© 2010 Cisco Systems, Inc. All rights reserved. This document is Cisco Public Information. C87-625519-00 10/10

THE CAMEL MODELSIX CRITICAL FACTORS FOR BEATING THE HIGH ODDS OF BUSINESS PROGRAM FAILURE

By Karl MeulemaSenior Vice President, Cisco Services

THE CAMEL MODEL

SIX CRITICAL FACTORS FOR BEATING THE HIGH ODDS OF BUSINESS PROGRAM FAILURE

By Karl MeulemaSenior Vice President, Cisco Services

© 2010 Cisco Systems, Inc. All rights reserved. This document is Cisco Public Information. C87-625519-00 10/10

PAGE 1

Moving the HumpCisco proposes moving away from the typical project timeline and lifecycle that, when plotted on a graph, puts the peak ramp-up of resources and decision making—the camel’s hump—toward the back end of the animal (project), shown in orange in Figures 1 and 2. Instead, we recommend shifting to a timeline that moves the peak early in the process—nearer to the camel’s head (shown in green in the figures). In real-world terms, this means focusing the high-volume critical planning, decision-making, buy-in, and expenditures to one strategic, peak time period. From there, the key decisions will have been made and the team will have a clear strategic direction that can be executed. We believe this approach will reduce costs and shorten the time required to complete the project.

Advising in favor of thorough upfront preparation and decision making might seem self-evident. However, more often than not, in practice an initiative takes off prematurely, without a number of factors being decided or with the presumption that the initiator’s ideas and assumptions are all correct and on target.

After the initial thrust to get the project off the ground, new considerations, details, and issues emerge. So do ideas and opinions that weren’t expressed earlier, perhaps because participants weren’t paying close attention in early planning meetings or feared that speaking up would be viewed negatively. “Fixing” the project as reality sets in results in another wave of expenditure in time, money, and human resources as participants rework or fine-tune the plan with different

or additional ideas, goals, and milestones. Project success, however, is far more likely if these issues get resolved up front.

There are six critical factors that affect a program’s degree of success and that should be solidified during that early major peak of activity. We have identified these factors using a mix of postmortem analyses, lessons-learned documents, observations, and interviews with many people involved in large cross-functional programs.

The absence of one or more of these success factors can be directly correlated to program failures, and unsuccessful programs often lack several of them:

• Business Leadership

• Business Architecture

• Program and Project Management

• Change Management

• Governance

• Strong Relationships

Critical Success Factors

Ensuring that these six factors are present and consistently executed against with high standards requires a dramatic shift in Cisco project team structure, behavior, and culture. Again, it requires a process change that involves deploying resources and making decisions earlier in the program lifecycle than has typically been the case and moving to a relationship culture in which team members feel comfortable expressing their opinions at the start of the program.

Conducting upfront, candid dialogue flies in the face of the command and control model, whereby key players assume that what a particular strategist has proposed is the only good idea and subordinates tend to accept what they are directed to do by their superiors. Added to this is the fact that Cisco is transitioning from command and control to a collaborative, virtual team environment. We have not yet reached the maturity in this new structure for people to feel ownership for decisions made by the virtual team. Therefore, by the time the unquestioned

Figure 2. The Camel Model

Yellow Hump = Typical Expected Process Flow Today

Orange Hump = Typical Actual Process Flow Today

Green Hump = Ideal Process Flow (advised for future)

Re

sour

ces

Time

BusinessCommit

Launch

1 The Standish Group, CHAOS Summary 2009

Most business programs fail. The harsh reality is that more than 65 percent of large cross-functional initiatives fall short of achieving their intended results. In IT projects alone, the failure rate is 68 percent.1 These sobering statistics cry out for a change in the way businesses plan and execute their projects, particularly as programs expand to involve interdepartmental business teams and, as a result, become even more complex to manage.

Figure 1. Typical Peaks and Valleys of Project Decision Making and Resource Allocation

Res

ourc

es

Time

The orange curve shows a significant increase in resources as the program gets closer to its intended completion date. By contrast, the green curve represents higher upfront investments than we currently make to ensure all elements of the program are clearly understood and sized. As a result of the more thorough preparation, the chances of unanticipated problems down the line are decreased and earlier project completion can result.

At Cisco, we are striving to grow from a $40 billion company into an $80 billion one while remaining the industry leader in customer intimacy, product leadership, and operational excellence. These are ambitious goals that involve thousands of programs along the way—and thus require a fresh approach to managing and executing those programs to beat the odds of failure. Specifically, we propose a shift at Cisco to what we’re calling the Camel Model. The hump of the camel symbolizes the optimum period of time, occurring early in the process, during which to make critical decisions and allocate key resources to projects and initiatives. Allocating these resources sooner rather than later avoids added cost, time, and duplication of effort throughout the duration of the project. The Camel Model focuses specifically on moving the primary areas of critical decision making and resource allocation earlier in the project lifecycle than is typically done, even if it means that some projects are terminated early in the vetting process.

EXECUTIVESUMMARY

PAGE 2 PAGE 3

“good idea” has made its way down the path toward implementation and it is discovered that the idea wasn’t strong or needs to be modified, the company might very well have lost a window of opportunity and profitability. Discovering and dealing with obstacles at the start eliminates or minimizes their impact and improves the company’s chances of the project remaining in line with goals and the business strategy.

Strong relationships require honest and frank discussion and criticisms up front to vet the project and its components before execution begins. We believe this approach not only leads to a reduction in total resources expended, but also shortens project duration and increases overall stakeholder satisfaction.

Figure 3. Six Critical Success Factors

A Closer LookCisco’s ambitious growth plans require us to zero in on the six key success factors and ensure that they are in place at the start of any given project. Let’s take a closer look at what each critical factor entails.

1. Business Leadership: Accountability and Power Every project and program needs a general manager with overall accountability and budget power. This individual acts as a single point of contact and is responsible for the ultimate level of the project’s success. He or she is also responsible for the project budget, project plan, and timeline and leads a team of people that can be composed both of people who report directly and those who report virtually. The business leader ensures that all resources and elements that affect the project are in sync with one another.

Unlike the role of the general manager in a command and control structure, the role of the business leader in a collaborative, virtual team environment is much less defined. The leader must have significant abilities to influence people over whom he or she has no direct control. The leader must also have a strong ability to recognize and understand the interdependencies between work being done in various areas of the organization.

Lack of strong business leadership significantly affects a project team’s ability to stay focused and overcome roadblocks. It will often result in indecisiveness, frequent scope changes, and a general lack of discipline in executing the other critical success factors—results that often lead to expenditures late in the project’s original timeline. The domino effect of weak leadership ultimately leads to budget overruns, time delays, and an end result that misses the original mark.

2. Business Architecture: Impact on the Current EnvironmentThis success factor represents an interrelated infrastructure of systems, processes, tools, and programs created to achieve desired business results. It requires gathering a complete understanding of the impact of a new program on the existing environment and clearly articulating that impact across all relevant departments.

Creating a successful business architecture requires accurately defining and describing the relationship between the company strategy and its functions, processes, and governance. Components of the business architecture are the company’s data/information architecture, project processes, communications structure, and relationship culture.

Intense interaction between the business architecture team and the business strategy group is recommended, because it yields informed trade-off decisions between strategic value and operational feasibility. Once those are discovered and accepted, the project can move forward without surprises and the second-guessing and subsequent changes that so often accompany them.

At Cisco, we have appointed a vice president of operations in the Advanced Planning Team, who is in charge of business architecture across the board.

Relationships - Created and nurtured from the heart and gut

Foundationalcomponents thatgive the project thelegs to moveforward

Single hump towardthe front symbolizesone primary period ofexpenditures of time,resources anddecision making earlyin the process

Governance - The executive-level“brain” that keeps project alignedwith business strategy

Change Management

BusinessLeadership

BusinessArchitecture

Program/ProjectManagement

That individual is charged with building a reference blueprint for the company and deciding how it should evolve regardless of outside or tactical factors. When new ideas or products come along, the process is to hold them against the blueprint and gauge the degree to which they can reuse existing infrastructure versus creating special-purpose infrastructure to meet their unique needs.

Doing this exercise early in the process might expose flaws or considerations that drive stakeholders to propose slight modifications up front that either make goals more realistic or allow Cisco to achieve similar results at a lower expense. This requires a dialogue among key stakeholders at the project’s outset, allowing time to create solutions that easily fit the blueprint and support the business strategy.

3. Program and Project Management This component involves developing, collecting, and performing ongoing monitoring of all project plans and risk assessments, and inspecting all program elements. This discipline establishes common methodologies with supporting processes and clear roles and responsibilities. A program and project management discipline jointly improves and sustains the quality and effectiveness of project delivery. It leads to tight control over budget, scope, and timeline and will help Cisco build an experience base for future programs.

Lack of proper program and project management will lead to an inability to control the overall program. Replanning based on changes in requirements, budget, or timeline becomes nearly impossible. A solid program management discipline, by contrast, allows individuals to speak with one common language, no matter their industry, their geography, or whether they manage projects, programs, or portfolios, in order to achieve repeatable, predictable results.

4. Change Management An end-to-end change management program that accounts for both work processes and culture helps ensure that people and organizations are ready and willing to operate in a new business environment. A structured, end-to-end process for change is a critical component for ensuring that people understand and buy into the need for change and thus accept it rather

than fighting it, giving projects a far higher chance of success. Change management helps sustain productivity, decrease learning difficulty, and increase overall customer satisfaction during transition periods.

• 35 percent ROI when a poor or nonexistent change management program is part of a project, vs. 143 percent ROI with an excellent change management program*

• 20 to 30 percent rework rate on day-to-day service requests within a shared services center

• 20 percent unplanned increase in transition resources to account for lack of skilled resources

• Additional funding used to re-create training materials

• 40 percent unplanned increase in change management FTEs to manage sponsorship and additional user testing

• Loss of high performers, creating knowledge transfer gaps and a need to hire temps

• Disengagement of employees, resulting in rework, unmet customer expectations, and unmet project timelines

Implications of Poorly Managed and Unmanaged Change

Source: Accenture 2009; * Source: McKinsey

Lack of structured change management will result in a lack of up-front commitment to the changes ahead, in part because of confusion over goals, processes, and decision-making authority. In particular, stakeholder buy-in and explicit plans for stakeholder inclusion and communication that are tightly integrated into the program plan are critical components that decide failure or success.

5. Governance Governance is the executive oversight and support needed to ensure that a given program aligns with the company’s objectives and that project scope, budget, and timelines are properly adhered to throughout the lifecycle of the program.

Of particular importance here for Cisco is to define and make known specifically what group or groups have oversight on an initiative. This is partially due to Cisco’s highly collaborative work environment, in which it can be challenging to ascertain who has the final say on decisions. Not infrequently, one board or group thinks it has oversight and begins work on a project only to discover later that another thinks that it should be involved in key decisions, too. This lack of clarity creates confusion, delays, misdirection, and added expense.

PAGE 4

6. Strong Relationships Trust and openness between all program and governance players are intangible, but critical, components of project success. Research shows that high-performance teams are also the most highly committed teams—those with individuals that are committed to protecting one another from failure. They build higher levels of intimacy and trust that allow them to proceed with faster decision making, more robust problem solving, and innovative thinking.

Missing the level of relationships needed for success will ultimately sabotage the program. When working on highly complex, dynamic projects, not everything can be planned up front, even in the best of circumstances. On an ongoing basis, it is necessary to review the project to assure that every aspect of the project stays on track. Team members and stakeholders need to voice honest status reports, concerns, and new information so that decisions can be made as quickly as possible to put projects back on course. To do that, participants need to have the trust and confidence that speaking up will have no negative repercussions. Otherwise, they will be reluctant to provide their unique perspective—the very factor that constitutes their primary value to the company.

Striving to Excel: How Cisco Is ExecutingCisco is committed to the six critical factors in project success as we evolve our business practices to deliver more consistent success. We therefore need to make changes to our processes, or we will continue to risk suboptimal outcomes.

Our solution is to develop Cisco Centers of Expertise (COEs) in four of the six disciplines. Each COE will see to it that its aspect of the project is executed in systematic, consistent ways. This consistency will give us a foundation from which we can learn and grow, rather than making the same mistakes with every project.

Each COE comprises people with core expertise in that field, who can take a step back and synthesize what the discipline is all about: the processes, job levels, and associated skill sets. This assessment provides a framework for gauging whether the discipline is being executed to their level of expectation.

To date, Cisco has established COEs in project management, change management, and business architecture.

• In the Program and Project Management COE, we have developed job descriptions, families of required job skill sets, and project classifications, and we have adopted industry-standard methodologies that can be repeated throughout the community. The next step is to further build out the community and instill the methodologies in all practitioners.

• For the Change Management COE, the Cisco Business Operations Council, the highest Cisco internal operations organization, has adopted a process and moved it up to a corporate level. Our plan, again, is to drive consistent methodologies and career opportunities for the members of this community.

• The Business Architecture COE has made substantial headway in reverse-engineering our existing business architecture and has a revised blueprint against which to assess new initiatives. In addition, training of business architect practitioners is under way.

• Moving forward, we plan to do similar work to establish a Business Leadership COE.

Governance and relationships are two areas at Cisco that require significantly more work.

ConclusionAs Cisco strives to become an $80 billion company, we need to execute faster and with greater effectiveness. By addressing the six factors outlined, we can move the hump of the camel from the back to the front and execute with greater discipline. Our projects will come in on time and on budget, and will deliver results that are in line with expectations.

We will also see projects terminated earlier in the lifecycle. This is actually desirable. Today, too many projects continue to receive funding that, if the total cost had been known earlier, might not have been funded in the first place. It pays to know when to stop putting good money after bad, and forcing a front-hump approach will allow us to focus our resources on the right programs with successful outcomes.

BACKGROUND OF THE CAMEL MODEL

External Reference to the CamelThe notion of more thoroughly vetting projects and processes to avoid costly re-do’s has been around in one form or another for some time.

U.S. company

20-24Months

14-17Months

90% oftotal Japanese

changes complete

Japanesecompany

Des

ign

chan

ges

1-3Months

Job #1 +3Months

In his 1986 article “Quality Function Deployment,” Lawrence Sullivan contrasted American and Japanese automobile manufacturers. He clearly demonstrated that American manufacturers without strong project management and cross-functional alignment disciplines have significantly more design changes after the first car comes off the line, presumably at a high cost. In comparison, Japanese companies that use Quality Function

Deployment techniques have essentially frozen their design by the time the first car comes off the assembly line. Better up-front analysis of what success will look like and what interdependencies to expect, and strong program and change management disciplines can lead to significant savings in time and resources over the lifetime of a project.