Value Assurance Program

1
Value Assurance ProgramA Focused Solution
ElementDate 21 June 2002
Leon R. Casaubon 301 laver Court Roseville, CA
95661 Solutions_at_CoFocusInc.com
2
Index
Value Assurance Program Introduction
Methodology and Workflow Activities
Results Review
Value Assurance Program Introduction
3
Why Value Assurance? - Here Are Some Project
Management Statistics

• Value Statistics
• Over 70 of change initiatives fail 3 74 2
• Over 30 of IT projects are cancelled prior to
  completion
• Of the 70 not cancelled, 50 do not deliver the
  business performance promised 2
• ROI has been traditionally over-stated since
  most negative effects were ignored 5
• Focus on Cost and Schedule often inhibits value
  delivery 6
• Accessibility, bandwidth and power are no longer
  the problems the problem is now that software
  doesnt work 7
• Hidden costs seldom accounted for
• Application integration consumes 35 of IS
  budgets 1, 7
• The value of a technical project declines in the
  time required to deliver it due to industry
  dynamics and evolution to higher standards 3
• Those who sell applications conveniently forget
  the added costs for infrastructure, support or
  integration changes in their ROI figures 5
• Projects are becoming more complex semantic
  problems can no longer be ignored

• Cost Statistics
• IT projects have been traditionally 79 over
  cost 2
• Nearly half of projects are over budget by 100
  to 400 4
• Cost estimate accuracy is not valid until the
  architecture is established 1
• Deterministic cost estimation accuracy declines
  exponentially with size of project 6
• Change impacts rarely account for cumulative
  impact of change (i.e.things that have to be
  redone) 6
• Cost impacts from interdependentprojects are
  rarely accounted for 6

Cost
Value
Schedule

• Schedule Statistics
• IT projects have been traditionally 100 over
  schedule 2
• Deterministic scheduling accuracy declines
  exponentially with size of the project 6
• Schedule impacts from interdependent projects
  are rarely accounted for 6
• Schedule impacts are the single most damaging
  impacts to other projects value 6

1 Gartner Research 2 Standish Research 3
Harvard Business Review 4 Center for Business
Practices 5 Goldman Sachs 6 Consulting Focus
7 Rational
4
What Causes This High Percentage of Failure?

• Typically
• Development team is unaware of value expected
• Skills are not adequate to make software solve
  that problem
• Key people are lost to next critical project
• Requirements are not understood by developers

• Converged brand is not well enough defined
• Cant place information in context of role
• Information requirements are not known
• Inability to justify a return on investment
• Business people are not involved during
  development

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Value Assurance Program Introduction

• Quality Control
• Test Planning
• Understand unit under test
• Understand requirements
• etc.
• Test Execution
• Set-up
• Test
• Document results
• Problem Isolation
• Determine causes
• Validate causes
• etc.
• Corrective Action
• Fix defects
• Document new unit
• Retest

• Quality Assurance
• QA Planning
• Understand process
• Understand requirements
• etc.
• Audit, Inspection
• Set-up
• Audit
• Document results
• Problem Isolation
• Determine causes
• Validate causes
• etc.
• Corrective Action
• Fix problem
• Document new process

• Value Assurance
• Value Planning
• Understand goals
• Understand promises
• etc.
• Value Comparison
• Metrics
• Analysis
• Project performance progress
• Problem Isolation
• Determine causes
• Validate causes
• etc.
• Corrective Action
• Reallocate resources
• Refocus alignment
• Reinforce vision, goals, etc.

Focus is on the Results
Focus is on the Process to Obtain the Results
Focus is on Resource Allocation to Achieve the
Right Results
Almost All Businesses
Many Businesses
6
Value Assurance Involves Many Roles
Human Capital
Customer Service
Technology Information
Business Strategy
Business Relationship Management
Research Development
Marketing Sales
Finance
Operations
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And Responsibilities

• Business Domain Responsibilities
• Human Capital
• Programs to administer
• Programs to develop
• Finance
• Programs to plan
• Programs to report
• Operations
• Programs to plan
• Programs to execute
• Programs to learn
• Programs to improve
• Technology and Information
• Programs to model
• Programs to implement
• Programs to operate
• Programs to improve
• Sales and Marketing
• Programs to analyze

• Customer Service
• Programs to listen and understand
• Programs to serve
• Research and Development
• Programs to innovate
• Programs to synthesize and test
• Programs to develop
• Business Strategy
• Programs to envision
• Programs to execute on the vision
• Programs to manage interdependency
• Business Relationship Management
• Programs to converge for required brand
• Programs to manage contribution to brand

8
Value Assurance is to Determine and Correct
Alignment with Goals
Know the Benefit Streams
Goals 1. Customer view of product or service 2.
Customer view of timeliness, flexibility 3.
Customer value 4. Product or process
Innovation 5. Brand Leadership 6. Information
Flows 7. Threats and Substitutes 8. Profit
Margin 9. Cash flow 10. Revenue Growth 11. Return
on Assets 12. Waste Reduction 13. Time
compression 14. Flexible response 15. Unit cost
reduction
Customer Service
Technology Information
Business Relationship Management
Research Development
Marketing Sales
Finance
Human Capital
Operations
Business Strategy
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Establish What Impacts Strategic Performance
Indicators
Driven By a Focus On
With Leading Indicators Of
Affected By
A Result Of

• Supply Chain Costs
• Technology Investment Strategy
• Level of Integration
• Facility Locations
• Administration Efficiency
• Value Chain Integration

• Transfer Pricing
• Technology Integration Costs
• Infrastructure Operations Cost

Measured By
Tax and GA Minimization

• Global Tax Rate
• Infrastructure Cost
• Administrative Cost

• Supply Chain Costs
• Technology Investment Strategy
• Applications Effectiveness
• Customer Knowledge
• Operations Cost
• Administrative Efficiency
• Workforce Flexibility
• Knowledge Systems

Is a Result Of

• Total Delivered Cost
• Cost of Goods Sold
• Logistics Cost

• Cost of Service
• Costs in Cycle Times
• Cost of Quality
• Cost of Product

Net Profit After Tax
Operating Cost Effectiveness
Overall Business Success

• Applications Effectiveness
• Responsiveness Flexibility
• Information in the Value Chain
• Ease of Order/Purchase
• Information Availability
• Lead Time Management
• Knowledge Systems Use

• Quality of Service
• Responsiveness
• Flexibility Agility
• Quality of Product

Revenue Growth Effectiveness

• Market share
• Sales, Profit
• Brand Experience

EMV and Share Price
After Tax Free Cash Flow

• Supply Chain Costs
• Asset Management Efficiency
• Vendor Managed Inventory
• Demand Fulfillment Visibility
• Customer Knowledge
• Performance Accuracy Speed
• Bill Presentment Payment
• Support Effectiveness/Speed
• Inter-Enterprise Process

• Demand Responsiveness
• Production Flexibility
• Value Chain Partner Agreements

• Inventory Value
• Days Sales Outstanding
• Payables

Current Asset Effectiveness
Return on Capital Employed

• Asset Management Efficiency
• Technology Investment Strategy
• Demand Visibility
• Sales
• Channel Structure
• Infrastructure Costs
• Training, Productivity, Job-Enhancing Services

• Application Licenses
• Facility Cost Trends
• Infrastructure Utility
• Revenue Per Employee

Fixed Asset Effectiveness

• Asset Value
• Utilization
• Productivity

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Index
Value Assurance Program Introduction
Methodology and Workflow Activities
Results Review
Methodology and Workflow
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Value Assurance Ensures These Areas Are Focused
on Business Goals
12
Value Assurance Operations Processes
Value Assurance Operations

• Understand Goals
• Inputs
• Business Strategy
• Business Vision
• Business Mission
• Business Goals
• Tools Techniques
• Workshops to understand the meaning
• Workshops to establish the way operations or
  projects will be assessed
• Results
• Documented Vision, Mission, Goals
• Value and Readiness Criteria or Standards
• Program Office Guidance

• VA Program
• Inputs
• Documented Vision, Mission, Goals
• Value and Readiness Criteria or Standards
• Program Office Guidance
• Tools Techniques
• Organization workshops
• Policy Procedure workshops
• Results
• Program Structure
• Program Policies Procedures

• Corporate Performance Management
• Inputs
• Business Strategy
• Business Vision
• Business Mission
• Business Goals
• Tools Techniques
• Operational review workshops
• Initiative or project review workshops
• Technology and programmatic reporting workshops
• Results
• Corporate Performance Management Program
• Defined Targets
• Performance Review Schedules
• Improvement Initiatives

• Review Gates Value Criteria
• Inputs
• Program Office Guidance
• Program Structure
• Program Policies Procedures
• Tools Techniques
• Review activities
• Criteria setting sessions
• Resource allocation sessions
• Results
• Gate Criteria by Project
• Resource Allocations
• Action Items

• Value Definition
• Inputs
• Value and Readiness Criteria or Standards
• Program Policies Procedures
• Tools Techniques
• Value assessment workshops
• Results
• Value Definitions

• Readiness Definition
• Inputs
• Value and Readiness Criteria or Standards
• Program Policies Procedures
• Tools Techniques
• Readiness assessment workshops
• Results
• Readiness Definitions

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Value Assurance Operations Deliverables
Enterprise Vision, Mission Goals Program
Guidance
Value Criteria Standards
Readiness Criteria Standards
Policies Procedures
Value Assurance Program Structure
Value Competencies
Readiness Competencies
Value Baselines
Readiness Baselines
Resource Allocation Decisions
Review Action Items
Defined CPM Program
Improvement Initiatives
Operational Improvement
Program Management Guidance
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How to Build a Value Assurance Program
Value Baselines
Value Assurance Program
Value Competencies
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Index
Value Assurance Program Introduction
Methodology and Workflow Activities
Results Review
Activities
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Plan Assign Tasks

• Value Assurance Program Work Breakdown
• Determine the value of and readiness for
  initiatives
• Skill structure initiatives
• Technology initiatives
• Build competencies for value assurance
• Practice prioritization
• Establish initial program office for value
  assurance
• Train on value assurance tools and techniques
• Apply tools on initiatives
• Review trials for cultural effectiveness
• Establish the Value Assurance Program
• Adjust trial mechanisms and operational guidance
• Obtain organizational buy-in
• Establish the program

Skills need to be assigned that can understand
business value, that have responsibility for
operations, that have responsibility for process
execution and results, that have PL
responsibility, and that have responsibility for
improvement initiatives.
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Domains of Performance
Value Assurance
Operations
Initiatives

• Process definitions
• Objectives
• Environmental conditions
• Skills
• Technology

• Vision, Goals
• Scope
• Environmental conditions
• Strengths, Weaknesses
• Success factors

Understand

• Results to objectives
• Trends (internal/external)
• Actual to plan
• Capability/capacity to need
• Best practices

• Opportunities Threats
• Competition, Risks
• Alternatives
• Value Readiness
• Flexibility Agility

Compare

• Causes for good bad
• Impacts
• Opportunities
• Risks, Information
• Constraints

• Processes, Objectives
• Environmental conditions
• Constraints, Relationships
• Skills, Technology
• System Roadmap

Identify

• Processes
• Constraint management
• Value achievement
• Information
• Communication

• Processes, Technology
• Constraint management
• Relationship management
• Value delivered
• Effectiveness Efficiency

Improve
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Establish the Initiatives and Their Value
Value Baselines
With or without other business initiatives, it
will be important to use value assurance while
establishing the value assurance program.

• Skill, Process and Structure Initiatives
• Define the value assurance program
• Establish the skills necessary to operate such a
  program
• Value determination, benchmarks, stage-gate
  criteria, audit competencies
• Tool use (value, readiness, benchmarking, project
  management, process measurement, technical
  performance measurement, etc.)
• Establish the structure for such a program to
  perform in
• Operations reviews
• Key processes to achieve results
• Support process effectiveness
• Program or project reviews
• Determine the initiatives required to reach the
  skill and structure conditions specified
• Lists combinations
• Quality Function Deployment Grouping
• Value and Readiness Determinations
• Establish the value and readiness baselines for
  the initiatives

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Model for Behavior Dynamics During Value Assurance
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Establish the Initiatives and Their Value
Value Baselines
With or without other business initiatives, it
will be important to use value assurance while
establishing the value assurance program.

• Technology Initiatives
• Define the value assurance program
• Establish the technology necessary to operate
  such a program
• Operations reviews
• Means to measure performance
• Means to make the information available
  effectively
• Program or project reviews
• Means to measure performance
• Means to make the information available
  effectively
• Determine the initiatives required to reach the
  technology conditions specified
• Lists combinations
• Quality Function Deployment Grouping
• Value and Readiness Determinations
• Establish the value and readiness baselines for
  the initiatives

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Set Up and Exercise the Value Assurance Program
Office
Value Competencies

• Set Up VAPO Exercise Operations
• VAPO
• A forum, not an organization
• Roles
• Facilitator, participants from representative
  domains involved, documentation experts
• Get senior direction and participation or dont
  even try
• Initiative Roadmap
• Guide the development of an initiative roadmap
  based on value and readiness
• Establish milestones and criteria based on
  initiative plans
• Value Assurance Data
• Organize what to see when for operations and
  projects
• Value Assurance Schedules
• Schedule the reviews (concurrent with others if
  possible) and make few, but clear review
  requirements (total process effectiveness, not
  individual function performance)

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Initiative Roadmap VAPO
Value Assurance Program Office
Could be an additional role for a current Program
Management Office (PMO).
Similar to a configuration control board, the
VAPO meets during operations or program reviews
to ensure value is being delivered. Follow-up
forums are built to address the issues necessary
to get back on track to delivering value.
Integrated Value Management Team
Support
Front Office
Unlike Quality Assurance, the skills to perform
the value assurance roles must be key performance
people who design their own destiny of
contribution.
Back Office
Decision Support and Transaction Technology
Program or project value assurance is scheduled
prior to initial charter and on planned
milestones to help control resource allocations
to initiatives that pay off.
Technology Value Assurance
Business Domain Knowledge
Enterprise Value Chain Centers of Expertise
Operational value assurance is routinely
scheduled.
The Value Assurance Program Office is a
deployment and operations concept that allows key
personnel from all roles to participate in daily
operations and initiatives from planning to
execution and to ensure the appropriate
application of resources and activity to
opportunities for value creation.
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Tool Technique Training
Value Competencies

• Value Assurance Tools
• Ensure that the key people understand the tools
  being used
• Tools to consistently determine value of
  initiatives
• Tools to determine the organizations readiness
  to deliver the value
• Tools for prioritization
• Tools for measurement and progress assessment
• Tools to guide strategy, methods, processes and
  other activities to add consistency
• Quality Function Deployment synergy and conflict
  identification tools
• Value Assurance Techniques
• Ensure that the key people understand how value
  assurance is a highly simple process of self-help
• Milestone criteria to ensure that resources are
  tied to progress
• Management participation and leadership in
  reviews and resolution strategies
• Maturity models to guide entire organization
  involvement
• Focus on resource allocation for highest value
  delivery

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Set Up and Exercise the Value Assurance Program
Office
Value Competencies

• VAPO Execution
• Establish test project baselines
• Establish criteria and schedules
• Conduct reviews
• Identify areas for analysis
• Kickoff initiatives for improvement if required
  with specific value criteria of their own
• Collect data on each phase and activity to
  determine the effectiveness of the activity

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Review VAPO and Materials for Deployment

• VAPO Review of Effectiveness
• Review and analyze data on each phase and
  activity to assess the effectiveness of the
  activity
• Make recommendations for change/improvement of
  the VAPO and VAP

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Establish Final Program and Deploy It
Value Assurance Program

• Value Assessment Program
• Make adjustments to the program
• Determine readiness for launch
• Ensure alignment of business vision with
  operations and this program
• Complete new trials if necessary
• Recommend the program based on effectiveness
• Document the final program
• Plan and schedule the program deployment formally

27
Deploy the Program
Value Assurance Program
Once operations and business strategy are
aligned, making this system work is a controlled
series of renewable projects. Operations
projects to achieve evolutionary improvement and
development initiatives to radically change the
level of performance in a given area.
Understand
Improve
Compare
Identify
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Index
Value Assurance Program Introduction
Methodology and Workflow Activities
Results Review
Results
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Expected Results

• Deliverables
• Value Baselines
• Initiatives with end goals and criteria to
  assess whether the goals can be met during
  performance
• Value Competencies
• People trained in tools and techniques for
  determining progress to value achievement
• Value Assurance Program
• Revised tools, techniques and structure to fit
  the organizational culture and to provide value
  assurance
• Value
• Organization empowered to monitor and control
  the delivery of value from internal or contract
  resources structure returned control of
  investments to management
• Trained resources that can help to establish the
  appropriate allocation of organization resources
  to maximize return on investment

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Typical Changes

• Formal Reviews, Value and Readiness Baselines
  Contributed to
• Business units reviewed their goals first during
  formal reviews, then the project team would show
  how they are achieving them
• Resulted in many issues of informed
  misunderstanding that were corrected JAD style
• Projects were stopped early when they did not
  show the right progress
• When the team could not make the turn to deliver
  what the business needed, they were able to stop
  the project before resources got out of hand
• Processes were improved
• Business process was used to ensure that use
  cases were valid representations and flexible
  enough to deliver what the business needed
• Much greater emphasis on data in the technical
  development area
• Resource assignments did not change from
  projects of high value
• There was just too much visibility on delivering
  the value in a strategic portfolio to allow pet
  projects to take
• Improvement became much tougher
• The projects were much more complex to deliver
  bottom line results and had to be phased to even
  begin to address estimates.
• Estimates became much more accurate, but over
  smaller portions of work
• Smaller planned projects became much more
  manageable
• Operational people had to participate in
  building their success, they could not just drop
  the project on IT and expect it to be delivered
  some time in the future

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Index
Value Assurance Program Introduction
Methodology and Workflow Activities
Results Review
Review
32
Value Assurance Program Introduction

• Quality Control
• Test Planning
• Understand unit under test
• Understand requirements
• etc.
• Test Execution
• Set-up
• Test
• Document results
• Problem Isolation
• Determine causes
• Validate causes
• etc.
• Corrective Action
• Fix defects
• Document new unit
• Retest

• Quality Assurance
• QA Planning
• Understand process
• Understand requirements
• etc.
• Audit, Inspection
• Set-up
• Audit
• Document results
• Problem Isolation
• Determine causes
• Validate causes
• etc.
• Corrective Action
• Fix problem
• Document new process

• Value Assurance
• Value Planning
• Understand goals
• Understand promises
• etc.
• Value Comparison
• Metrics
• Analysis
• Project performance progress
• Problem Isolation
• Determine causes
• Validate causes
• etc.
• Corrective Action
• Reallocate resources
• Refocus alignment
• Reinforce vision, goals, etc.

Focus is on the Results
Focus is on the Process to Obtain the Results
Focus is on Resource Allocation to Achieve the
Right Results
Almost All Businesses
Many Businesses
33
Value Assurance Ensures These Areas Are Focused
on Business Goals
34
Value Assurance Operations Processes
Value Assurance Operations

• Understand Goals
• Inputs
• Business Strategy
• Business Vision
• Business Mission
• Business Goals
• Tools Techniques
• Workshops to understand the meaning
• Workshops to establish the way operations or
  projects will be assessed
• Results
• Documented Vision, Mission, Goals
• Value and Readiness Criteria or Standards
• Program Office Guidance

• VA Program
• Inputs
• Documented Vision, Mission, Goals
• Value and Readiness Criteria or Standards
• Program Office Guidance
• Tools Techniques
• Organization workshops
• Policy Procedure workshops
• Results
• Program Structure
• Program Policies Procedures

• Corporate Performance Management
• Inputs
• Business Strategy
• Business Vision
• Business Mission
• Business Goals
• Tools Techniques
• Operational review workshops
• Initiative or project review workshops
• Technology and programmatic reporting workshops
• Results
• Corporate Performance Management Program
• Defined Targets
• Performance Review Schedules
• Improvement Initiatives

• Review Gates Value Criteria
• Inputs
• Program Office Guidance
• Program Structure
• Program Policies Procedures
• Tools Techniques
• Review activities
• Criteria setting sessions
• Resource allocation sessions
• Results
• Gate Criteria by Project
• Resource Allocations
• Action Items

• Value Definition
• Inputs
• Value and Readiness Criteria or Standards
• Program Policies Procedures
• Tools Techniques
• Value assessment workshops
• Results
• Value Definitions

• Readiness Definition
• Inputs
• Value and Readiness Criteria or Standards
• Program Policies Procedures
• Tools Techniques
• Readiness assessment workshops
• Results
• Readiness Definitions

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