"benefits-led" portfolio management: an introduction

© Copyright 2010 | Cambiel Consulting Ltd | www.cambiel.co.uk Slide 1

“Benefits-led” Portfolio Management: An IntroductionJanuary 2010

Daniel Fishere:

[email protected]

t: 07906 351008


“Benefits-led” Portfolio Management Introduction

What is it?– Features– Decisions enabled– Difference from “traditional” approaches

Business Case for “Benefits-led” Portfolio Management

Key Implementation Considerations

How Cambiel Can Help


Introduction

“Traditional” portfolio management has existed for some time:– Difficult to find case history of success– “Bottom-up” approach to tracking cost & risk (sometimes to exclusion of

benefits) perceived as bureaucratic & non- value-adding in many organisations

“Benefits-led” approach emerging as more strategic alternative:– Compelling business case– Focus on value and benefits increasingly important in period of economic

constraint– As Programme and Project Management becomes more mature, gap between

business change activity and corporate strategy is highlighted

Portfolio management finally offering genuine opportunities to “invest to save” and “invest to accumulate”


About Cambiel & Sigma

Leaders in “benefits-led” approaches to managing change portfolios and programmes

Responsible for some of the largest benefits realisation implementations across public and private sectors

Expert in training, coaching and facilitating “benefits-led” mindset, tools & techniques

More details at www.cambiel.co.uk


Portfolio Management - What Is It? A portfolio is more than just the sum total of

programmes and projects. It provides a decision-making framework for optimising the necessary contribution of change to your business strategy. It is not just a reporting overlay on top of your programmes and projects.

Portfolio management is the process of:– Ensuring that you are doing the “right” things (driving the contribution of

business change to your strategy), not just doing things well– Engineering the optimum combination of programmes and projects to

maximise value (and minimise waste)– Monitoring and managing the performance of your change investments

at a strategic level


Portfolio Management - What Is It? The OGC says that Portfolio Management is a “co-

ordinated collection of strategic processes and decisions*”. Some key features:

Increase sales

Reduce costs

Develop staff

Business As Usual

Business Change

(Projects & Programmes)

Corporate Performance Managemen

t

Benefits-led Portfolio

Management

Business Strategy

• Managed at corporate level, in a similar way to, but additional to, Business As Usual performance management

• Bridge between top-down strategy & bottom-up business change delivery

• Proactive control mechanism for executive

*OGC Portfolio Management Guide Crown Copyright


Portfolio Management - What Is It? Benefits-led Portfolio Management is the rapidly-

emerging alternative to Portfolio Management in recent practice

It addresses the bureaucratic pitfalls which organisations have encountered

By building your portfolio around benefits* realisation you can achieve its full potential value (e.g. genuinely increased efficiency and effectiveness), rather than just manage its timeliness and cost

– Most effective balance of business change and business as usual– Optimised Return on Investment from projects and programmes– Reduced waste from poorly conceived, planned & implemented change

*Measurable outcomes of change perceived as positive by stakeholders


What Is It? - Features

•Defines overall contribution of change to strategy•Prioritises benefits required to achieve contribution•Makes decisions on commissioning, de-commissioning, sequencing and clustering of initiatives• Monitors overall Benefit Delivery Confidence (and Capability Delivery Confidence by exception) & takes mitigating action

Benefits-led PortfolioManagement

ProgrammeManagement

• Coordination of Project Delivery, change, dependency and risk management

• Measurement of Results & Benefits

Strategic

Tactical

Natureof

Work ProjectManagement

• Budget• Schedule• Resources

• Scope• Risks• Metrics

Scale/ Scope of Initiatives

Relationship to Programme and Project Management

Source: Adapted From New York City Housing Authority and Cisco Systems

Not just a “bolt-on” overlay to PPM but a strategic decision-making process

OUTPUTS

OUTCOMES

BENEFITS



Permanent support function provides “top-down” strategic analysis and executive assurance, and “bottom-up” support and appraisal to programmes throughout change delivery lifecycle:

Bu

sin

ess

Stra

teg

y

Driv

ers

: PES

TEL

Pre-Commissioning:•Desirability & Strategic Fit•Affordability•Feasibility

Contextual Commissioning:•Investment Appraisal•Delivery Confidence

Even

ts &

O

ccu

rren

ce

s

• Change Delivery

• Benefits Realisation

• Transition to Business As Usual

Business Planning

In-year delivery



An underpinning portfolio model enables complex decisions to be visualised – showing cause-and-effect of the chosen course of action

Improve productivity

Reduce Headcount

Increase Effectiveness

Both?

OR

OR

Strategy Alignment?

Implement Systems Project

Implement Business Change Project

Combine systems & change projects to deliver

capability programme

OR

OR

Visualising decisions also

aids communication and stakeholder

buy-in


What Is It? – Decisions Enabled

Bu

sin

ess

Stra

teg

y

Driv

ers

: P

ES

TEL

Pre-Commissioning:•Desirability•Affordability•Feasibility

Contextual Commissioning:•Investment Appraisal•Delivery ConfidenceE

ven

ts &

O

ccu

rren

ces

• Change Delivery• Benefits

Realisation• Transition to

Business As Usual

Business Planning

In-year delivery

• How should change investment develop to support strategy?• What impacts are

likely to occur in the short, medium and

long-term?

• Overall net benefit yield?

• Engineer programmes to

increase it? – e.g. by coordinating

benefit-related dependencies?

• Key costs and impacts?

• Consolidate, sequence and/ or

stop programmes to minimise

unnecessary impact & maximise gain?

• Actual or predicted benefits, cost or risk

exception?• Stop, start, re-sequence, cluster or

consolidate programmes to

mitigate?

• Commission programmes into the context of the

Portfolio – not just standalone business cases.

• Reduce double-counting & increase confidence in

delivery

Create “what-if” scenarios to aid yield and cost planning


What Is It? – “Benefits-led” approaches vs. “traditional” portfolio management

o “Traditional” Portfolio Managemento Often better at reporting cost & risk

than benefits o Benefits can be a “bolt on” to

programmes to justify spendo Often retrospective – e.g. focusing on

last quartero Sometimes bureaucratic, focusing on

reporting rather than decision-makingo May be focused on “outputs” (e.g.

products from a programmes)o Business case process may not be

integrated with Portfolio Management, and may be “case by case” (ineffective)

o Often derived “bottom-up,” driven by project & programme delivery functions, & utilising project-level metrics

o Governance focused primarily on project delivery

o “Benefits-led” Portfolio Managemento Reports benefits, cost & risk – i.e. Return on

Investment/ Value for Moneyo Benefits central to design, management &

success of Portfolioo Predictive – e.g. anticipating risks to

benefits from external eventso Strategic analysis & decisions: reporting by

exception. Self-funding through value added

o Focused on “outcomes” & business changes required to deliver them, as well as “outputs”

o Replaces current business case/ investment appraisal processes with a more strategic, contextual approach

o Developed “top-down” by and for executive. Driven by strategic decision-making, not by ease of gathering existing project information

o Governance focused primarily on benefits delivery


The Business Case

“Benefits-led” Portfolio Management:– Reduces existing spend by stopping and/or consolidating programmes

unlikely to yield a return, or which could do better as part of another initiative

– Controls ongoing spend by investing only in initiatives with an appropriate return (judged in the context of the Portfolio, not just business-case by business-case)

– Reduces duplication and waste – programmes designed around benefit-related dependencies (e.g. “enabling” project becomes part of “business change” programme, eliminating a project management overhead)

– Reduces duplication and waste - coordinates impact of change on the business, reducing “change for change’s sake”

– Introduces greater objectivity, scrutiny and accountability into investment appraisal and selection – reducing “pet project syndrome”

– Focuses investments on achieving the “right” commitment and behaviours amongst stakeholders to generate genuine and sustainable improvement


The Business Case

Fundamentally, this is just Good Management!– Relevant skills normally exist in-house– Possible to make a one-off investment in skills, processes

etc. to “kick-start”– Process should be self-funding (through ongoing avoidance

of unnecessary cost and waste, and continued value realisation)


Implementation Approach

Treat as a “benefits-led programme”!


Key Implementation Considerations Cultural:

– “Delivery” mindset of requirement to demonstrate genuine strategic fit

– “Pet projects”– Business ownership and accountability for benefits– “Balanced” view of benefits – e.g. non-financial and financial

Process & Infrastructure:– Avoid perceived bureaucracy– “Benefits catalogue” to track and manage value at Portfolio

level– “Architecture” of business activities to minimise unnecessary

change


Key Implementation Considerations Resource:

– Permanent central team: skilled at strategic analysis; knowledgeable about programme management and financial management

– Not necessarily traditional “project office”– Effective Portfolio Executive – ideally leadership team or sub-

group

Information & Technology:– Project-level metrics (time, cost, quality, risk) insufficient to

enable strategic portfolio decisions: requirement for new dataset (Benefits Delivery Confidence)

– Ensure currency of information whilst minimising unnecessary data burden


Summary

“Traditional” portfolio management has existed for some time:– Difficult to find case history of success– “Bottom-up” approach to tracking cost & risk (sometimes to exclusion of

benefits) perceived as bureaucratic & non- value-adding in many organisations

“Benefits-led” approach emerging as more strategic alternative:– Compelling business case– Focus on value and benefits increasingly important in period of economic

constraint– As Programme and Project Management becomes more mature, gap between

business change activity and corporate strategy is highlighted

Portfolio management finally offering genuine opportunities to “invest to save” and “invest to accumulate”


How Can We Help?

• Using a “maturity model” approach, we will help you to articulate the benefits of this approach to you and to your organisation

• We will help you to plan and achieve the benefits, through enabling you to generate a self-sustaining momentum

• We will underpin this with a customised set of industry-leading processes and tools. This is not about software (although itmay be useful down the line), but about a new model of benefits-led decision-making

• “Do it • Train it • Support it • Put it Right • Review it • Assure it”

Business Area: Prevent Crime and Disorder

IMPACTOverarching Command &

Control Doctrine

PIP ANPRMIP

Programme

Communicate positively with

the public

Identify threats

Protect vulnerable

people

Locate missing persons

Promote road safety

Monitor threats

Patrol Neighbourhood

s

Harden potential targets

Dissuade potential offenders

Provide expert consultancy to

partners

70 days

Scale of Impact

No. of People in Impacted Roles

1,000 PCs 5,000 I nspectors

Primary I mpact on Business Processes


the public

Identify threats

Protect vulnerable

people


Promote road safety

Monitor threats


s




partners



the public

Identify threats

Protect vulnerable

people


Promote road safety

Monitor threats


s




partners



the publicIdentify threats

Protect vulnerable

people


Promote road safety

Monitor threats


s




partners



the public

Identify threats

Protect vulnerable

people


Promote road safety

Monitor threats


s




partners


10 days

Scale of Impact


1,000 PCs 3,000 I nspectors

50 days

Scale of Impact


500 Sergeants

7,000 PCs

80 days

Scale of Impact


40 Superintendents

500 Sergeants

40 days

Scale of Impact


20,000 PCs

5,000 Police Staff

Cost of Business Change to Forces





££ £ ££££ ££ £££££


What’s the first step?

• We recommend an Initial Portfolio Review using our maturity model derived from P3M3 with additional benefits realisation focus

• The review will allow you to position your organisation on the spectrum of how “benefits-led” you need to, or would like to become. This will help to define the scope and scale of your potential change programme – from small and un-daunting to larger and challenging.

• Whatever you conclude, we are here to support you.

• “Do it • Train it • Support it • Put it Right • Review it • Assure it”


Selected Clients & Case History

– Associated British Foods plc

– Criminal Records Bureau

– DCSF/BECTA

– Metropolitan Police Service

– Ministry of Justice NOMS

– Home Office

• IMPACT Programme

• Information Assurance Programme

– National Policing Improvement Agency

• Mobile Information Programme

• Portfolio Development Unit

• Technology Product Management Unit

• ISIS Programme

• Forensics21 Programme

• Equality and Diversity Strategy

– UK Borders Agency

Large National Portfolio:

c. £180m p.a. spend

High profile national IT & business change programmes

No method of coordinating, aligning or stopping programmes. Considerable duplication & waste.

Cambiel team provided end-to-end process & tools, data collection & analysis, strategic review,

governance recommendations & mentoring on new approach.

Complete overhaul of commissioning & investment appraisal. Fewer programmes

started, more being stopped and/or consolidated into more effective units. Complex multi-agency

governance has complete visibility of the Portfolio for the first time. Can now make

forward-looking decisions about prioritisation & resource allocation.

Approach cited as “good practice” by OGC


e: [email protected] t: 01449 737867 www.cambiel.co.uk

20-22 Bedford Row, London WC1R 4JS

Questions and Further Information?

"benefits-led" portfolio management: an introduction

Documents

usual business

find case

benefits increasingly

easibility

business change

tracking cost

led approach

led portfolio