an Enterprise Architect and Strategy Advisor on behalf of Microsoft Corporation.
As an Enterprise Strategy Advisor, Blessing helps organizations achieve challenging business and organizational goals. He does so by helping them leverage value from their current and future investments, enabled by technology. Blessing has a solid record of delivering large and complex initiatives within organizations while always doing this in a mutually beneficial way. You can connect with Blessing Sibanyoni on LinkedIn.
Without further ado, here’s Blessing on Value Realization …
Often we grapple with the notion of value. At first it seems like a very simple thing but when you really take time to consider it, you realize how complicated and multi-dimensional it becomes. Take a simple example of a person who follows a methodology, based on best practices, who crosses all the t’s and dots the i’s but at the end of the day experiences a failed project or is unable to reach goals that his customers appreciate. Or perhaps, what about the notion of another who is highly intelligent but working for someone far less “intelligent” from a credentials or even IQ perspective.
What has happened here?
Why do these paradoxes occur and how do you ensure you are not ending up experiencing the same?
I would argue that at the heart of these conundrums is the notion of value. Value is the worth of something in terms of the amount of other things for which it can be exchanged. Often it’s not about inputs but rather outcomes and many state that you cannot achieve it without effecting a transformation. The transformation itself can be virtual or manifested in the real world, but for true value to be derived, transformation in whatever form, must transpire.
For transformation to transpire a real pain must be felt.
After spending almost two decades in public and private enterprises, I’m still intrigued by why organizations decide to spend resources on some things and not others. Often it’s the thing that seem to make the least sense which these organizations decide to put all their resources into.
This curiosity is one that lingers on especially realizing that resources are often limited and logically, one would naturally be better positioned by focusing on projects or initiatives that offer more returns and deserve more attention. One could take the cynical view that common sense is not so common, or the perspective that organizations are made of people, and people are irrational and fallible beings that bring their own biases into every situation.
So the notion of value then or the expectation of what will bring value is often subjective and largely determined in the eye of the beholder.
I have met many stakeholders who are more interested in the qualitative rather than the quantitative. Surprisingly, this is true, even in financial services!
Giving such people a quantitative, seemingly logical justification is often destined to result in failure, and the converse is also true. So, knowing your stakeholders, what drives and resonates with them is more important that coming up with a definitive, objective, rational and quantitative hypothesis in order to convince them to take some action.
Recently I was fortunate to have worked with a senior executive who was very financially inclined with a major focus on bottom line impact. This stakeholder did so well in the organization that he was soon promoted. To my surprise the person who replaced him was much more people oriented and his biggest concerns were around how the changes proposed would impact people within the organization. The new stakeholder’s view was that people came first and happy employees result in a positive bottom line effect.
I believe both execs had a great view, even though it seemed that their perspectives were fundamentally different.
The key for me was to ensure that both qualitative and quantitative arguments were well prepared in advance so that we could tell compelling stories that drove the agenda regardless of the different concerns and viewpoints.
Knowing your industry and thinking ahead about what your stakeholders may not yet know that they need or desire, is also a very valuable thing to do.
Think about the world of tablet computers that nobody knew they needed just a few years ago, yet these things are now taking the world by storm...
At the beginning I spoke about blind implementation of a methodology being a less than great thing, I would argue that the following steps make great sense around realizing that value, in the eye of the beholder:
Paul Lidbetter on Value Realization
Martin Sykes on Value Realization
Mark Bestauros on Value Realization
Graham Doig on Value Realization
This is a guest post by Paul Lidbetter. Paul is a seasoned Enterprise Architect on the Microsoft Enterprise Architect and Strategy Practice in the UK. His specialty is business value, strategic alignment, and Cloud transformation opportunities with customers.
Paul is also an active member of the Innovation Value Institute Consortium, a Chartered Engineer, Fellow of the BCS, and member of The Institution of Engineering and Technology (The IET).
Without further ado, here’s Paul on Value Realization …
Value realization is talked about, but is less frequently achieved because it is hard to deliver! Value realization tends to be thought of by many organizations as the magic that will happen at the end of a project/program.
Value Realization has evolved to become one of the most used phrases in project proposals, value propositions and investment discussions, but do we really know what the implications are or what we are promising by agreeing to Value Realization as part of a program of work?
Cost of ownership and business benefit measures have been and are still used as the focus for a business case, which is, at worst, simply a gate to justify a business investment, after which any focus on managing and delivering the expected business benefits, from the agreed investment, is long forgotten.
In my experience Value Realization is hard because it assumes some level of maturity for process, reporting, measures and decision making, as part of a value based culture, which supports long term ownership of change and value management over extended time lines. For example in the worst cases I have experienced;
As Value: = (Benefits - (Operational Costs & Investment-Capital Costs)) Realized Value is impacted by delivering more or less benefits and/or incurring more or less costs/investments needed to deliver such benefits over time. Indeed the investment is very much part of Value Realization. Value therefore needs to be measured over the life time of the change, for example some metrics may be evident early in the adoption cycle and others such as overall ROI may take years. Because of the time line, investment time/resources needed tend to increase and benefits fall/become less relevant with time, thereby leaking value from the business also impacting opportunity costs.
Realization means that the value defined by the business case (or agreed sub set) is actually delivered, is visible and has an agreed impact on business goals, KPIs, revenue and budgets. Until value is actually realized it is remains as potential value and no more. For example finding a cost saving and then not reducing budgets or reallocating the funds to drive new opportunities is not Value Realization, it is pretending that value has been delivered.
A more top down approach may increase accountability for delivering benefits, but the very same people may not want the benefits (e.g. they see dis-benefits based on cuts to their budgets, staff, maybe major personal and career change), or they may want the benefits, but are still dependent on another group, who may own the budgets/resources and have other priorities on time and resource, to enable solutions and deliver change.
So stakeholder management and alignment are key issues that can be a source of delay and indeed failure to optimize Value Realization.
Value Realization therefore demands a value culture or shift in an organization around value governance and increasing levels of maturity/capability to focus on qualifying decisions based on Realizable Value and managing value as part of delivery programs. Hence, successful Value Realization needs to be planned as part of any project/program from the start, not in panic at the end of the project based on smoke and mirrors. Of course if there are no defined measures to start with then smoke and mirrors can work every time.
Value Realization is/should become more critical to organizations as the ability to source new cloud services and capabilities accelerates and lowers the risk and costs for the design and deployment cycles, thereby throwing the internal focus on doing the right things and ensuring value is being created within shorter cycles. This is further driven by both business and accelerating technology trends which in some industries can be enabled to deliver value faster for competitive advantage. Being able to demonstrate that a program has delivered on time and on budget is no longer good enough, pretending that value just appears is no longer good enough to remain competitive.
Some organizations focus on realization in the short term, in order to mitigate this issues above and also to ensure that opportunity costs are maximized. Indeed some organizations I have worked with, both commercial and public sector, have banked the benefits at the start of the project. For example a CFO reduced the travel budgets at the start of a Unified Communication program to accelerate the program, business change and adoption. The final value delivered is still dependent on the overall level of investment, but this did drive behavior and accelerate change.
In a Telecommunications customer, although the initial discussion was with IT and around deployment, the focus for change was in fact the business (HR), which allowed both relevant measures and accountability to be established. Also the focus on delivering value was integrated into the PMO and associated change managers which enabled the Value Realization process to be part of the overall plan, as part of a Microsoft Enterprise Strategy Services engagement. In addition the number of measures where kept small and easy to verify. E.g. a cost saving metric, a productivity measure and a program acceleration measure (to demonstrate the value of the Microsoft Enterprise Strategy Services engagement)
A further example from a financial organization had some of the challenges, but the approach taken ensured that a culture and process change was slowly introduced with support from Microsoft Enterprise Strategy Services. Projects/Programs were delivered with measures that were more about cost and time, but in order to demonstrate the value of both Microsoft Enterprise Strategy Services and customer projects, some projects were evaluated for post Value Realization in which the benefits were signed off ( or not, by stakeholders) and accumulated with investments to provide a snap shot in time of value realized. Importantly this also allowed potential value, to be identified along with a portfolio based value management process and relevant accountabilities to be successfully introduced moving forwards.
Some of the key enablers are therefore;
Value Realization is a powerful tool when you use it as an approach to help connect business and IT, justify investments, accelerate business value, and drive adoption and change.
“Until we’re educating every kid in a fantastic way, until every inner city is cleaned up, there is no shortage of things to do.” – Bill Gates
Bill Gates was my original inspiration for joining Microsoft. Here was a guy with all the money in the world that showed up everyday, and put in more hours than most people I know, to change the world.
He had ruthless focus on empowering people and building a better world.
Technology just happens to be his way.
Related to this, a funny thing happened a few weeks back. I was meeting a colleague I hadn’t seen in a while. While I was waiting, I noticed a poster on his wall.
It was a poster of lessons learned from Bill Gates. It was 25 lessons learned from Bill Gates.
Lesson #18 caught my eye:
You get better by listening to your toughest critics. Your greatest source of growth can come from the people that will tell you what you need to hear, not just what you want to hear. Bill says, “Your most unhappy customers are your greatest source of learning.” Bill also says, “You’ve got to want to be in this incredible feedback loop where you get the world-class people to tell you what you’re doing wrong.”
I started to read a few more of the lessons. #25 also caught my eye:
Connect people, process, and technology. Create a digital landscape or a virtual world to reduce friction and to create new possibilities. Bill says, “One of the wonderful things about the information highway is that virtual equity is far easier to achieve than real-world equity…We are all created equal in the virtual world and we can use this equality to help address some of the sociological problems that society has yet to solve in the physical world.”
I had to ask my friend where he got the poster from. He told me from my site:
Lessons Learned from Bill Gates
How funny was that?
My friend had formatted the poster so well, I didn’t recognize my original post from long ago.
Anyway, I did a quick formatting sweep of my post, Lessons Learned from Bill Gates.
Hopefully, the lessons are easier to read now, and better emphasize the insight that Gates has shared with the world over his lifetime.
BTW –- if you have any favorite lessons from Bill Gates, feel free to share them.
Microsoft Explained: Making Sense of the Microsoft Platform Story
Microsoft Secret Stuff
Steve Ballmer Quotes
The First 11 Employees of Microsoft
The Microsoft Story
This is a guest post by Stephen Kell on Value Realization and how it can help IT organizations stay relevant through changing times, as well as become a strategic partner within the organization. For background, Stephen is a Microsoft Enterprise Architect with extensive experience in Telecoms, Manufacturing, Financial Services and government sectors. Over the course of his career, he has played various roles including CTO, IT Director, Enterprise Architect, and Principal Consultant.
Without further ado, here’s Stephen on lessons learned in Value Realization …
During my time working within IT, I have found that business value is something that project teams worry about at the beginning of the project in order to justify initial investment but then is often forgotten as the project goes into the build and implementation phases. During these phases the emphasis is placed on the budget and timescales of the project. Scope changes are made to fit in with the budget and timescales without any thought as to the effect on the business value delivered. ‘On-time and on-budget’ is the project managers’ mantra whereas it should be ‘on-time, on-budget and business value delivered’.
This lack of emphasis on business value delivered gives the business the view that IT is a cost center which provides an essential service rather than seeing IT as a valued business partner. This view is reflected in the position of IT departments under the CFO rather than as a valued member of the board reporting into the CEO or even as part of a business strategy group. The way technical people tend to communicate does not help. Often there is a long explanation of the technical merits of a solution followed by ‘it will save the user 2 hours per day’. This is where value models come in which allow the conversation to have some structure in order to attract and hold the attention of the business community.
IT is so important to the business but they often get frustrated with the IT department’s perceived inability to deliver and thus set up their own Business Unit IT departments, side-lining the IT department to acting as the provider of infrastructure only. This trend was highlighted in the recent MIT CISR 2013 Annual Research Forum in Boston.
In order to be able to communicate the value of IT to the business, the CIO and his team need to know what the business values and how these are measured and reported:
How many people in the IT department know and understand the above value dimensions? Most of this information is readily available internally (and often externally). Taking time to understand what the organization values will mean that the IT department becomes much more relevant to the business and the business will start to listen and value the insights that the CIO and his team can bring, enabling them to be at the core of the decision making process and not side-lined.
By using value models the CIO can bring a level of maturity to the value discussion which might well be missing from the business. The CFO will have some financial models but these will not necessarily cover all of the dimensions of value. This can also be a challenge for the CIO; if there are not mature value models within the business then it is difficult to articulate the value of IT.
Having said that, it is difficult to model and measure value. Other blog entries on this subject have covered the Observable, Measurable, Quantifiable and Financial categorization of value so I won’t go into detail here but would point out that financial models do not cover all the goals and drivers of certain organizations. Public sector organizations and charities are about delivering social value to the countries/communities that they serve and therefore the Social Impact has to be taken into account as well as the financial aspects and indeed the Social Impact can be much more important than the financial measures. Even commercial companies are now putting emphasis on value other than pure financial such as environmental impact, or helping the unemployed back into work.
Whereas there are some fairly mature models for modeling the financial side of a business, there are very few models for modeling the Social Impact of an organization. I have discussed this in more detail in the following blog post:
Understanding How To Measure the Value of Public Sector Projects
So in conclusion, business value to the organization is a very important concept for IT leadership teams to get their head around if they want to play a strategic role within the organization. Without a good understanding of business value there is the risk that they will be relegated to the side-lines as the provider of the infrastructure whilst the business units set up their own IT departments. Researching the different value models and frameworks should be a priority for IT leaders who have not already done so. Understanding what the business values and delivering to increase that business value keeps the IT department at the heart of the organization as a valued partner.
Blessing Sibanyoni on Value Realization
I’ve put together a comprehensive list of the best personal development gifts:
The Greatest Personal Development Gifts Ever
I wanted to put together a profound catalog of the best personal development programs that the world has ever known. At Microsoft, I’ve been lucky enough to have amazing mentors over the years, and they have always shared with me the programs that they’ve used to really transform their lives.
Success often seems like magic until you find out behind the scenes the price that people pay.
I’ve used many personal development programs over the years. So many of them ended up being heavy on hype, but light on insight. I’ve learned to seek out the programs that have profound knowledge that you can use to grow your capabilities and really change your game. I’ve written about 3 personal development programs that give you an edge in work and life before, so this time, I wanted to go above and beyond, and really share the full scope of the most powerful personal development programs on the planet.
While I was putting together The Greatest Personal Development Gifts Ever, I was a little sad to see that some of “the great ones” are no longer with us. Even sadder was when I looked for personal development programs by people that I thought would have created some, it turned out, they didn’t actually create any. It reminded me of the value of information products that goes well beyond books. There is something to be said for a “program” of sorts where you give somebody a self-paced package to work through, to practice skills and turn insight into action.
It’s also a great reminder of how unique some people are, and how unique their gifts truly are.
And, it’s also a reminder how valuable “evergreen” life wisdom is.
The other thing I learned while trying to put together The Greatest Personal Development Gifts Ever is that it’s not always so easy to give somebody a boxed set of personal development multi-media gifts. In some cases, some things just weren’t available anymore, unless somebody on eBay wants to part with their old cassette tapes It’s a reminder that as our form factors change, it’s actually possible to “lose” some ancient or timeless wisdom. I didn’t realize how easy this is, until I was trying to put my hands on some old classics that I knew would help some people.
The other big thing I reflected on while putting together The Greatest Personal Development Gifts Ever is how important it is to have a system for personal transformation. And, while it’s true that all roads lead to the same town, some paths are way better than others. But, the real key, as always, is that you have to find the system that works for you. For me, I prefer hard-core or extreme insight and action. If I’m going to invest, then I want the most powerful lessons and the most rapid results presented in a way where I can quickly test my results, make progress, get feedback, and change accordingly.
For others, they need a softer approach. They need their journey to be more inspirational, or more emotional. I take this into account when I give personal development gifts for the holidays. I also took this into consideration while putting together The Greatest Personal Development Gifts Ever. For example, if the person you are getting the gift for would prefer a “harder” style of personal development, then Tony Robbins is a great choice. If, on the other hand, you know the person would prefer a “softer” style, then Brian Tracy or Jack Canfield would be great choices.
I also included a collection of self-hypnosis programs in my collection of The Greatest Personal Development Gifts Ever. Here’s why: It’s easy for people to get stuck. Super easy. It’s easy to fall into a trap of learned helplessness. It’s easy to fall into a pit of despair when you are down and out. It can be hard to bounce back. You can think of self-hypnosis as a guided relaxation, but the reason I included it is because sometimes we are our own worst enemy. Whether it’s our negative self-talk, limiting beliefs, or subconscious habits, we work against ourselves. Self-hypnosis can help you get unstock by helping you refocus on who you want to be and what experiences you want to create, and get the power of your mind back on your side.
I hope my catalog of The Greatest Personal Development Gifts Ever helps you save a lot of time, avoid wasting money, and find the personal development programs that actually work, whether you’re looking to find gifts for someone else, or to add to your own personal development collection.
This is a guest blog post from Martin Sykes. Martin has been involved with Enterprise Architecture and IT Strategy for 15 years and is today a coach in Microsoft Service’s Enterprise Strategy Centre of Excellence. He’s also known for his use of visual storytelling techniques and is one of the authors of Stories That Move Mountains: Storytelling and Visual Design for Persuasive Presentations. (watch his top rated session on storytelling from TechEd New Zealand if you want to improve your own presentations)
Without further ado, here’s Martin on Value Realization …
This week I was teaching a class for our Enterprise Architects where we covered some of the most important topics for success as an EA, with one of the sections focused on the identification and delivery of value. If “Beauty is in the eye of the beholder” then I think it’s fair to say “Value is in the eye of the customer”, although depending on your perspective you might replace customer with stakeholder or shareholder. In this posting I will cover some of the things we talked about that can make a big difference when creating business cases, and ensuring you realize the value promised in the business case.
What’s the first thing you do when creating a business case? Some may start by clarifying the scope, some by identifying the real drivers for change, some the budget.
I recommend you should first think about who will care about the opportunity proposed in the business case. Who will be reviewing it? Who will be approving it? What do they care about? Every business case must have good numbers, let’s take that as a given. Those numbers must be correct for the business case (and your reputation) to be credible. But while a business case must have the numbers it is more than the numbers. Even for purely internal teams the business case is a proposal for someone to make an investment decision, or more bluntly, to buy something.
Let’s turn that last statement around, when you create a business case you are selling something. So before you start work on that business case spend some time really understanding the consumer of the business case to work out why they will ‘buy’ your ideas now. This is important even if your customer is your own management, who have asked you to write the business case.
Use the insight into your customer to work out what narrative (or story) needs to go into the business case to support the numbers, to ensure you focus on the aspects that are important to the goals of the stakeholder. This is where so many standard templates fail to inspire. They take a business case to the point where it has all the logical argument and can totally miss, or at least hide, why the proposal is important and relevant to the customer today.
If value is the difference between cost and benefit then let’s look at all the different types of benefit that can come from making a change. I like to use a benefits structure developed from ideas first published by the Information Systems Research Centre of Cranfield University School of Management back in the late 1990s. The desire to make a change, or create a business case often comes initially from a belief that there will some form of improvement or financial return. In most organizations belief is not good enough - that’s why we ask people to work on a business case – so the team at Cranfield defined four levels of benefit that be used to build a business case:
Observable – these are the benefits we can see, but have not worked out how to measure. These could be improvements in morale or changes in the culture of an organization.
Measurable – one step up from observable and we now have identified some way to measure the benefit. For a cultural change program you could start to survey staff members to understand their attitudes to work and track this over time. Unfortunately you may not know what the current value for your measure is, and the first task may be to go out and do an initial survey to set a baseline.
Quantifiable – if you already have some data for the measures you might use then we call the benefit quantifiable. The best case here would be that you have a trail of historic data to show not only the current position but the existing trend. If you have a trend showing a slow but steady increase in staff turnover then you may be doing well simply to make a change that levels things off. If the trend was already improving then you have to do better than the trend.
Financial – finally, can you turn your measurement into financial value? If you know the costs of recruitment and training to bring in a new staff member you can define a financial benefit to balance against the costs of your proposed changes. There are two kinds of financial benefit though, the first is where you can recognize the value, but in reality you can do nothing with the money. This is typically the case where a proposal has identified savings in time because of a new process, but in reality the saving does not allow you to reduce staff numbers. All you can really do is re-purpose that time for more work. The second is where you can realize the value and actually have real money in the bank (or avoid spending some). If a new process allows you to achieve the current workload with 3 people instead of 4 then you have a choice to reduce staff costs and realize the benefit.
All of these benefits can be included in a business case and contribute to the value of a project, but in reality only realized financial benefits can be used to provide a return on investment calculation. If you want to learn more about this approach then watch my TechEd New Zealand recording from earlier this year.
Most of the business cases I see developed are used to secure funding, then used simply as a baseline for the project costs. As benefits usually cannot be realized until something is delivered this part of the business case is often quietly forgotten about. When an IT project team complete a delivery there is usually some form of celebration, the solution is handed to operations and a small group might be left providing some user training. The benefits drift away, someone else’s problem.
Here’s an idea I have only ever seen implemented a few times around the world, and that’s because it challenges a few basic assumptions about the role of a project manager and a PMO.
Change the definition of success for a project manager to be about the realization of value. Delivery is just another milestone. The PM should be required to stay on the project until the ROI stated in the business case is achieved. This makes the PM responsible for user adoption and achieving the benefits defined in the business case. Achieving the value becomes the goal of the project, resources are planned to ensure adoption happens, and measures are implemented to show progress. It also changes the types of business cases produced. Inflated expectations are pushed down by the PM to more realistic levels so the project can be reach the ROI as quickly as possible and the PM can move on to their next project. For such a little idea it can take a big change in mindset and culture to make it happen – but the result can be projects that have a much more demonstrable impact on the business.
Strategy Must Be Dynamic