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Turning Strategyinto Action

The Real Value of Enterprise Project Management

White Paper

Paul Major, Director, Management Framework Ltd

© Management Framework Ltd & Microsoft Corporation 2005

1. Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

1.1 Who should read this paper? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

1.2 Why should you read this paper? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

1.3 What are the benefits? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

1.4 Next steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2. What is the problem? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

2.1 Structuring the debate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

3. Where are we now? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

3.1 Competitive advantage is speed driven . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

3.2 Some things never change! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

3.3 New challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

4. How do we manage today? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4.1 Welcome to the real world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4.2 Personal heroics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4.3 Suitability of the current control solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5. A new approach – Enterprise Project Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5.1 Contextual background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5.2 The business driver for EPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5.3 The four pillars of EPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

5.3.1 Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

5.3.2 Process adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

5.3.3 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

5.3.4 Managing resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

5.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

6. Implementing EPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

6.1 First steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

6.2 Approaches to implementing EPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

6.2.1 Top down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

6.2.2 Bottom up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

7. What next - establishing the ROI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

7.1 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

7.2 Competitive advantage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

8. Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

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1. Executive summary

This paper aims to provoke discussion on why so many organisations, large and small, really struggle to successfully

deploy their most important business initiatives when, by definition, they are strategic, critical and achievable: if they

weren’t why would you be doing them?

We will explore a new way to approach this challenge, one that is rapidly gaining support in boardrooms across the world

and one which could alter the way you think about managing change across your organisation.

1.1 Who should read this paper?

Are you responsible for delivering strategic or business critical change in your organisation? Do you feel frustrated by the

lack of visibility or true control you have over these initiatives? Are you concerned over the impact failed or incomplete

delivery is having on the organisation’s (and your) future?

1.2 Why should you read this paper?

Competitive advantage: the ability of your organisation (whether public or private sector) to create superior value for its

consumers is driven by its ability to implement change more quickly, consistently and predictably than the competition.

Turning strategy into action: even great organisations with the best strategies will become ordinary if they fail to deliver

on these strategies (and lose competitive advantage as a result).

Implementing change requires a change in approach: our existing management solutions (e.g. ERP, CRM, Financial

Control) are based on improving operational efficiency, doing ‘business as usual’ more effectively. Successfully

implementing business critical strategic initiatives requires the delivery of change – the antithesis of ‘business as usual’.

As speed to action increasingly drives competitive advantage, organisations need to develop a new set of competencies

based on the ability to manage change.

1.3 What are the benefits?

The ability to successfully implement your organisation’s most important business initiatives (whether developing new

products, integrating a newly-acquired subsidiary, deploying new technology solutions or entering a new market) is a

change management issue. Managing change has not been regarded as a core organisational competency until recently

and the approaches to successfully creating this competency are only just emerging.

Microsoft® Enterprise Project Management (EPM) provides a framework for successfully implementing change in your

organisation by creating a consistent governance framework and approach that allows you to gain visibility of, and

therefore control over, the change initiative(s) most critical to you.

Put simply, it enables your organisation to turn strategy into action …over and over again.

This paper discusses the realistic business value of implementing EPM together with the challenges organisations face in

creating these competencies. It also describes two separate approaches an organisation can take to successfully creating

an EPM capability using Microsoft’s Enterprise Project Management solution.

Finally we will suggest the typical return on investment a range of organisations could expect as a result of EPM.

1.4 Next steps

If you want to understand more about EPM and how it could help your organisation improve its ability to consistently

deliver business-critical change then continue to read this white paper.

If you are already aware of the benefits of EPM and want to know more about implementing Microsoft’s Enterprise

Project Management Solution please follow this link www.microsoft.com/uk/office/epm

If you would like to comment on this white paper, or discuss how to create sustainable competitive advantage for your

organisation by turning strategy into action please e-mail the author at paul.major@managementframework.com

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2. What is the problem?

“Why is it so difficult to successfully deliver our strategic or business

critical change initiatives?”

Have you ever asked yourself that question?

Perhaps you are the Managing Director of your business and you’ve got

to a stage where your leadership team agree on the three strategic

initiatives that will make the most significant difference to your business

this year. Problem is, now you are looking at the team, what are the

chances of actually deploying all three initiatives successfully?

Maybe you’re the Finance Director and you’re mentally calculating the cost of failed deployments in the past and wondering

why these ones will be any different. Why do you always have to play ‘Devil’s advocate’? You want to see the organisation

succeed as much as anyone, just in a controlled, rather than a chaotic way.

Or possibly you’ve drawn the short straw. You have been given responsibility for making the strategy work (perhaps you

even volunteered!) You might be the Marketing Director charged with launching into a new market, or the Chief Engineer

tasked with designing and developing a new product. Maybe you’re a Programme Director given the job of implementing

a new business solution or integrating the sub supplier you acquired last quarter. Given that this challenge will be as

important for your career as it is for the business, what are you going to do to make sure it succeeds?

As you are currently using some of your valuable time to read this white paper then it is likely you have an interest in

successfully deploying business critical change in your organisation. If you also have the ability to influence how these

changes occur and are responsible for their success, then you are involved in one of the most important (a.k.a. incredibly

difficult) challenges facing organisations today.

2.1 Structuring the debate

To help structure the debate, the rest of this paper is divided into five sections.

1. Section three will look at the situation organisations are currently in and suggest some reasons why the issue

of implementing key strategic initiatives successfully is becoming increasingly important.

2. We will review in section four how organisations are currently equipped to manage these issues.

3. Section five describes a new approach to implementing change based on the principles of Enterprise Project

Management (EPM).

4. In section six we examine two alternative approaches to implementing EPM and discuss some of the practical

challenges and benefits of each approach.

5. Finally, in section seven we will summarise the value proposition of EPM and suggest next steps organisations

can take to research this subject further.

Given that this challenge will be as important for your career as itis for the business, what are you

going to do to make sure itsucceeds?

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3. Where are we now?

Everything is changing, or so it seems. We have to bring products to market quicker, implement new technologies faster,

rapidly adapt to an ever changing market place and a more empowered customer whilst also running ‘business as usual’

and becoming operationally excellent.

At the same time, the number of potential ‘good ideas/projects/strategic initiatives’ (call them what you will) allegedly

offering exceptional return on investment and immense value add is multiplying. All these ‘opportunities’ demand

investment of the organisation’s limited resources and are creating an increasing need to choose only the best and make

absolutely sure they deliver what they promise.

Whilst ‘change is a constant’ is a generally accepted business truism, it seems there is not a lot of consistency in the way

organisations implement change.

Why is this? What is different about change now compared to, say, ten years ago?

We would suggest that there are now two critical differences in the way change is impacting organisations:

1. The requirement to change has increased –

“it is more important to our organisation’s survival”

2. The speed of change has increased –

“we have to change more quickly, more consistently.”

As a result organisations have to focus far more clearly on the strategic and tactical initiatives that will make a real

difference to their business, and that is forcing a focus on how they deploy these initiatives. The clarion call from the

boardroom has become “how do I turn strategy into action?” and underlying this question is a fundamental lack of

confidence in the organisation’s ability to consistently deliver.

3.1 Competitive advantage is speed driven

In his paradigm-shifting book ‘Competitive Advantage’, Michael E Porter

describes competitive advantage as being “…about how a firm actually puts

the generic strategies (cost, differentiation, focus) into practice”. Porter goes

on to talk about mechanisms such as the ‘Value Chain’ for identifying areas

of competitive advantage. Historically, many organisations have successfully

used these approaches to create competitive advantage but we believe there is a new and increasingly important dynamic,

one which has only come to prominence over the last five years - namely execution.

In this context, we define execution as the ability to deploy strategic change accurately, quickly and consistently and

therefore accrue competitive advantage.

We live in a ‘now-time’ generation. Everything around what we do, how we do it and who we are, is defined by speed.

The latest gadgets and the fastest cars are obvious examples, but we also see it in the frustration with waiting, whether it

is for a hospital operation, a train or even the postman. The impact on our organisations is significant; it is no longer an

issue of “can I change?” but “how fast can I change?”

And no, it isn’t any different in the public or not-for-profit sector. The expectations on our public services are ever

increasing in terms of both volume and speed to delivery and this is bringing a huge change management burden to

organisations on top of their already significant operational effectiveness challenges.

Crucially the paradigm has moved on from ‘change is a constant’ to ‘the rate of change is constantly increasing’.

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It is no longer an issue of “can I change?” but

“how fast can I change?”

3.2 Some things never change!

The problem is, some things don’t change. For most organisations the process for selecting which initiatives to allocate

their limited resources to, (previously called ‘prioritise’, now more commonly known as ‘portfolio selection’) is probably

the same as it has been for years. Even, more critically, the way in which deployment of these initiatives is managed is

probably based on a combination of personal heroics and a few key lessons picked up from the project management

or technology teams.

3.3 New challenges

The new challenge is to create a systematic capability in our organisations

for implementing change, allowing us to execute business critical strategies

successfully, time after time, to specification, budget and schedule.

Historically the conversations around creating a systematic approach to

implementing change have either been confined to technology teams

(who typically have used Project Management methodologies and

processes) or HR teams (promoting the cultural and leadership aspects

of change management).

Whilst both these aspects are important ingredients of change we will deliberately focus away from traditional Change

Management specifics and look instead at a wider canvas: “how do I create an organisational competence in

implementing strategic change?”

The common skill set we suggest is missing, is the ability to consistently manage change in complex organisations. This

paper focuses on how to add real value to your whole business through ensuring you can control change effectively and

therefore implement your critical strategic initiatives successfully, regardless of the functional area you work in.

Note the language here. The suggestion is that successfully deploying your organisation’s chosen strategies is actually an

exercise in controlling change, in itself something of a paradox, which perhaps explains why it has proven so difficult.

To be successful at controlling these changes perhaps we need to consider our organisation (Enterprise), our critical

change activities (Projects) and the processes by which we control them (Management) in a more holistic way.

No matter how big or small your organisation is, whether you are in the public or private sector, if you are a leader or

stakeholder in a business critical change you have to ask:

“How do I make sure our strategic initiative(s) deliver successfully – every time?”

That is the real value to your business of Enterprise Project Management (EPM).

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No matter how big or small yourorganisation is, you have to ask:

“How do I make sure ourstrategic initiative(s) deliversuccessfully – every time?”

4. How do we manage today?

4.1 Welcome to the real world

In reality, failure to deploy has never been an option, yet many before us have failed. Why is that, and what can we

do differently?

Change management like project management, has been around for years and has an existing body of knowledge and

practitioners. Likewise the concepts of strategic planning and execution are early stage topics in most MBA and Business

Schools’ curriculum. One would think, therefore, that there is a significant depth of knowledge and experience in all these

disciplines to ensure that today’s business decision makers are more than capable of successfully deploying their day-to-

day business initiatives, let alone the critical strategic ones, with regular monotony.

The trouble is, that doesn’t seem to be the case. In both public and private sectors it is too easy to list major business

change initiatives or programmes that have failed to hit time, cost or specification targets. At a time when technology

abounds and our business leaders are more educated than at any other time in history we still fail to hit the mark.

Executives tell us that it’s hard enough prioritising their own world without having to sort out every one else’s. The

traditional management paradigm is ‘personal heroics’ – “go on make it happen, you know it will be good for your

career” (even if it isn’t for your marriage or sanity.) Surely there must be a better way, a ‘Silver Bullet’ that can take all this

pain away?

Observationally, there are two fundamental problems with silver bullets:

1. They are expensive

2. They have a habit of killing the recipient.

In the real world there are lots of problems waiting for solutions, lots of consultants offering advice, lots of technologies

promising Nirvana – and a lack of clarity on what to do next. There is no easy solution. As we will discuss later, even

success in EPM has a cost.

Before we look at a new way though, let’s spend a few moments discussing some reasons why, we believe, traditional

approaches to implementing business critical change have failed.

4.2 Personal heroics

In a situation where there are no existing charts or maps for successfully

deploying critical business initiatives and where success or failure has a

high level of visibility (and risk) it is tempting to take the helm and

personally navigate the fleet through the choppy waters of change.

Despite the significant differences that initiatives such as Total Quality

Management, Six Sigma and the whole CRM debate have made to the

way we look at business through the power of teams and the need for

process, when it comes to implementing change we still have a tendency

to revert to personal heroics – ‘the power of one’.

One of the more significant risks of this approach is that it results in energy and creativity being focused on trying to

manage the change, rather than applying these qualities to the change subject itself. To extend the sailing analogy above,

so much time is spent trying to find a safe route through the storm that by the time the fleet arrives, the battle is over.

Whether this is due to a latent human desire to be creative or, perhaps, that natural human aversion to process, rigour

and discipline - the outcomes tend to be the same. Organisations are prone to adopt silo mentality in implementing

change, focusing on personal or departmental rather than organisational goals, inevitably leading to sub optimal

decision making.

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In a situation where there are noexisting charts or maps for

successfully deploying criticalbusiness initiatives it is temptingto take the helm and personally

navigate the fleet

4.3 Suitability of the current control solutions

If an organisation has moved beyond personal heroics and is trying to implement a more holistic approach it is likely

that the conversation will soon shift to “how do we control this initiative, what tools do we have at our disposal to

measure progress?”

Over the past 20 years, organisations across the world have invested billions in state of the art control solutions under the

various guises of Cost Control, Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM). It is

natural, therefore, to look to these ‘super solutions’ to enable us to manage change in our organisations …isn’t it?

Undoubtedly elements of our ERP/CRM/Cost Control solutions will support elements of our change management

requirement, but let’s examine this a bit more closely.

What’s the prime currency (measure) of change? Arguably it is progress described in terms of both time and deliverables.

What do our ERP systems primarily measure – is it broadly transactions?

What do our CRM systems primarily measure – is it broadly customer interactions?

What do our Financial systems primarily measure – is it money?

Could it really be that none of the core governance systems we have put in place over the past 20 years actually help

us to measure change? We probably have isolated pockets of capability, usually in desktop-based project management

tools, but that is not a core competence, an organisational-wide capability supported by organisational-wide processes

and technologies.

Alarmingly, if this is the case, then we do not have an embedded governance process for managing change, which may

explain why organisations struggle to successfully deploy strategy time after time. Is this where we need a new wave of

business thinking?

In addition to the core business solutions mentioned above many organisations are currently implementing Corporate

Performance Management (CPM) as part of their drive to gain better visibility and control of organisational performance,

presumably with an expectation that it will also improve the ability to deliver key initiatives.

Again the difficulty is that although CPM as an approach is a valuable mechanism for giving executives visibility of

organisational performance, it is still based on the data held in the existing core business solutions. This creates a real

danger that, without an EPM element, the CPM ‘dashboard’ focuses the organisation on driving operational efficiency,

getting better at ‘business as usual’ activities whilst ignoring the other key driver of ‘value add’ - the ability to

implement change.

We are not suggesting that EPM replaces CPM in an organisation, rather that in implementing CPM, a core part of the

data reported has to come from an EPM solution, as this is the only way the organisation will gain real visibility of its

progress in deploying business critical initiatives.

Is it possible that as the business needs have changed from managing costs, to managing supply chain, to managing

customers to managing change we have overreached the capability of our organisation’s core governance processes?

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5. A new approach – Enterprise Project Management

“If we always do what we’ve always done, we will always be where we’ve always been”

T.D.Jakes, Lead with all Diligence Conference 2005

Albert Einstein is quoted as stating the case a little more elegantly when

he said, “You can’t solve a problem with the same kind of thinking that

created it!”

The fact is, the world has changed. Competitive advantage is speed

driven and derived from our ability to turn strategy into action.

To survive and succeed we need to create an organisational competence in making change deliver. Traditionally we have

focused on individual efforts and existing solutions but in a world where speed is king and change occurs even during

the deployment of change, we simply don’t have a robust, consistent, flexible control paradigm that gives visibility of real

progress and allows us to take decisions not express opinions.

5.1 Contextual background

Let’s look at a typical assessment of how we deploy

change in an organisation. At the top of the pyramid

is decision making. Whether it is deciding which

initiatives to start with (portfolio selection) or what

to do with the ones already in progress, it is at this

executive level that most decisions are made.

EPM Value Proposition #1: decisions are often

made on gut feel and intuition due to a lack of

visibility of real data.

At the bottom of the pyramid is where we deliver.

Here is where the rubber hits the road, and the bulk

of our energy is deployed. Personal heroics

predominate with individual(s) focussed on delivering

their own specific objectives in their own way.

Creativity rules!

EPM Value Proposition #2: innovation is great, but not when it creates chaos.

The middle of the pyramid is, crucially, where governance takes place. This is where the control processes exist that allow

real data to be filtered up to decision makers and real direction to be passed down to the deliverers. More often than

not, this is the area most lacking. More than just a ‘data engine’ or technology layer, this section is about having consistent,

pragmatic, relevant processes in place that enables good decision making and effective team working based on real progress

information. It is in this area that the concept of EPM really delivers.

5.2 The business driver for EPM

The challenge is how to succeed when ‘complexity kills!’ Even if we only had to deploy one simple initiative to the above

model the complexity of cross-functional dependencies, resource constraints, and communication issues to name but a

few, would severely challenge our success.

In reality we rarely have the opportunity to deploy in complete isolation. More often than not this initiative will be one of

perhaps three key strategic bets for our organisation that all use similar resources, and bump up against each other on the

way. In larger organisations we may be managing a portfolio of 100 or more initiatives, all under way at the same time.

To survive and succeed we need to create an organisational

competence in making changedeliver.

Complexity is evident in all sizes of organisation and initiative; it simply

grows exponentially the more initiatives you deploy.

To be able to manage change effectively in this complex environment we

need a consistent approach that doesn’t bury us in more issues than we

already have. This is why organisations are starting to realise a need to

create a core competence in EPM.

EPM Value Proposition #3: people, process & technology harnessed

in a pragmatic way to create organisational competency in

implementing change.

Because of the widely-varying complexity involved in organisations deploying change we have to be able to adapt EPM

to suit. The beauty, of course, of it being the middle layer in the pyramid is that it can support both a top down

(lightweight touch-point management) and a bottom up (high maturity, plan-based) approach.

5.3 The four pillars of EPM

Whichever route is chosen there are four basic pillars of an EPM approach that contribute to the organisation’s ability to

manage change more effectively.

5.3.1 Collaboration

One of the reasons complexity kills is an increased difficulty in sharing

information in a meaningful way as the volume of data increases. Lack of

consistent processes tends to encourage a proliferation of filing

mechanisms both electronic and physical. Ironically, the ability that

technology has given us to communicate easily often significantly

reduces the quality of that communication.

The first key pillar of an EPM approach, and often the easiest to deploy,

is creating an ability to collaborate effectively across functional, geographical and initiative boundaries.

11

To be able to manage changeeffectively in this complexenvironment we need a

consistent approach that doesn’tbury us in more issues than we

already have.

The first key pillar of an EPMapproach, and often the easiestto deploy, is creating an abilityto collaborate effectively across

functional, geographical andinitiative boundaries.

Collaboration can take many forms and may, for example, be in the form of a common document repository holding all

the key data on the initiative in one place where it can be accessed easily. Collaboration doesn’t have to imply technology

though, it might be as simple as setting a regular progress review meeting where issues are discussed, resolved and

outputs minuted.

For some organisations the biggest step (and benefit) in collaborative working is in setting up a ‘war room’ where team

members live for the duration of the initiative and where all reporting and data storage is maintained. This simple step

alone can significantly improve the energy, focus and hence success of a business initiative.

EPM Value Proposition #4: as change changes, our success is dependent on our ability to communicate (in the

same language!)

Communication is always key. The best organisations use EPM to create a collaboration process that allows easy access to

information, thereby allowing teams to focus on managing or delivering, rather than spending their time trying to find

the information on which to act.

5.3.2 Process adoption

To successfully implement change, it is essential that consistent

processes for managing change exist and are used in the organisation.

Yet in our experience, the implementation of these processes is the area

most often neglected.

Maybe it is our natural dislike for rigour, or experiences that tell us process

is another word for bureaucracy, but organisations and individuals are more

likely to be creative about how they use a process than in most other areas

of the business.

When we talk process in an EPM context we are not talking about large-scale Business Process Re-engineering activities,

or stifling people’s innovation – just about applying some basic rules for managing change.

EPM applies those basic rules, enabling a framework for adopting consistent processes across an organisation, and gives

early warning when a process is breaking down.

Typical processes deployed as part of an EPM solution should include:

1. Defining scope: what is the initiative and what are the planned benefits? What does success look like and how will

we measure it? Who will be involved, and what role will they have in the successful outcome of this initiative?

2. Change control: when scope changes (as it will), defining, authorising, communicating and implementing

these changes.

3. Managing risk: identifying events that have not yet occurred but could have a major impact on success if they do

– and where there is a high probability of impact, implementing a plan to mitigate them.

4. Managing issues: ensuring that when an issue is identified we have a means of prioritising, escalating and

tracking progress thereby dealing with the issues, not ignoring them.

EPM Value Proposition #5: we execute change more quickly with less effort because we have clarity on approach, one

foot in front of the other.

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When we talk process in an EPMcontext we are not talking about

large-scale Business Process Re-engineering activities, just

about applying some basic rulesfor managing change.

5.3.3 Reporting

The ability to report on progress is fundamental – that much is obvious.

What is often less obvious is the quality of information reported.

The leader of a multinational technology company, when talking about

how projects are selected for termination, was quoted as saying “the last

person I will ask about progress is the project manager; he’s bound to

tell me it is going OK!”

All too often we are forced to make decisions based on gut instinct or intuition because we don’t have access to the facts,

and if the facts do exist they are at least a month out of date!

We accept that decision making is rarely simplistic enough for a pure fact-based decision to be made, but given the

choice wouldn’t you prefer to make a judgement call on a critical issue after having seen some meaningful data rather

than before?

This level of fact-based reporting does not occur naturally however. Unless we spend time establishing the language of

reporting, the information we get back will be inconsistent and potentially incomparable. For example, let’s assume you

ask for a progress report from Tim, the leader of one of your change teams. Tim might report back and say they are 50%

complete, but what does that mean? Does it mean they are halfway to achieving their goal on time, or that they have hit

half the deliverables but have used 75% of their resources! When you ask the same question of John, the leader of a

different team, how will he interpret it?

For reporting to work, we have to establish a common language and use it consistently through the initiative. This

language not only allows us to report historically, but, critically, means we can talk about the future (forecasting) in the

same way.

EPM Value Proposition #6: to effectively alter course we need a common unit of measurement that tells us the impact

of our actions.

This third pillar of an EPM solution establishes a common repository for data, and ensures a common language is used to

describe that data. As a result it gives decision makers the information they need in a timely and consistent manner,

allowing better decisions to be made.

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This third pillar of an EPMsolution establishes a commonrepository for data, and ensuresa common language is used to

describe that data.

5.3.4 Managing resources

Ultimately our initiatives are delivered through the use of resources, be

they people, money or physical assets. One of the most difficult aspects

of successfully implementing change (and hence the most rewarding if

you get it right) is that of effectively utilising our resources, especially

when some of them are scarce.

To manage resources we need to have visibility of where they are, a way

of defining their unique attributes using common terms and the ability

to measure their usage. Achieving all of the above is not an easy task,

yet effective management of resources is seen as a core capability for the organisations who are best at implementing

change. Not only does it allow them to succeed for a lower cost through better utilisation, it also enables smarter trade-

offs to be made when resources are scarce.

The ability to see and measure the resources we use in executing our initiatives is the final pillar of an EPM approach and,

significantly, has the largest impact on our management of costs within the initiative. It will only work effectively, however,

when the underlying business processes are implemented in a robust manner.

EPM Value Proposition #7: when resources are limited, the better we utilise scarcity, the more value we create.

5.4 Summary

Ultimately an organisation’s ability to successfully implement change again and again will depend on the capability in

each of the four areas highlighted above. As we will discuss in the next section, the depth of capability required will alter

depending on the shape of your organisation and the complexity of your initiatives. Regardless of scale or complexity,

however, the likelihood of a successful implementation can be significantly increased by applying these principles of

Enterprise Project Management.

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To manage resources we need to have visibility of where they

are, a way of defining theirunique attributes using commonterms and the ability to measure

their usage.

6. Implementing EPM

What is the impact of adopting EPM in your organisation? Our assertion is that it will give you the ability to consistently

deploy your most important business initiatives, with confidence of success, through enabling collaboration, process

adherence, meaningful reporting and visibility of resources.

But what is the cost of deployment and is it achievable in

your organisation?

Obviously there is not a single answer to this question, but what

we can highlight is how to best approach an EPM deployment

with some guidelines on costs, benefits and issues.

As we stated earlier, EPM is a combination of process, people and

technology. A successful implementation requires rigour, process

adherence and a level of technology, together with cultural and

practical support from the organisation’s leaders.

There is not ‘one size fits all’, and the approach can be tailored

to the differing needs of an organisation. However, when you are

looking at deploying EPM, there are some basic questions that

you need to ask.

6.1 First steps

“If you don’t know where you are going, you’ll probably end up somewhere else.”

Lewis Carroll , Alice in Wonderland.

Before planning a route you have to know your starting point and your destination. Before trying to change the world

(or your part of it at least) start by assessing your current capabilities in the context of the four pillars and then take a

realistic view on the level of capability you require for this season in your organisation’s life.

It may help to use a Capability Maturity model such as the one shown below that describes an organisation’s ability in

process improvement through five different levels of maturity. Whilst this is Process Improvement specific it will give you a

good idea of the ease with which you will be able to adopt EPM (and the accompanying processes) into your organisation.

It is worth noting that experience has shown moving from one level to the next will take 9-18 months in most

organisations, so if you aspire to level five and currently sit at level two, be warned – you have a long road ahead!

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Source: CMMI distilled: a practical introduction to integrated process improvement, Ahern, D. M., Clouse, A. & Turner, R. (2001)

6.2 Approaches to implementing EPM

This paper is concerned with discussing the real value to an organisation of being able to systematically deploy change by

using the basic tenets of EPM. It would be out of context to describe a detailed implementation plan here, but to enable

a more informed debate on the value of EPM within your organisation, it is important to understand the foundations of a

successful deployment.

Whilst the concept of EPM is a generic one, any successful deployment will require the implementation of some

underlying technologies to support the process deployed. The implementation approaches described below are based on

using Microsoft’s Enterprise Project Management solution as the underlying technology.

As discussed earlier in this document, EPM can be deployed as both a top down or bottom up solution depending on the

specific situation and needs of an organisation. The following sections describe these approaches, together with some

typical benefits and costs.

6.2.1 Top down

Top down is analogous to the approach adopted in a typical CPM deployment, where a thin layer of process accompanied

by robust reporting tools are used to enable an organisation to quickly gain visibility and control of its initiatives.

The approach is based on agreeing the minimum level of process and

reporting required for the change initiative(s) to succeed, based on an

assumption that in the short term direction and good decisions are more

critical to success than creating an organisational capability.

Typical ‘light’ processes for a change initiative might include agreeing

a formal gateway review process with key milestones identified or

implementing a consistent reporting process that includes protocols for

issue resolution.

The advantage to organisations of top down, is that it is a relatively quick and low cost route to achieving visibility and

hence control. Organisations do not have to deal with large business process changes, nor alter significantly the culture

of an organisation. Instead they leverage their existing processes and apply a ‘sanitisation’ layer to ensure data is

presented consistently.

Top down is often a good entry point for organisations unsure of the benefits of EPM, as it allows business executives to

experience the difference that real visibility of progress can give to implementing major change initiatives. Typically a top

down approach would use largely pre- configured technology solutions combined with best practice processes to enable

rapid deployments across large sections of the organisation, often based on an 80:20 fit rule.

Ultimately, top down will not enable organisational competence in EPM, nor will it manage significant complexity. It is,

however, worthy of serious consideration for organisations requiring a simple approach to EPM, rapid visibility of an

initiative’s status or a low cost route to assessing the benefits of deploying a bottom up EPM approach.

Top down fast facts:

Target: smaller organisations with less complexity (or budget) or organisations that need to rapidly gain control of their

situation.

Approach: thin layer of process and reporting focussing on creating visibility and aiding decision making.

Benefits: delivers rapid visibility at low cost using 80:20 rule. Also provides a first step assessment prior to a bottom

up approach

Costs: Typical external costs of implementation (services & technology) £25k to £100k

Timescales: Deployment in 4–8 weeks.

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The advantage to organisationsof top down, is that it is a

relatively quick and low costroute to achieving visibility and

hence control.

6.2.2 Bottom up

Bottom Up is a more thorough approach similar in concept to a ‘mini

ERP’ deployment due to the impact it has on core business processes

and the accompanying need for careful consideration of the cultural

change issues involved.

The aim of a bottom up EPM deployment is to deliver an organisational-

wide competence in EPM, enabling the business to consistently deliver its

business-critical strategic change initiatives on schedule, to specification

and cost targets, time after time.

The approach is based on assessing the current capability of the

organisation to deploy change, particularly with regard to the four pillars

of EPM, and contrasting this to the desired capability. It is often the case

that this assessment will identify a need for a significant increase in the capability of the organisation as described by

models such as the CMMI model shown on page 15. It is critical at this point to realistically agree what level of change in

capability is sustainable in the organisation in the short term. Whilst it may be desirable to move from say Level Two

(common processes) to Level Four (benchmarking), in a large organisation, achieving this will involve significant cultural

change and forcing this change through in too aggressive a timescale may be counter-productive.

Organisations will often use ‘Proof of Concepts’ or ‘EPM Demonstrators’ to assist in the process of identifying required

capabilities and associated technical functionality prior to deploying these functionalities and business processes as a pilot

in a representative section of the organisation. Following the pilot, full scale deployment then becomes a process of

rolling out the same functionalities and processes across the organisation as a whole.

The prime advantage of bottom up deployment is that it creates a core capability in managing change within the

organisation based upon embedded business processes and technologies. Having deployed this capability the foundation

is laid for handling increasing complexity without the need for exponential increases in risk, cost and effort. Effectively the

organisation achieves a position where they can systematically deliver change, thus creating sustainable competitive

advantage.

Bottom up fast facts:

Target: large/complex organisations or discrete large-change programmes.

Approach: business process led, delivered through formal proof-of-concept, pilot, deployment based on matching

required functionality to organisational capability. Usually focussing on a department and then scaling out.

Benefits: creates organisational competency in delivering change, driving competitive advantage.

Costs: typical external costs of implementation (services & technology) £100k to £500k

Timescales: deployment in 3–12 months.

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The aim of a bottom up EPMdeployment is to deliver an

organisational-wide competencein EPM, enabling the business toconsistently deliver its business-

critical strategic changeinitiatives on schedule, to

specification and cost targets,time after time.

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7. What next - establishing the ROI

Talking about real business value without mentioning ROI is usually a short conversation.

This paper started by asking the question, “why is successfully deploying our strategic, business critical change initiatives

so difficult?”

We suggested that the current management paradigms used to implement change in our organisations do not create

systematic capability and that there must be a better way.

We have proposed that implementing the four pillars of an Enterprise Project Management solution provides this better

way by enabling a consistent, measurable, controlled approach to implementing change.

So what is the ROI of implementing EPM? There are two answers:

7.1 Cash

The easiest way to measure ROI is in terms of cash saved. Estimates on the costs of late, failed or overrunning business

change initiatives vary wildly. Conservatively let’s estimate that the average initiative overruns by 15% of total budgeted

cost. The table below shows some calculations based on three different sized change initiatives appropriate to an

organisation running a portfolio of change initiatives (e.g. large IT dept.), a single large change programme (e.g. public

sector) and a typical small business project (new facility).

The costs for deployment are estimated assuming the EPM solution is based on Microsoft Enterprise Project Management

solution with appropriate hardware, software and consultancy services being purchased.

Large Medium Small

Nature of change Portfolio of business initiatives One large change prog One discreet business project

Value of change £100 million £50 million £ 400,000

Estimated overrun £15 million £7.5 million £60,000

Cost of EPM solution £500,000 £350,000 £30,000

ROI on this initiative Up to 30 times Up to 20 times Up to 2 times

You might think that these numbers are not representative of your organisation, so have a go at the calculation yourself.

1. Look at the last major business change you implemented and note the original cost estimate.

2. Look at what was actually spent and calculate the overspend (assuming you had one!)

3. Write down the critical business initiatives you currently have underway or have planned in your organisation

and use the percentage overspend from above to estimate the projected future overspend.

At this stage you could argue EPM will not completely remove the overspends most organisations are incurring, which

would be a fair comment – some events are beyond your control.

The point is to emphasise the relatively low cost of gaining control compared to the relatively high cost of losing control.

Is the current state of control one which you are willing to perpetuate?

7.2 Competitive advantage

We believe that in the modern world speed is a prime driver of competitive

advantage. Your organisation’s ability to implement change more quickly,

more effectively and more frequently than your competition will determine

your success in the market place.

The question is, do you believe that your current approaches to

implementing change will allow you to be a leader in your market or

will you always been running to catch up?

The ROI on competitive advantage is simple to measure: will you still be

in business next year?

8. Summary

So, what’s the real business value of implementing an EPM approach to your organisation?

We believe it is seen in deploying your key strategic change initiatives more quickly, more predictably and for less cost,

ultimately increasing competitive advantage for your organisation.

We also believe the current paradigms for managing change do not create systematic capability and cannot therefore

cope with the increased speed and frequency with which change is occurring.

Whether you investigate further the concepts of EPM will depend largely on the level of confidence you, as a senior

manager in your organisation, have in the organisation’s ability to implement change or turn ‘strategy into action’.

If you are very uncomfortable about the level of control you have or perhaps have experienced some significant failures

in the organisation historically – give urgent and serious consideration to EPM.

If you are concerned that whilst your business change initiatives generally succeed, they often seem far too much like

hard work and cost too much – consider investigating EPM.

If you are in control and deliver initiatives successfully in your organisation – congratulations! You are one of the few and

should be a market leader in your sector. Consider the next step of success and look at portfolio selection – are you

choosing the right initiatives?

If, after reading this paper, you would like to investigate further the benefits of a Microsoft-enabled EPM solution or wish to

contact a Microsoft approved implementation partner more information can be found at www.microsoft.com/uk/office/epm

If you would like to comment on this white paper, or discuss how to create sustainable competitive advantage for your

organisation through turning strategy into action please e-mail the author at paul.major@managementframework.com

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Your organisation’s ability toimplement change more quickly,

more effectively and morefrequently than your

competition will determine yoursuccess in the market place.