Ranking Portfolio Initiatives

The challenge of defining workable prioritisation criteria

APM PfM SIG 14/06/12 Bernard Marshall

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Building a change portfolio

• Defining prioritisation criteria – Distilling criteria from strategic documentation

– Challenges and practicalities

• Building the rankings list

• Building a coherent portfolio

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Preparing for the future

Running the

Business

Improving the

Business Defining new

strategyBuilding infra-

structure

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Initiative Process and Pipeline

Re-direct

Terminate

Channel

Terminate

Nurture

Resource

SeedSet Direction

Experiments ProjectsIdeas Solutions

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NewCo Initiatives (sample)

New Brand Identity

Product Development Process

NewCo Environment Definition (“Culture” and Employee Assimilation

New Business Unit

New International Office Locations and Moves

Pack-Out and Distribution Transition

NewCo.com Reorganization

January, 2013 April JuneMay July AugustFebruary March

Infrastructure Development

Employee Self-Services

Customer-Relationship Management System

Virtual Supply-Chain

Web-enabled Information Warehouse

Vision/Strategy/Planning

Organizational Design

NewCo@NewCo

ACQUISITION(S)

New channels to market

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Criteria – Strategic and Business Rationale

You should ask these questions about each initiative / programme / project.

• Why do we have to deliver this initiative and why now?

• How does it fit with other initiatives already planned or underway?

• Who are the main stakeholders and partner organisations?

• Do we understand the scope, what success will look like, and is it supported explicitly by both users and stakeholders?

• What is the critical path and how will we know we are on track?

• What is our track record for managing similar initiatives?

• Have we identified the main risks and do we have explicit plans to manage them?

• Are we confident about our leadership, skills and capabilities to achieve success?

• Is the budget affordable for the overall initiative and the work to be done through to the next stage?

• What are the plans for evaluating the outcome of the initiative / programme / project?

• How does this initiative contribute to your authority’s business strategy?

• Is the high level business case complete – that is, is it affordable, achievable, with a wide enough range of options explored and likely to achieve value for money?

• Have we taken account of the wider policy context, including other critical policy initiatives such as FoI, the Efficiency Agenda, etc., where relevant?

• Have the critical success factors and benefits been agreed with key stakeholders?

• Has a feasibility study been completed satisfactorily, with a preferred way forward?

• Do we have internal / external authority and stakeholder support for the initiative?

• Have we identified the major risks and do we have outline risk management plans?

• Are the scope, scale and requirements realistic, clear and unambiguous?

• Can we confirm our planning assumptions, including timescales and the impact of any other enabling or interfacing initiatives?

and

• Is there a clearly defined and agreed governance structure with nominated key roles and responsibilities?

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Sample Ranking Criteria

• Regulatory Compliance

• Policy Imperatives

• Risk mitigation or avoidance

• Return on investment

• Cost avoidance

• Competitive differentiation

• Market share

• Revenue

• Innovation

• Flexibility/agility

• Nearness to delivery

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Simple Categories

• Compliance projects

• Strategic Projects

• Operational projects

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Weighted Indexing

• Establish the relative value of the investment

• Compare across multiple unrelated criteria

• Provide Aunt Sally but ensure that leadership gets to define the final criteria and weightings

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Bread and Butter Pearl

White Elephant Oyster

Feasibility

Value

Credibility

Fit

Readiness to deliver

Relative costs

Quality of Approach

Strategic relevance

Financial reward

Speed to market

Synergies and complementarity

One of the many matrices to help illustrate your work

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The Challenges

• Need for neutrality – process needs to be seem as extremely impartial

• Define the criteria as part of the strategy work – not the planning work

• Only a model to help simplify

• Start with an naïve objective caricature and then let the key decision makers justify why they are moving away from the model

• Look out for inflation

• Quality of the information available

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From entry criteria to planning criteria

• Multiple assessment criteria, quantitative and qualitative data and tools to collect it

• Not just a linear process – portfolio needs to be reviewed for balance and >Σparts

• Sequencing

– How and when to run the project in the context of the wider portfolio

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Thank you for your attention!

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Initiative Portfolios

• Speed– Integration

• identifies dependencies and manage sequencing

• minimizes competing priorities

• maintains focus

– Knowledge Management

• creates internal competency for managing change

• lessons learned collected in central repository

• Reduced Cost and Confusion– prioritizes and allocates resources appropriately

– reduces rework and redundancies

– enables employee understanding and acceptance

Integrating initiatives into logical portfolios

delivers benefits of:

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Balancing the Portfolio – cost/benefit

Benefits

• Regulatory

• Commercial

• Financial

• Operational

• People

Costs

• Money

• Resources

• Risk

• Attention

• Commitment

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Alignment to Organisation Strategy

1. Customer Service Excellence

7. Operational Excellence Delivery

3. Business Excellence Delivery

6. Driver Licensing Modernisation

8. Vehicle Taxation and Enforcement / Compliance

5. Vehicle Registration Modernisation

2. Data Provision and Information Support

4. Electronic Vehicle Licensing

Customer Relationships

– Strategic Imperative

Operational Excellence –

Strategic Imperative

Enabling Culture –

Strategic Imperative

Knowledge Management

– Strategic Imperative

Products & Services

Innovation –

Strategic Imperative

PR

OG

RA

MM

ES

Stra

tegic

Impera

tives

Po

licy In

fluen

ce –

Stra

teg

ic Im

pera

tive

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Mapping Initiatives to Priorities

Once Step 1 has been completed and all of the council’s key objectives have been agreed and all relevant projects and

initiatives selected, they can all be plotted onto a plan as outlined in this example.

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Collecting Project Date (illustration)Project code, Name of project, Short description, Project manager, Contact details, Sponsor, Directorate, Project Type (MSP), Start

date, Finish date, Duration (months), Not started, Complete, % complete (time),

1st Priority Theme, 2nd Priority Theme, 3rd Priority Theme

Statutory, Political, Strategy, Improvement, Maintenance - "Cat Index" (weighting), No of Objectives contributed to

Dependencies , Links to other projects, File name

Total budget: approved – real, Budget for analysis, Spend to date: approved – real, Committed spend: approved – real, Spend to

complete: approved – real, Approver, Approved, Approval level, Budget owner/Service Mgr, Key stakeholders, Customer

Number of staff involved - Direct >75%, >25%, >5%, Total direct, Number of staff involved - Indirect >75%, >25%, >5%, Total indirect,

Estimated FTE months – Direct, Indirect, FTE sum

Is customer satisfaction being measured as part of the project? No Comments

Is the project part of a programme? No Comments Which one?

Has Managing Successful Projects methodology been applied? No Comments

Is there a documented Project Initiation Document? No Comments

Deliverables, Next key milestone, Expected Benefits Date

Does the project enable continuous improvement? No, Comments

Will the project contribute to evidence based decision making? No, Comments

Will the project contribute to how performance is measured? No, Comments

Will the project positively impact BVPIs? No, Comments, Which ones?

Will the project increase staff skills? No, Comments How quickly will this impact occur (months)?

How much will the project save (£)? FTEs, Time, Process Efficiency project, Estimated saving, % of cost, Effectiveness project,

N/A, Notes Direct, Enabler, Approved, Real

Is the saving a one off or on-going saving? How long (years)?

Statutory requirement: Is your project necessitated by law/regulation? Direct- Indirect, Which one? Notes

Political commitment: Is your project required to deliver on a political commitment? Direct - Indirect Which one? Notes

Strategic priorities: Is your project delivering on a strategic commitment form the corporate plan? Direct – Indirect Which one? Notes

Performance: Is your project in response to an external performance improvement target? Direct

Is your project in response to an external performance improvement target? Direct, Which one? Notes

Maintenance - Is the project in response to a maintenance need? Direct – Indirect, Which one? Notes

Is your project in response to some other imperative? Direct - Indirect Which one? Notes

Link to Key Council Partner? Links to other projects, Number of customers impacted (#)? Communities, Adults, Children,

Business, Ease of redeployment, Can be wound down quickly? Priority index, Portfolio home, Projects for review

Analysis Tools

Portfolio Rationalisation

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Identify the full range of projects that to

develop the strategic capabilities

necessary to deliver strategic change

Purpose:

• Generate projects from the

capabilities

• Prioritize, sequence and plan the

transformation

• Identify the key methods and

techniques required for each project.

• Identify key dependencies

• Confirm what to STOP doing

How to Create:

This tool helps a manager be clearer about the reason for each project and the business goals

being served. It is easier to harness the different contributions required to reach goals, to

integrate contributions, and to prioritize projects.

Portfolio Matrix Identifier

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Using the scorecard to drive the organisation’s change programme

Corporate Scorecard measures

Results

Customer

Processes

People

Measure 1Measure 2Measure 3Measure 4

Measure 1Measure 2Measure 3Measure 4

Measure 1Measure 2Measure 3Measure 4

Measure 1Measure 2Measure 3Measure 4

?

?

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Out of the full range of potential projects,

agree which projects to prioritize

Purpose:

• Map the potential projects along the three dimensions:

• time to respond• ease of implementation• impact on business

• Use color coding to identify which projects to stop (red), park (yellow) and prioritize (green)

• What else can drive priorities?• externally imposed deadlines• the client's preferences• internal politics• critical paths• resource burdens• project staff• balancing with day to day business• assimilation capacity• benefit delivery profiles• greatest impact• continuous flow of benefits• risk management strategies

How to Create:

This tool helps in prioritizing projects.

Imp

ac

t o

n B

us

ine

ss

Time to respond ShortLong

Low

High

Ease of

implementation

HighLow

Project Prioritization Matrix

Analyze the relative strengths of a

company's array of products and

determine appropriate strategies for

each

• Use available internal and external sources to collect data on indicators of market attractiveness and competitive position such as market share, % revenue growth, and revenue in absolute dollars for each of the company's product lines.

• For each product, graph growth rate vs. relative market share; scale the data points to reflect product revenue in absolute dollars.

• Divide each axis into three sections –low, medium, and high – to form nine subdivisions on the graph.

Purpose:

How to Create:

This analysis illustrates product performance and suggests product strategies; for example: high competitive position coupled with high market attractiveness suggests investing to grow at the maximum digestible rate.

PRODUCT PORTFOLIO ANALYSIS

DataEncryption

MARKET ATTRACTIVENESS

HIGHMEDIUMLOW

COMPETITIVEPOSITION

WEAK

MEDIUM

STRONG

T1 Mux

Hubs

Routers

Fiber

T1 Access

NetworkManagement

DSU

Leased LineModems

LowSpeedDialModems

STD Mux

HighSpeedDialModems

Remote/Branch Access

Traditional Services> $500,000

< - $500,000

$10 M in FY 1994Budgeted Revenue

Operating Profit Bubble

Disinvest

Invest

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To optimize strategy by developing a

sense of the realistic state of the market

and company affairs

FIT VS. ATTRACTIVENESS MODEL

• Baked Goods

• Bulbs

• Cheese

• Fruit

• Kitchenware

• Meat/Seafood

• Stationery • Decorative

Accessories

• Indoor Plants

• Nuts

• Seeds

• Trees/Shrubs

• Gourmet Food • Bed/Bath

• Pool/Patio/Gardening

• Crafts

• Personal

Care/Grooming

• Specialty Apparel

• Camping Equipment

• Children’s Apparel

• Drug/Vitamins/Health

Food

• Hardware/Tools

• Athletic Equipment

• Fishing Equipment

• Hunting Equipment

• Sporting Good

Apparel

Category

Fit With

Company

High

Medium

Low

Low Medium High

Category

Attractiveness

CATEGORY EVALUATION - SPECIALTY/SPIN-OFF

Categories included in existing

or planned specialty books

Recommended additional

specialty book venture

EXAMPLE

• Identify product, category or market

overall attractiveness as being low,

medium, or high. Plot along x-axis

• Identify product, category, or market

fit with company objectives as being

low, medium, or high. Plot along y-

axis

• Evaluate newly created matrix; aim to

reveal products, categories, or

markets that fall under high overall

attractiveness and high fit with

company objectives

Purpose:

How to Create:

May oversimplify market situation. Requires judgments which are subjective in nature

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Project Responsibility Assignments

Identify the right sequence of projects

and programs for the business

Purpose:

• We have identified a "default change

sequence" from our own extensive

experience and academic research

into further case studies

• This provides a starting set of

assumptions for the best sequence

for major change programs

• These must then be matched and

tailored to the specific needs of each

organisation.

How to Create:

Project Sequencer provides a basis upon which to discuss sequencing and priority of activities

(projects and programs).

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Understand potential

opportunities and constraints

facing the client in taking

advantage of business

opportunities

Purpose:

• The Burke-Litwin questionnaire

should be applied.

How to Create:

challenges and opportunities of potential projects.

Customer Relationship

Management

Customer Information

Management

Alliance and

Partnership

Management

Corporate Brand

Management

Innovation

Management

Management of

Facilitating Technology

Innocence Excellence

Use customer information to understand and acquire customers

Become customer centric by using information to manage the complete relationship, meeting

needs and providing value added services through alliances

Market and company defined in

terms of products

Lip service paid to customer

lifetime value

The organisational focus is on the customer, not the product

Ensure that production respond to

customers, not vice versa

Alliances are looked upon with

scepticism.

Alliances are means e.g. of getting access to channels

Alliances are entered with self understanding and goal clarity

Alliances are seen as a way of pooling resources in a wider context

Use customer i Become custo

Has a managed style to innovation

Convergence Gap Analysis