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A summery of Benefit Realization Management

Today is the final day of the “Strategies, Benefits and Alignment” course. I can’t believe that almost two months have past since the program introduction and the initial lecture. As I stated in my previous blog post I will try to summarize the essence of the two books “The standard for Portfolio Management” and “Benefit Realization Management – A practical guide” in the two final blog posts of the course. Today, it’s time for “Benefit Realization Management – A practical guide”.

What is Benefit Realization Management
Benefit Realization Management (BRM) is a framework, developed by PMI, that aim to provides organizations a way to measure how portfolios, programs and project deliverer value to the organization. Business strategy is fundamental to BRM as it utilizes a holistic approach to derive, plan, manage and track the identified benefits, beyond the scope of a particular portfolio, program or project.

BRM is constituted by three phases: identify, execute and sustain. During the identify phase, senior management identify the benefits to be pursued by the organization and determine whether a portfolio, program or project could produce the intended business result. During the execute stage, portfolio managers, program managers and project managers plan and execute activates to achieve the requested outputs that realize the identified benefit. The goal of this stage is to maximize the opportunity of benefits being realized while minimizing the risk of future benefit being forfeit. The last phase, sustain, is where plans and activities are executed to sustain the values obtained if or when the current conditions (market, strategy, legislations etc.) change.

Core principals
PMI have identified five core principles of BRM: net benefits justify the use of invested resources; commencement of work is driven by benefits identification; planned benefits are identified in authorizing documents; benefits realization is holistically planned and managed; and governance and adequate resources are essential to BRM success. When applied, these core principals align and structure the work of the organization to ensure that the organization strive towards the right set of goals and resources are well spent.

Benefit tracking
BRM emphasizes on benefit tracking as a critical success enabler. In order to monitor the identified benefits throughout their lifecycle, identified benefits needs to be organized, categories and assigned to the different initiatives of the organization. Tools, such a benefit register, a benefit map or a benefit traceability matrix could constitutes a charter of authorized benefits and visualize the plan of how they will be achieved. This will also help senior management to illustrate how changes of strategy or priorities affect the overall benefit realization plan.

Culture
BRM emphasize on building the right culture with clear roles and responsibilities. To enable the successful implementation of BRM a culture that embrace changes must be established and where executives, initiative leaders, suppliers, individual contributors, and stakeholders are able to easily identify the intended outcome of each initiative; not just the deliverables. Some might even argue that the definitions of project success must be redefined within organizations implementing BRM.

According to me, these are the foundations to begin your implementation of benefit realization management. However, there are more subjects and several critical success enablers that should be considered. Please read the full book for further details.

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A summery of Portfolio Management

We’re reaching the end of October which means that the first course of my masters program, “Strategies, benefits and Alignment”, is almost done. It’s time to summarize what I learned during the last two months and what I will bring with me in future roles and employments. I’ve planned for two final blog post that will try to encapsulate the essence of the two books “The standard for Portfolio Management” and “Benefit Realization Management – A practical guide”. In this first post, I’ll summarize “The standard for Portfolio Management”.

What’s a portfolio?
According to PMI’s definition, a portfolio is a collection of projects, programs, subsidiary portfolios, and operations managed as a group to achieve strategic objectives. The components are grouped, which means that they coexists; they relate to each other; affect each other; share common resources and are a part of the same organizational system even though they may produce individual, specific, deliverables.

How are portfolios managed?
Portfolios are managed on a strategic level and the portfolio should reflect the strategic objectives or benefits identified by the organization. This means that portfolio managers must strive to continually align their portfolio and underlying components to that strategy and the decisions of executive management. Portfolio managers also ensure that stakeholder are engaged and that underlying components are scheduled, prioritized, coordinated and that the capacities and capabilities are balanced to enable the realization of the desired benefits. In addition to well-developed communication and leadership skills, portfolio managers must possess systems thinking i.e. the ability to understand how different components of the portfolio are interrelated and interdependent of one another.

PMI have defined a generic life cycle for portfolio management based on four stages; initiation, planning, execution and optimization. During the initiation stage, the organization established the scope, governance, processes, plans and criteria’s to manage and monitor the portfolio; prioritize and execute projects and to communicate with stakeholders. The planning stage, which is returned to in an iterative manner, aim to identify interdependencies between portfolio components and to prioritize these; to ensure that components are within the scope of the portfolio; that components are financed; to identify risks and issues; and to review available metrices to measure and evaluate the progress and success of the portfolio. The execution phase is performed throughout the accomplishment of each component. During this stage portfolio managers monitor the executed projects to ensure that the identified benefits are achieved by the deliverables of the projects; that the risks of the portfolio are maintained and managed; and that information and status updates flows within the portfolio. The purpose of the final stage, optimization, is to make the portfolio as effective as possible. This phase is usually executed when a project or program is added or closed and aim to review metrices, gather lessons learned and to implement suitable improvements.

Portfolio strategic management
Without a continual alignment to the strategy of the organization and the decisions of senior management, there is an eminent risk of the portfolio not delivering the expected outcomes and the resources invested being forfeit. The process of portfolio strategic management ensures that the portfolio is aligned and the components are within scope but also assists in advising senior management by visualizing the impact of their decisions. Portfolio strategic management involves setting the strategic objectives of the portfolio; establishing a portfolio charter; outlining the portfolio road map; and defining the components of the portfolio. PMI emphasize on two topics related to this that I appreciate, a culture of embracing change and risks; and stakeholder analysis.

Value management
Portfolios have no self-worth, they exist on the sole purpose of delivering a desired value; a strategic objective or identified benefit. What’s considered valuable for an organization must be defined by the organization itself but no initiative should be commenced without an identified value as the driver. However, value is seldom generated through the execution of a single project nor it’s deliverables; it’s when these deliverables are released into operations or have reached the market that value is generated and can be measured. Changes in internal and external requirements order the portfolio managers to continually align, prioritize, schedule and reschedule portfolio components to achieve this.

Value management is the process and practices aimed to negotiate the expected value of the portfolio and the underlying components, realizing them, maximizing the return of investment and reporting the progress. Though I personally believe that PMI have created a process too extensive for most companies, negotiating the expected values to create unambiguous expectations of the portfolio and to ensure that all components have associated business cases should be considered a critical success factor for any company implementing a portfolio.

Capacity and capability management
A key concept of a portfolio is that the components share common resources. This makes capacity and capability management a crucial and complex element in the planning and execution of the portfolio. PMI categorize the organizational capacity into four major categories: human capital; financial capital; assets; and intellectual capital. Next, they structure their approach for resource management based on four elements: capacity planning; supply and demand management; demand optimization; and reporting and analytics. PMI offers an extensive description on how to manage these elements and during the course of the written assignment I found an interesting framework that utilizes an agile approach – in a seemingly effortless way – to allocate capacities and capabilities.

As portfolios span over multiple years it is important to keep track on what resources and what capabilities are needed in the short perspective as well as the long perspective to ensure that the requested capacities and the required capabilities of the portfolio are developed or acquired in time.

Portfolio risk management
Risk management is the process of balancing the risks and opportunities of the portfolio to ensure that the portfolio components deliver the expected outcome with regards to business strategy. Since a portfolio is managed on a strategic level delivering upon the strategy of the organization, risks must be handled accordingly. There are a multitude of risks that could affect the portfolio negatively if not managed. Missed deadlines or poor deliverables are examples of internal, “component based risks” that could affect the outcome or value of the portfolio; changes in legislation, budget cuts or a change of strategy are other risks that could affect every components within the portfolio.

PMI provides an extensive description of portfolio risk management and the implementation of a framework to ensure that a portfolio risk management plan (risk tolerance and risk process) are established; that risks are identified and assessed (probability, impact, tolerance, interdependencies etc.); and that the appropriated responses are documented and tracked.

According to me, these are the foundations to begin your implementation of portfolio management. However, there are more subjects and several critical success factors that should be considered. Please read the full book for further details.

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Thoughts of last weeks lecture

Times fly when you’re having fun. I completely missed that a lecture was posted last week so I have a lot of catching up to do. I can’t believe this course is almost over and unless I’ve been misinformed, this was the last “lecture” of the course even there is another QA planed.

The title of last weeks lecture was “Capacity, Capability, Stakeholders and Risk management” and was held by Gunnar Wettergren. Once again Gunnar delivered and interesting and entertaining lecture, I appreciate the informal style and tone of his lectures.

I’ve written a previous post on utilization of capability in large, hieratical organizations and how it would be interesting to study this in a later assignment or thesis. In this lecture Gunnar, and the students, talked about this in the context of portfolio managers not owning resources.
In the written assignment I looked at an organization that used an agile framework to handle this in one of their departments. There were limitations but the framework seemed to be working really well for smaller projects and initiatives. I’ll write a blog post about it later this week.

I agree with Gunnar that stakeholder is a tricky bit. Identifying stakeholders are perceived as easy but my experience tells me it’s harder then most people think. Getting stakeholders involved and getting them to realize they are important for the success of a project or that they will be affected by the deliverables of the project can be a time consuming task. Assessing the engagement level to identify possible activities seems appropriate. I found the visual representation to be really useful.

What’s your thoughts on the lecture? Did you take anything with you? Please, leave a comment!

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The written assignement is complete

Finally, the written assignment is complete. This assignment took much longer time then I expected it to but it have been highly rewarding. I’ve might have taken Gunnars word a bit to literal but I embraced the role of a consultant and evaluated the organization and came up with a lot off suggestions to improve their current situation. Yesterday I presented my conclusions to managers of the organization and even though they already identified much of their problems, they were happy with my conclusion and recommendations.

Abstract

This report aims to assist a Swedish government agency in their ongoing improvement initiative to increase the return of investment and strategic alignment of their IT division. The objective of this report is to investigate how the strategic objectives and identified benefits of the agency are tracked, prioritized and realized by the IT division and to present suitable suggestions on how improve the current situation.

The ability to continually prioritize, track and align the provided services, executed projects and day-to-day operations to the strategic objectives of the agency is vital to ensure that the invested resources deliver the expected outcomes and that the balance between organizational capabilities are maintained.

The conclusions of this report are primarily based on the review of formal documentation and the internal processes of the IT division. To complement this review, three interviews with managers within the IT division were conducted.

The findings of this report indicate a disconnect between the strategic management of the agency and the management of the IT division. This disconnect had already been identified within the agency and actions to mitigate the situation was already initialized. To improve the current situation the author of this report suggests that initiatives should be commenced to promote a holistic approach and governing body to ensure that:

  • strategic objectives are echoed throughout the organizational body;
  • commenced work contribute to the strategic objectives; and
  • activities are registered, prioritized, evaluated and tracked throughout their lifecycle.

If anyone would be interested in peer reviewing the report before hand in I would highly appreciate it.

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A short article on communication

Communication is key for leaders within organizations. Today I stumbled upon an article at projecttimes.com that categorize strategic communication, project management communication, and change management in an easy way; story, status and transformation.

Read the full article here: https://www.projecttimes.com/articles/stories-vs-status-large-complex-projects-call-for-roles-that-are-defined-and-aligned-from-the-start.html

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An intressting article on sucessfull ITIL implementations

Another Monday – another week of studies. The focus of this week is to get the written assignment as close to finished as possible. I’ve gattered all my data, had a few formal and informal interviews with managers at the organization I’m investing but I’m still waiting for the longer, structured, interview with the head of the IT division.

I’ve already analysed most of the data and come to most of the conclusions but I would like to get my views confirmed before I hand in the report.
Since the organization I research have an outspoken ambition to implement ITIL and I’ve already started to look at articles about successfully implementing ITIL in general and Service Strategy in particular. I found a somewhat interesting article written by Malcolm Blumberg, Aileen Cater-Steel, Mohammad Mehdi Rajaeian and Jeffrey Soar called Effective organisational change to achieve successful ITIL implementation. Though their research focuses on the socio-technical systems (STS), something I haven’t quite grasped yet, it’s interesting to study their lessons learned. In their study they conclude that “the ITIL implementation was found to require greater effort to be applied to the people component of the STS, followed by process, technology and structure components”. In my experience any successful and effective change – organizational and technical – requires the support and authorization of the people effected by the change; changes are not implemented by formal documents but by discussions and interactions between people.

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Alignment of ITSM

Today I reopened the report “Delivering value to todays digital enterprise” published by Forbes and found a really interesting section.

When asked which most closely describes the state of their ITSM efforts as they relate to the business, 37% of executives indicate their “ITSM effort is mainly focused on delivering IT services at this time”.

The organization I study is one of these 37% percent. I haven’t analysed all the data yet but it seems quite obvious that the processes implemented are done so to structure the day to day work within operations rather then an attempt to improve the execution of business strategies.

What’s really interesting is that only 8% claim that their ITSM efforts are “closely aligned with the success of our overall business”. I honestly thought that we’ve come further then this.

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A generic maturity model for processes

I’ve spend quite a bit of time to find a generic maturity model to use for the purpose of my report. The head if the IT division that I study have asked me to assess the maturity related to their processes. In order to fit this request into the scope of the course I’ve added “to evaluate the IT divisions maturity level with regards to benefit realization” as one of the objectives of the report. I’ve searched for a defined maturity model for BRM but I’m also going to need something generic.

I looked at the Capability Maturity Model (CMM) and realized that if I remove the word software from “software process” I got a pretty good, generic, model to build upon. This is how far I’ve come:

  • initial – processes are characterized as ad hoc, and occasionally even chaotic. Few processes are defined, and success depends on individual effort;
  • repeatable – basic management practises are established to track cost, schedule, and functionality. The necessary process discipline is in place to repeat earlier successes;
  • defined – processes are documented, standardized and integrated into the standard operating procedure of the organization. Key performance indicators (KPI) are defined;
  • managed – processes and the outcome of the processes are measured, evaluated and controlled. Activities to identify improvements are performed;
  • optimized – continuous process improvement is enabled by quantitative feedback from the processes and their outcome. Identified improvements are actively being planned, prioritized, scheduled and implemented.

What do you think, have you found a good model that I could use instead? Please let me know by dropping a comment.

References

Paulk, M. C., Curtis, B., Chrissis, M. B., Weber, C. V., (1993). Capability Maturity Model for Software, Version 1.1 (Technical Report). Carnegie Mellon University, Pittsburgh.

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Weekly summery

Another week of masters studies is finally over! This week have been hectic as I’ve facilitated a three day workshop at work. The good part is I spent the week at a hotel so I’ve been able to read a lot of articles this week. “Benefits Realisation Management and its influence on project success and the execution of business strategies” was an extremely interesting read and “Project Categorization Systems and Their Role for Project Portfolio Management” which was recommended by Gunnar Wettergren held some intriguing conclusions.

The written assignment is slowly progressing; I’ve spend a ridicules amount of time trying to get my citations and references correct. The assignment is really challenging but fruitful as I get to reflect upon and apply the knowledge I gained throughout the course on a real organization.

References

  1. Serra, C.E.M., Kunc, M., (2015). Benefits Realisation Management and its influence on project success and the execution of business strategies. International Journal of Project Management, 2015 33(1), 53-66. doi: 10.1016/j.ijproman.2014.03.011
  2. Bich Nga Dao. (2011). Project Categorization Systems and Their Role for Project Portfolio Management (Unpublished master’s thesis). Chalmers University of Technology, Gothenburg, Sweden.
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Benefits Realization Management vs. Service Strategy

This week is almost over and the introduction to the written assignment is now complete. I’ve looked at a lot of articles on benefit realization management (BRM) for my literature review and it’s interesting to see how BRM and Information Technology Infrastructure Library (ITIL) Service Strategy are aligned.

In the book Benefits realization management: a practice guide (Project Management Institute [PMI], 2019), BRM is said to encompass “standard methods and processes that an organization uses for identifying benefits, executing it’s benefits realization plans, and sustaining the realized benefits facilitated by portfolio, program or project initiatives”. Business strategy is central in BRM since benefits are derived, planed, managed and tracked holistically, beyond the scope of a particular portfolio, program or project.

In ITIL, the practices related to strategy management for IT services, suggests similar activities as BRM. In Information Technology Infrastructure Library (ITIL) and the book ITIL® Service Strategy (The Cabinet Office [TCO], 2011) the purpose of service strategy is described as a way to “articulate how a service provider will enable an organization to achieve its business outcomes”. Service strategy “establishes the criteria and mechanisms to decide which services will be best suited to meet the business outcomes and the most effective and efficient way to manage these services”. This involves activities such as analysing the internal and external environment to identify risks, constraints or opportunities; engage and to keep relevant stakeholders informed; and to ensure that “strategic plans are translated into tactical and operational plans for each organizational unit that is expected to deliver on the strategy”.

References

  1. Project Management Institute. (2019). Benefits realization management: a practice guide. Newtown Square, US-PA: Project Management Institute, Inc.
  2. The Cabinett Office. (2011). ITIL® Service Strategy. London: The Stationery Office.