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ROI Handbookfor geospatial network infrastructure management solutions
A structured approach to quantifying and delivering business value
g www.GEDigitalEnergy.comDigital Energy
For a network operator to take full advantage of a geospatial network infrastructure management solution, it is necessary to engage a wide-cross section of the business to determine where and how business value could be best delivered – and be able to prove it . The most effective way to achieve this is through the development of a robust and realistic implementation strategy, an ROI-based business case and a benefits-delivery roadmap.
This handbook provides a practical step-by-step guide to building a robust, fact-based and quantitative strategy and business case for investment in geospatial network infrastructure management solutions. It provides the know-how and guidance to build a comprehensive and realistic strategy, business case and roadmap, illustrated with insights and experiences from the Utility and Telecommunications industry sectors.
Tools and templates to support the ROI methodology described are available for download from the GE Digital Energy website.
www.GEDigitalEnergy.com/GIS.htm
The information in this ROI Handbook is derived in whole or in part, under license, from the ROI Methodology of PA Consulting Group, Inc.
All Rights Reserved. No part of this ROI Handbook, including content, calculations, interior design, cover design and icons, may be reproduced or transmitted in any form, by any means (electronic, photocopying, recording, or otherwise) without the prior written consent of GE Digital Energy.
No patent liability is assumed with respect to the use of the information contained herein. Moreover, because GE Digital Energy is constantly striving to improve its high quality products, the information contained in this manual is subject to change without notice. Every precaution has been taken in the preparation of this manual. Nevertheless, GE Digital Energy assumes no responsibility for errors or omissions. Neither is any liability assumed for damages resulting from the use of the information contained in this publication.
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Written by: Ross Smith, PA Consulting Group John Turner, GE Digital Energy
COntEntS
Introduction and BackgroundGeospatial Network Infrastructure Management Solution
Telecom Market Challenges
Electric Utility Market Challenges
A Benefits Driven-Approach
Practically Applying the Methodology
Methodology Step Overviews
Conclusion
1. Organizing for Success1.1 Introduction
1.2 Define the Engagement Model & Stakeholder Universe
1.2.1 Form your Core Team
1.2.2 Perform a SWOT Analysis
1.2.3 Build a “Case for Change”
1.2.4 Define the Stakeholder Universe
1.2.5 Create a Detailed Plan
1.3 Conclusion
2. Identifying & Prioritizing Business Imperatives2.1 Introduction
2.1.1 Using the Program Blueprint
2.1.2 Benefits of the Program Blueprint
2.2 Building the Top-Line - Stakeholder Interviews
2.2.1 Preparing for Senior Stakeholder Interviews
2.2.2 Conducting Senior Stakeholder Interviews
2.3 Organizing the Opportunities for Delivering Value
2.3.1 Collating Benefit Opportunities by Stakeholder Group
2.3.2 Refining Benefit Opportunities
2.3.3 Prioritizing Benefit Opportunities
2.4 Updating the Program Blueprint
2.5 Conclusion
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3. Understanding the Gap: Current vs. Future State3.1 Introduction
3.2 Understanding the Current State
3.2.1 Data
3.2.2 Technology
3.2.3 Process
3.2.4 Organization
3.3 Defining the Future State Vision
3.4 Magnitude of Change: Closing the Gap
3.5 Conclusion
4. Designing the Program Portfolio4.1 Introduction
4.2 Building the Program (Portfolio of Projects)
4.3 Conclusion
5. Implementation & Operational Team Design5.1 Introduction
5.2 Program Governance - Capability Maturity Model (CMM) Assessment
5.3 Delivery Team and Structure
5.4 Operational Team and Structure
5.5 Conclusion
6. Building a Multi-Year Budget Forecast6.1 Introduction
6.2 Important Concepts for Budgeting
6.3 Building Your Budget
6.4 Conclusion
7. Quantifying the Benefit7.1 Introduction
7.2 Deciding What to Model
7.3 Gathering the Metrics
7.4 The Benefits Model Template
7.5 Collating the Benefits
7.6 Conclusion
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8. Building the Program Benefits Roadmap8.1 Introduction
8.2 Building the Benefits Roadmap - Implementation
8.3 Building the Benefits Roadmap - Overlay the Benefits
8.4 Conclusion
9. Proving the Economic Case9.1 Introduction
9.2 Making the Desired Benefits the Priority is Critical
9.3 Rear-view vs. Forward-Looking ROI
9.4 Isolating ROI by Platform Limits Ability to Demonstrate Cumulative ROI
9.5 Range of Options for ROI Analysis
9.6 Using the Work You’ve Already Done
9.7 Conclusion
10. Executive Communication: Delivering the Case10.1 Introduction
10.2 Assembling Your Case
10.3 Conclusion
Tracking the BenefitsIntroduction
Tracking Benefits - Considerations
Tracking Benefits - Dashboard
Conclusion
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6 ROI Handbook
Foreword
This return-on-investment (ROI) handbook will enable you to quantify the tangible business value that geospatial network infrastructure management solutions can deliver to your organization.
We understand that as Utility and Telecommunications network operators in an increasingly competitive world, you are seeking to better leverage the capital investment in your network assets to support your goals of:
• driving revenue growth
• improving cash flows
• reducing operating costs
• improving customer experience
• competing effectively
• meeting regulatory commitments
• improving public health & safety
• maximizing shareholder value.
We also recognize that technology innovation, competition and customer demands are driving the need to exploit your network infrastructure and the information captured about that infrastructure more effectively. Smallworld software solutions from GE have been specifically designed to realize tangible value in these areas and capitalize on the next wave of innovation that will make your networks smarter through greater monitoring and automation.
Investment prioritization and justification are more relevant than ever as leaders of network operators look to quantify specific and measurable return across all IT investments. As a result, many geospatial technology advocates face significant challenges to secure funding because:
• Senior leaders expect a strong economic (quantitative) business case to support all funding/budget requests
• Historic technology investment may not have yielded tangible value that senior executives recognize
• Strategic investments are not high enough on the ‘priority stack’ compared with tactical initiatives that address short-term issues
• Network infrastructure solutions are viewed as only relevant to the Engineering Department, with a lack of awareness of the value and benefit of exploitation through all parts of the business
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To support you, we have collaborated with PA Consulting Group and assembled our collective insights and experience, together with practical tools, to help you build more robust ROI-based business cases that win the support of executive decision-makers.
This handbook is relevant across the technology lifecycle including organizations:
• yet to have an established corporate network infrastructure management platform
• prioritizing ‘next steps’ to ensure current platforms fully deliver on their potential value
• upgrading to the latest versions of their software solution
Our intent is to help you make fact-based decisions about investments in network infrastructure management solutions; gain buy-in by making the right level and pace of investment; and support your business objectives based on a quantifiable return-on-investment.
We hope you embrace the insights and tools from this handbook and put them to practical use to further your organization’s goals and objectives.
GE Digital Energy Leadership
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Introduction and Background
This handbook is written specifically for Utility and Telecommunication companies, commonly known as network operators, because they share many common challenges. They are undergoing significant change as a result of:
• increased competition
• rapidly emerging new technologies
• changing customer expectations
• energy sustainability and environmental concerns
• infrastructure modernization of aging network assets
• an aging workforce nearing retirement
• demand for greater network reliability
• greater energy supply security needs, and;
• regulatory pressures.
In response to these pressures, network operators are seeking opportunities to:
• reduce operating cost
• grow revenue
• improve customer experience
• meet regulatory, safety and security obligations
• gain competitive advantage and;
• maximize shareholder value.
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The following insight boxes provide examples based on our experience of working with network operators across the world. Throughout the handbook we have included other real-world industry examples to illustrate the points we are making.
Utility Experience
Grow Revenue
A large US operator serving 3.3 million electric and 1.8 million gas customers utilizes their geospatial asset base across many corporate departments including marketing and demand management. The system is used to analyze opportunities to market additional services to specific customer demographic sectors.
Meet Regulatory Obligations
A mid sized Austrian multi-utility company offering electric, gas, water, district heating in addition to telecoms and public transport, integrated their network documentation, plan-ning and design processes. As a result significant savings have been realized due to the operator’s improved ability to meet their regulatory requirements and maintenance costs have been halved.
Gain Competitive Advantage
A leading US gas distributor is one of the most efficient natural gas utilities in the country due to cost management and industry leading productivity levels. Using their network infrastructure management solution, each employee serves almost 50% more customers compared with the industry average. The operator also met operation and maintenance expense levels that are almost half the peer group average of $209 per customer.
telecoms Experience
Reduce Operating Cost
At a major European network operator the residential network planning process has been improved by reducing the time it takes to define the network and serviceable addresses from about 1 month to 3 days.
Improve Customer Experience
At an innovative European service provider circuit information used to be in the heads of circuit planners. Now information about where the circuit is and the customer associated with that circuit is available to anyone who needs it. This is key to enabling 20-30 circuits to be planned per day, vastly improving productivity.
Gain Competitive Advantage
In a competitive FTTH market, a leading broadband service provider has pre-provisioned customers with fiber connections allowing them to reduce customer activation times to a few days with service configuration almost completely automated.
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Geospatial network Infrastructure Management SolutionOne area of opportunity for a network operator is to re-examine how they capture, record, disseminate and exploit information about their network infrastructure. Many operators have taken the first step by implementing a geospatial network infrastructure management solution.
Geospatial network Infrastructure Management Solution As competition increases, network operators need to address four conflicting objectives: reduce cost (both CapEx and OpEx); increase network reliability; meet regulatory obligations; and improve customer service. In order to meet these competing goals, operators need to manage their network infrastructure to ensure that they can effectively utilize their network; plan cost-effective network upgrades; maintain their critical network assets; and operate the services running across the network.
As such, a critical component of the organization’s business support systems is a geospatial network infrastructure management system that can act as master of record for the company’s network, in terms of assets, location, connectivity and capability. Geospatial Network Infrastructure Management and Mobile Workforce Applications play a key role in planning, constructing, operating, and maintaining critical network assets. This is much more than a traditional GIS technology development - these industry-focused applications are foundational elements for supporting key business processes across multiple business units within the network operator, helping design, construct, service, restore and maintain complex network assets throughout their entire life cycle.
In our experience, these systems were often isolated efforts centered within the engineering department. The focus was on network planning, design and build rather than other functions of the service delivery chain, such as marketing, finance, operations, field services, compliance and customer service. The software solutions were therefore typically stand-alone, rather than fully integrated, enterprise applications.
The focus of network operators has shifted and is now on cross-functional standardization and system and data optimization. Naturally, this requires a more comprehensive look at how information about the network can be managed, integrated and exploited. Emerging technologies and concepts such as cloud computing, service oriented architecture and mobile computing both enable and complicate this challenge even further.
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Additionally, there are many specific industry sector challenges that need to be overcome by Telecom and Utility network operators. The next two sections outline some of the most important, based on our experience working with market leaders throughout the world.
telecom Market ChallengesDue to rapid technology evolution, changes in the competitive environment, and emerging revenue opportunities many Communication Service Providers (CSPs) are now seeking to optimize their back-office and customer facing functions as a means to compete, reduce their bottom-line costs, and provide growth opportunities for their top-line revenues. In particular, we have seen our CSP customers focus on:
• Fibre roll-out. Service providers are faced with tremendous demand for high-quality services that require ever-greater bandwidth. To support this, the Telco industry is making a massive investment in new fiber networks. Infrastructure deployment decisions to meet the exponential growth in bandwidth demand will be critical to the long-term sustainability of the network operator.
• Cellular Backhaul. The explosive growth of wireless data services (due in a large part to global 3G upgrades and the iPhone phenomena) has opened up new opportunities for CSPs to carry the increasing cellular backhaul traffic for wireless operators.
• Commercial business. With residential revenue growth flat or in decline, the real growth engine for CSPs comes from commercial business. CSPs must therefore evolve to better integrate engineering with the sales function to capitalize on existing network infrastructure investments.
• netCo / OpCo. A global reorganization of the telecoms industry (often driven by government regulation) is forcing CSPs to split into Network Operators (NetCos), responsible for the underlying network infrastructure, and Operating Companies (OpCos), responsible for the end-user and their services. This business restructure will require a major redesign of their mission critical engineering tools and Operational Support Systems (OSS).
Figure 1 Manage the complete network asset lifecycle.
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• OSS /tools Consolidation. With the need to drive out operational cost from back-office functions and optimize business processes across departments there has been an increased focus on OSS to move away from standalone legacy platforms and toward more fully integrated solutions.
In order to fulfill the drive for customer responsiveness and more efficient use of resources in this “do more with less” climate, many network operators are implementing a holistic end-to-end outside (OSP) and inside plant (ISP) physical inventory management approach. Historical division of OSP and ISP departments is not only counter-productive but a major obstacle. Even as industry standards and trends point to the “one network” model, a strong case must be made to affect this degree of change.
Electric Utility Market ChallengesTrends in the electric utility industry include rising fuel costs, frozen/flat rates (tariffs), retirement of key employees, and increasing regulatory demands. New challenges also exist – for instance the need to integrate low carbon technologies (micro-generation, electric heat pumps, plug in vehicles etc) at distributed locations is expected to cause significant changes in network utilization.
Two areas deserve particular attention as they can be vastly improved through technology investment.
• network Reliability: It is generally accepted that total energy consumption mirrors GDP. Utilities face the issue of changing customer behavior whilst anticipating future demand. In addition, ageing infrastructure continues to cause immense reliability concerns for all utilities. Recent trends include:
• E-vehicles, e-heating/cooling etc. are expected to substantially impact peak demands on parts of the network, driving the need for sizable network reinforcement projects.
• Continued investment in measuring and improving distribution reliability as a result of the regulatory focus on customers quality of supply.
• Improvements to asset management and reporting to support business processes focused on asset maintenance and network reliability.
• Increased need to develop formal plans for Demand Side Management, Distribution Automation and Automated Metering Infrastructure.
• Resource Management: In most of the developed world, the majority of utility workers will be retiring in 10-15 years. Network Operators are struggling to staff and train replacement engineers and operations personnel. In some countries ‘workforce renewal’ has even been identified as a focus for regulatory review. The shortage of technical knowledge incurs significant risk - network design without optimization, distribution systems over-engineered, and transmission system design continuing to be a largely manual process. Recent trends include:
• Frozen salaries and staff redundancies despite attrition concerns.
• Continuing focus on lowering resource costs and improving utilization.
• Drive towards lower OpEx solutions that can provide advanced decision support with less training and expertise (e.g. design, scheduling and dispatch systems).
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Finally there is a significant drive within the industry to accelerate the development of the electricity networks of the future, a so-called Smart Grid, capable of meeting the challenges of future energy supply and demand. The Smart Grid will be a user-centered, interactive, reliable, flexible, and sustainable electrical network system, and network operators must play a key role in its development.
A Benefits Driven-ApproachFor a network operator to take full advantage of a geospatial network infrastructure management solution, it is necessary to engage a wide-cross section of the business to determine where and how business value could be best delivered – and be able to prove it . But how? We believe that the most effective way is through the development of a robust and realistic implementation strategy, a ROI-based business case and a benefits-delivery roadmap.
For this reason we have compiled this handbook, providing a practical step-by-step guide to building a robust, fact-based and quantitative strategy and business case for investment in geospatial network infrastructure management solutions.
In our experience technology advocates are traditionally domain specialists or technologists who focus on operating their business rather than developing strategic plans, business cases or financial analyses. Despite this, they are often relied upon to justify technology investment and secure capital and operational budgets from senior executives.
This methodology is designed to help these individuals leverage their domain expertise while supporting them with the development of a strategic ROI-based business case. By following the step-by-step methods that we present, you will be able to confidently answer the five questions typically asked by executives:
1) How will investment in a geospatial network infrastructure management solution impact revenue; costs; service levels; regulatory compliance; public safety and shareholder value; and how will it contribute to overall business goals & objectives?
2) What are the initial capital and operational expenditures required, and what is the on-going cost of ownership?
3) When will we realize these benefits?
4) What resources are required to deliver, implement and sustain the solution in order to realize the benefits?
5) What is the economic case?
top 5 success factors for delivering value from Geospatial network Infrastructure Management solutions
1. Build a robust ROI-based business case and roadmap (even if you already have a mature implementation)
2. Treat it as a business transformation project, not an IT project
3. Take a benefits-focused approach
4. Establish a capable delivery team to implement and operate
5. Get the fundamentals right first before building complex applications
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Justifying technology investment is often challenging because senior executives (who ultimately approve the budget) may not grasp the value that the technology brings because they are disconnected from it. The complexity of technology can often lead to confusion and uncertainty - and therefore kill the program before it has even started.
Our approach is based upon the business value that will be delivered by the program, and not about the technology itself. Although selection of the right technology platform is obviously an important element, there is a tendency for technology-based business cases to articulate what the technology can do; rather than the business capability it will enable and the benefits it will deliver. Our approach is effective at building ownership, commitment and consensus across the business by:
• Being highly participative (via workshops & interviews), involving not only the senior team but an appropriate number of managers and staff. This ensures full ownership of the plan produced, consensus on approach and commitment to success.
• Focusing on aligning benefits with key stakeholders objectives, positively drawing out insights and differing viewpoints from within the business and gaining strong buy-in throughout.
• Developing implementation options and plans which are both achievable and sufficiently flexible for future adaptation in light of changing circumstances.
• Encouraging cross-functional collaboration, offering both team and individual development and knowledge transfer.
• Being an end-to-end packaged and comprehensive approach, covering strategic goals through to proving the financial case by leveraging our toolkit.
• Being led by the business need, not technology.
A Benefits-Driven Approach
Is not... Is...
• IT-led
• Technology-driven
• Delivered against project milestones
• Focused on delivering applications & functionality
• Based on short-lived buy-in
• Independent of organizational objectives
• Unable to measure success based on value delivered
• Business-led
• Benefits-driven
• Delivering measurable value to stakeholders
• Focused on delivering business capability
• Expecting long-term stakeholder commitment
• Clearly linked to organizational objectives
• Measuring success based on the return on investment
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Practically Applying the MethodologyWe recognize that every network operator is at a different stage with respect to how network information is managed, integrated and exploited. As a result, there is no ‘one size fits all’ answer to how and where a geospatial network infrastructure management solution could deliver the most significant value.
Our methodology has been designed to be flexible and it can be applied, in whole or in part, to your specific situation. The most common situations where we envisage this methodology being used are where our customers have said:
Scenario Customer Viewpoint
Green Field“We don’t yet have a geospatial network infrastructure management platform and are seeking to determine the most appropriate solution that will deliver both short and long term value to our business”
Departmental
“We have a number of geospatial network infrastructure management solutions but they are fragmented and based in departmental silo’s. We need to determine the most appropriate approach to consolidating them and establishing a ‘single source of truth’ that will better serve the needs of the business”
Merger & Acquisition
“As a result of a Merger or Acquisition we acquired an additional geospatial network infrastructure management solution. We need to determine the most appropriate solution which will deliver the best return on investment in the long term, and plan a program of work to realize the consolidation”
Upgrade “Our current platform requires upgrading to the next major release, but we need to justify the upgrade by demonstrating the value this will deliver in additional benefit or mitigated risk”
Replace “Our current platform is a legacy platform that’s reached end of life and we need to assess options for replacing it with a future proofed solution”
Integration
“We have a mature geospatial network infrastructure management solution and are looking for opportunities to deliver additional business value by integrating with other corporate platforms. We need to justify the integration and secure funding”
Mobile
“We have a mature geospatial network infrastructure management solution but there is opportunity to ‘go mobile’ and provide greater capability to our field force. We need to build a business case and implementation roadmap that will successfully drive out the expected benefits”
Defense Against Cost Cutting
“Our senior management is looking to cut costs and have slashed our budget. We need to demonstrate the negative impact this will have on business performance in a tangible way so they understand the value being added”
Demonstrating Risk
“There is significant risk to the business if we do not implement (or upgrade) a geospatial network infrastructure management solution. We need to demonstrate that inaction will be more costly than action at this point”
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What do all of these situations have in common? They all need to be addressed using a benefits-driven approach to garner support and buy-in from across the business, and maximize the return on any investment made. Also, they all require a plan and a capable delivery and operational team to execute effectively. The methodology is designed to help address all of these requirements.
telecoms Experience
Green field
A major Indian network operator rolled-out an enterprise-wide geospatial network infrastructure management solution across both fixed and mobile parts of the business. The key focus was on supporting rapid network roll out, enabling faster service delivery to customers throughout India.
Departmental
A major ILEC in central Europe previously maintained network information in a myriad of paper records, schematics, spreadsheets and databases. They undertook a program to create a single geospatial network infrastructure management system to support all planning and documentation activities. The solution now supports the core business processes of planning, building and operating the physical network, with significant pro-ductivity gains across the organization.
Upgrade
At a major network operator in Australasia, their legacy system was replaced with a new system utilizing off-the-shelf software with minimal customizations. The business drivers were to consolidate the data in a single system and make it available across the enter-prise, enabling standardization of work processes across the regions.
Utility Experience
Integration
A large private electric company in Brazil replaced a legacy GIS system, in order to de-velop a ‘future-proofed’ solution with a single network representation supporting a set of business applications with minimal customization. Their system now supports in excess of 2.5M customers over two distribution subsidiaries and is fully integrated to their SAP solution, Outage Management System and Call Center providing far-reaching efficiency improvements.
Replace
A leading Italian Water provider, serving more than 300 communities, has operating principals that include “Guaranteed quality and safety of water supply, capability to react quickly in emergencies and provision of complete and transparent information.” By replacing and migrating from their incumbent system, their network infrastructure plat-form is now a critical support system for inventory management, data maintenance and outage management. Operations are now optimized, fault management is significantly reduced, customer care is improved and regulatory compliance is achieved.
Mobile
One of the largest electric power companies in the US serving approximately 4.6M meters recognized the potential of “going mobile” to improve their field operations. Today in excess of 2,000 users benefit from their mobile solution, which takes their entire service, territories network, customer information and related data into the field. As a result rout-ing has increased field force productivity, trouble calls have reduced 5% and maintenance order cost savings of 5% have been achieved due to field technician efficiencies.
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Methodology Step OverviewsThe remainder of this handbook is structured around discrete steps in the methodology. We have structured the handbook in an easy to follow ‘step-by-step’ format so that you can progress from one step to the next as you work through the handbook. Each step covers:
• Purpose of the step and core activities involved
• Specific description of each activity, with reference to and descriptions of the underpinning tools which are applied to support the activity
• A description of the expected or required outcomes from a particular step in the methodology
• Industry sector examples or insights to help you understand factors that may influence the application of the methodology for your particular situation
We have purposely described this as a linear approach for convenience and ease of understanding, but it is iterative in practice. Although we are very prescriptive about how to accomplish the tasks and complete the templates and models provided, we fully expect and encourage you to adapt it to meet your own specific needs.
For instance, in Step 6 we provide a Budget Model template and describe a bottoms-up approach to building a multi-year capital and operational budget forecast. If there is a well-defined approach within your organization for budget forecasting, then it would be prudent to use your own internal approach for consistency and acceptance internally.
Figure 2 Structured step-by-step ROI methodology.
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The following table outlines the key content of each step in the methodology and highlights the associated templates to support each step.
Section Content Associated Models/templates
Step 1
Organizing for Success
Step 1 describes the necessary planning steps that are required to lay the groundwork to com-plete a geospatial network infrastructure man-agement solution Strategic Plan and ROI-based Business Case. We cover:
• seeking support from a senior leader at the outset
• identifying key stakeholders
• forming your core team
• completing a SWOT analysis to identify current and past challenges and opportunities
• creating a project plan
• SWOT Analysis
• Stakeholder Engagement Plan
• Business Case Project Plan
Step 2
Identifying and Prioritizing the Business Impera-tives
Step 2 describes how to engage with senior business stakeholders to identify their key issues, challenges, goals and objectives. We describe how to:
• employ structured interview techniques
• capture and prioritize the input from leaders into a formal framework
• translate business imperatives into tangible business opportunities
• prioritize business opportunities based on value to the business and feasibility
• Program Blueprint
• Interview Templates
• Benefits Opportunities Template
Step 3
Understanding the Gap: Current vs Future State
Step 3 determines the current business situation and creates a future vision that delivers the ben-efits needed to secure the commitment of senior stakeholders. This is key to the ‘change man-agement’ considerations of proposing changes to current business processes. In this step we describe how to:
• define and articulate the current ‘as-is’ situation across a number of business processes
• develop a ‘future-state’ picture across a number of relevant business processes
• understand the degree of ‘change’ required to close the gap between the ‘as-is’ and ‘to-be’ pictures
• Magnitude of Change Worksheet
Step 4
Designing the Program Port-folio
Step 4 provides guidance on how to build a port-folio of projects that will collectively deliver the required benefits. In particular we decompose the program into manageable parts.
• Program Blueprint
• Program Portfolio
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Section Content Associated Models/templates
Step 5
Implementation & Operational Team Design
In order to successfully deliver and realize the proposed program value, it is vital to ensure that your team and/or organization is capable of actually managing the delivery and realiza-tion of benefits. In Step 5, we provide guidance on how to assess the business readiness of your organization to take on a major technology-enabled change program, and how to establish an appropriate delivery model for the program - including post-deployment when it is operational in a “business as usual” setting. We cover:
• Different types of “Delivery Team” models, plus their relative strengthens and weaknesses
• Supplier and vendor roles and performance management considerations
• Capability Maturity Model
Step 6
Building a Multi-year Budget Forecast
Having defined the program (which is a portfolio of discrete projects) in Step 4, we provide guid-ance in Step 6 on how to forecast the capital and operational cost of executing those projects.
The aggregation of the costs of the individual projects will create a multi-year budget forecast for the entire program. This will represent the ‘investment’ side of the ROI equation, so the cost effective delivery of the required projects needs careful consideration. In this step we provide:
• Explanation of how to use our Budget Model template, with which you build a bottoms-up capital and operational program budget in a robust and structured manner
• Strategies for addressing challenges around capital and operational budget allocation
• Guidance on how to forecast expenditure, taking into account cash flow implications, budget cycles etc.
• Budget Model Template
Step 7
Quantifying the Benefit
In Step 7 we provide an approach to modelling benefits quantitatively and incorporate concepts such as benefits realization curves, confidence factors, expert witnesses, value-driver trees and more. The model we provide is a robust toolkit that has been designed to allow individual ben-efits to be modelled.
• Benefits Modelling Toolkit
Step 8
Building the Program Benefits Roadmap
In Step 8 we discuss how to create a powerful illustration of ‘what is going to happen’ using an implementation roadmap that demonstrates, quarter by quarter, which projects are being ex-ecuted and when the benefits will be delivered.
• Benefits Roadmap
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Section Content Associated Models/templates
Step 9
Proving the Eco-nomic Case
Having created a multi-year budget (the invest-ment) and modelled the value to be delivered (the expected benefits) we now have the key pieces of information required to calculate the “ROI”.
In Step 9 we explain financial methods such as net present value (NPV) and internal rate of return (IRR), and provide insight into the different flavours of “ROI” models and their relative strengths and weaknesses.
• Financial Metrics
Step 10
Executive Com-munication: Delivering the Case
The final step of the process is to consolidate the key pieces of information at the right level of abstraction for the executive team.
Step 10 should be for completeness and not the lynch pin in the final submission, where you cross your fingers and hope that the budget is approved! If you have completed each step ap-propriately, then you should already be confident that the senior leadership fully appreciate the benefits that the solution will deliver.
• None
In the final section of the handbook, techniques for tracking the benefits resulting from the program are discussed. Many business cases are put on the shelf after they have been used to secure budget. In this final chapter, we present various options for using your business case in a more sustainable way. We discuss strategies for putting the right mechanisms in place to capture the real impact of the program, and demonstrably show that the benefits described in the business case are being realized.
1.3 ConclusionAlthough the end-to-end approach described in the ten-step process may appear intensive and overwhelming, in practice it should be applied as your particular situation dictates. Each step is relevant to consider, regardless of the size of organization or technology investment, but the manner in which you apply the step will be guided by your needs.
However you choose to apply it , the methodology affords you the opportunity to:
• Establish an achievable, fact-based, benefits-focused and business-led strategy, business case, ROI analysis and roadmap that provide a clear path to successful and on-going benefits delivery
• Build consensus amongst stakeholders regarding priorities and direction, with ownership and buy-in being achieved at all levels across your stakeholder groups
• Put in place measurable performance metrics and targets that are achievable and which can be established to allow on-going benefits delivery tracking and management.
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1 Organizing for Success
Step 1 describes the planning and organizational steps that establish the necessary groundwork to complete a Strategic Plan and ROI-based Business Case for a geospatial network infrastructure management solution. We cover:
• Seeking support from a senior leader at the outset
• Identifying key stakeholders and a stakeholder engagement plan
• Forming the core team
• Completing a SWOT analysis to identify current and past challenges and opportunities
• Creating a project plan for the development of your Strategic Plan and Business Case
• Insights and guidance on benefit opportunities based on industry perspectives from our client experiences and internal experts
1.1 IntroductionSuccessfully building a benefits-driven program roadmap and business case (or annual budget submission) typically has some pre-requisites:
• The timing must be right
• You must have at least one senior sponsor who supports you in building a roadmap and ROI-based business case
• There must be a catalyst or some ‘burning issue’ that makes doing this essential for the business (or you have a realistic opportunity to make the case that it should be essential)
telecoms ExperienceA major European service provider deployed a new system for planning Fiber To The Home (FTTH) networks. This was in response to pressing demands to rollout their fiber network ahead of the competition and hence maintain market share. It was realized that the aggressive timescales could not be achieved without the productivity gains realized from deployment of the FTTH network infrastructure solution.
We typically see two types of scenario which drive the development of a business case: either you have been directed to build a business case by your senior leadership team, or you recognize the business problem and wish to convince your executives to fund the proposed solution.
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Regardless of the situation, the development of a strategic plan, roadmap and business case should be treated as a project in itself. That is, it has a start, a finish, deliverables, stakeholders and it is managed in a planned way. Too often we see business case development move in fits and starts and not answer key questions in an organized way.
The table below summarizes some typical situations and considerations/options for helping to overcome or resolve these.
typical Situations Considerations Recommendations
The timing isn’t right because the business case planning activity is not aligned to the organization’s budget planning cycle.
The primary purpose of a business case is to secure funding for a program of work. If the business case develop-ment falls outside the budget process, then it is considered ‘unbudgeted’. This creates a significant hurdle in securing funds since they were never originally part of the financial planning process.
Our advice is to align your planning /business case development activity so that the output feeds into your organization’s budget cycle. Typically, budget planning for the next fiscal year starts for most organizations in late Q2 and is finalized in early Q4.
The timing isn’t right because there are other major ‘change’ initiatives underway already.
Executing a major business transformation program often consumes significant manage-ment overhead and resources (financial and staff). If there are too many other major initiatives underway, then intro-ducing another program may not be appropriate at that time.
We advise you to become familiar with the other initia-tives happening within the business, their relative priority and impact areas within the business. This will help you better understand if the timing is appropriate to introduce another program at this time.
Executive support for the program is unclear.
If you are unsure of the level of interest for your project amongst your leadership team then this introduces significant risk. If senior leaders have their focus elsewhere then you will have a hard time getting genuine engagement and commitment to move forward.
We recommend ‘testing the water’ with each senior deci-sion maker to at least secure their support in analyzing the business problem, defin-ing potential solutions and quantifying the cost/benefits. If you fail to secure even this, then you will very likely fail to secure funding and have your business case approved.
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typical Situations Considerations Recommendations
There is no ‘burning issue’ or catalyst.
We often see the strongest support for developing a strat-egy and business case when there has been a significant fi-nancial, regulatory or customer impact to the business.
When there is a catalyst, it is far easier for senior leaders to relate to the need to act and act swiftly. In the absence of such a catalyst, the challenge is convincing executives that they should still act (i.e. ap-prove the business case and implement the solutions) and to do so now – not later.
There are often situations where senior executives know there are challenges at the operational level, but because they have not yet felt signifi-cant business impacts (finan-cial, regulatory or customer), they are not motivated to act.
Without a relevant and recent catalyst, you might consider identifying the impact of ‘not doing this’ – which equates to operational risk. In some circumstances, you can paint the picture of looming disaster if the senior team fails to act now. This is not the ideal ap-proach since it is a strong-arm tactic, but it is sometimes the only viable approach.
There is a good case for change within the group “owning” the project, but benefits with even greater impact to the busi-ness are in adjacent departments.
Many companies operate with distinct departmental boundaries of authority and budget. For example, in a telecoms operator, corporate engineering is often separated functionally and financially from field operations and customer service delivery. This means that support for transformational projects that span several areas can be even more difficult to obtain.
This scenario emphasizes the need for executive-level stakeholder engagement at the onset of the business case development project. It has been proven time and again that going to an executive during the last stage of the planning process will not work. Related to the example above, the senior leaders of engineer-ing, field operations and ser-vice delivery need to agree on a shared vision from the very beginning of the process and commit to common program goals and commitments.
With the above considerations in mind, we will now describe the steps involved in putting the right building blocks in place to ensure that the ‘business case development journey’ you go on is a smooth one.
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1.2 Define the Engagement Model & Stakeholder Universe The approach we describe in this handbook is a highly participative one. We recognize that there is a need for views, opinion and understanding at both senior and operational levels.
Organizations have often undertaken studies to identify opportunities where geospatial technology could help drive out cost, create efficiencies and improve service. In many cases however, these studies were carried out using a bottom-up approach that focused on the technology (features, functionality) rather than on the ‘business’ outcome required. This resulted in application focused approaches that neither broke down organizational barriers nor truly established a robust strategy for capitalizing on the potential of an enterprise approach. In fact, these approaches often perpetuated the tactical approaches that prevent organizations from achieving more useful, widely integrated solutions.
We advocate a different approach where building a robust business case is:
• ‘business’-led (not technology-led)
• benefits-focused (not functionality or application focused)
• highly-participative, both at senior levels of the organization (top-down) and with operational staff who have detailed insight into business opportunities and issues (bottom-up)
We have learned through experience that an approach that follows these principles provides a powerful and robust strategic plan and business case that is supported by senior stakeholders and operational staff alike.
Below we outline the manner in which we categorize stakeholders within the ‘universe’ of contributors to the business case.
Figure 3 Highly participative engagement model.
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Core TeamThis core set of individuals is responsible for the successful execution and delivery of the project goals and objectives established with the Project Sponsor.
Senior Stakeholders
These are key executives (Director and up ideally) who can provide business goals, objectives etc with perceived benefit for the pro-posed solution(s) in their respective business area (field services, construction, customer service, marketing/sales etc). Their input is key to building the top-line of the Program Blueprint which under-pins the business case.
Business Primes
These are generally individuals nominated to represent a functional area of the business (e.g. network planning & engineering, network operations, sales & marketing) or a specific interest group. These individuals primarily contribute to the top line of the Program Blueprint by helping to identify key business goals/objectives and understand metrics/targets that would be impacted or influenced by the proposed solution(s). They also provide more insight into the operational aspects of the ‘business design’ which helps define the current and required future states.
Functional Represen-tation
Named individuals engaged in operational activities (e.g. field engi-neers, network planners, maintenance staff) on a daily basis within and throughout the business. Direct contributions through partici-pation in workshops and indirect contribution through interactions with Business Primes.
Vendor / Supplier
Representation
Relevant vendor/supplier resources that bring deep technical exper-tise. Direct contributions through participation in workshops and indirect contribution through interactions with Core Team.
1.2.1 Form your Core teamThe Core Team is typically made up of four to six people who are responsible for assembling, validating and communicating the business case. We typically recommend that there are representatives from:
• Each of the core business groups who will be most impacted by the proposed solutions. Given they have the most to gain (or lose) it is important that they take a leadership role in assembling the business case.
• The IT department. If this initiative is being led from within the business, then it is critical to ensure IT representation since the ultimate solution will require a technology deployment, development and/or integration component.
• The Finance department. Given the emphasis on quantifying tangible value and calculating return on investment metrics, it is important to involve a finance representative early in the process. They will be able to advise on budget issues (e.g. allocations, capital vs operational categorization, sign-off authority levels, procurement requirements, financial metrics) specific to your organization.
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1.2.2 Perform a SWOt AnalysisUsing a simple Strengths, Weaknesses, Opportunities and Threats (SWOT) approach to thinking through your current situation helps to ensure you’re well informed and prepared as a team. We have provided a simple SWOT Analysis template to capture your findings.
We recommend working with your core team members (simply hold a meeting using a whiteboard) to assemble a simple SWOT analysis that relates to your organization’s ability to build a suitable business case and execute against it successfully.
For example:
Strengths – What are the strengths we have that will enable us to successfully build this business case and strategic plan?
• Strong track record amongst core team members of building successful business cases in other disciplines/technologies
• Good involvement from finance and a clear understanding of the budgeting process for upcoming years
Weaknesses - What are the weaknesses we have that could prevent us from suc-cessfully building this business case and strategic plan?
• Complex technical environment that is not yet fully understood – many moving parts related to the technology
• IT resource are overwhelmed and unable to commit fully to the technical planning portions of the program at this time
• Other teams previous attempt to build a business case was unsuccessful and so we need to overcome a credibility perception
Opportunities – What are the opportuni-ties that will help us to successfully build this business case and strategic plan?
• New CIO has indicated he wants to see innovative ideas presented for consideration which will improve IT’s cost profile
• No other major initiatives currently planned which would overlap with this initiative
• Another strategic initiative for improving customer service has CEO-level sponsorship, and this program could ‘piggy back’ on it
Threats – What are the threats that could prevent us from successfully building this business case and strategic plan?
• Senior sponsors have conflicting views as to priorities related to this program – and this needs to be resolved
• Meeting to be held next month to review organizational strategic plan – unclear if this program will remain a strategic priority
1.2.3 Build a “Case for Change”After forming your ‘Core team’ and completing a high-level SWOT analysis, you should prepare a concise ‘story’ that clearly explains:
• The business problem that currently exists and, if appropriate, a very brief history conveying why/how that situation came to exist
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• The business impact this problem is having financially and/or operationally (e.g. risk, compliance, safety). This does not have to be quantified at this stage and anecdotal ‘stories’ that describe the “pain” can be very powerful
• A high-level description of the potential program of work to address the business issue
• Areas of business impact/benefit to illustrate where the opportunity for improvement exists. The most powerful illustration shows positive impacts to multiple stakeholders/groups rather than to just one silo (e.g. the engineering department).
A ‘case for change’ can take many forms so we have provided guidance rather than a ‘template’. Depending on your senior leadership, they may want to see a slide deck, or a word document ‘narrative’; or indeed they may simply want to have a conversation that touches all of these points and confirms there is a need to act.
The importance of telling the right story cannot be stressed enough. Ensure that:
• the goals of your project align with the company’s top corporate initiatives
• you can describe the “before and after” pictures in simple but effective terms
• you convey a compelling case for change
• you use terminology typically used by business leaders (your audience)
• you target metrics for improvement that can be understood and measured where possible
Utility ExperienceThe following outlines a “case for change” from one of the few private power companies in India.
Business Problem
The network operator started with significant operating losses compounded by hugely challenging infrastructure and environmental concerns – including unplanned growth, imprecise address knowledge, poor quality customer data, electricity theft and inadequate space within a city environment to create the necessary distribution infrastructure.
Opportunity to Change
With practically no process automation, ambitious plans for modernization were outlined for their entire operation. The key success factor was in establishing a network centric geospatial system as their primary system of truth for network asset data and the front end to enterprise functionality with integration to their critical business applications.
Areas of Impact
Integration of their network infrastructure management system with 12 corporate systems is now in operation. All business applications are web-enabled to ensure network data penetrates all levels of the organization. Today more than 200 intranet users plus further field-based users have their daily tasks optimized across operations, network management, commercial management, asset management and CapEx management. Since the business transformation, the operator has halved the time to carry out project planning & engineering for new schemes and overall operating losses have been reduced by 30%.
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telecoms ExperienceThe following is an example of a “case for change” from a national telecoms supplier in the CIS region.
Business Problem
The original focus of the network operator was supply of PSTN services nationally. However, following initiatives to upgrade the national information infrastructure, their portfolio of services was broadened to include data and broadband internet. This introduction of new technologies resulted in a significant rise in consumers subscribing to broadband internet.
Opportunity to Change
The deployment of a centralized network infrastructure system played a vital role in managing the network, both inside plant and outside plant, to support the delivery of voice, data and internet services. Using the system they are now able to manage the detail of the access network reducing the time to prequalify services for customers from about a week to a matter of seconds. This has enabled them to roll out their internet services much faster enabling them to meet their customer demands.
Areas Of Impact
More than 200 users now use the solution with different departments having access to the system including documentation, marketing, sales, maintenance and operations. The system holds critical information about the network that these departments need to support their day-to-day operations. For example, when a customer requests a new service, the system is able to provide information about the availability of DSL ports and the capability of the line and equipment so that the service request can be quickly prequalified and feedback provided to the customer. The system is also used by the marketing department for reporting on how much of the network resource is allocated to supporting services to customers so they can see the spare capacity still available. This enables decisions to be taken about where additional network resources may be needed.
1.2.4 Define the Stakeholder UniverseIdentifying the stakeholders you need to liaise with, based on the engagement model described previously, requires careful consideration. It is not important to engage with a large number of people. It is more important to engage with the right people within your organization.
Building a profile of the organization and the key business processes/activities that will be impacted by the envisaged geospatial network infrastructure management system is key to this activity. The exact people you need to engage with can then be determined.
Where available, we recommend getting a copy of your company’s organizational charts as a starting point. These will provide you with a vehicle by which you can identify key players across the business, both at senior and operational levels. You should also consider geographic distribution e.g. not focusing all in one regional area while excluding others.
Utility Experience
A major Electric Utility has innovatively interfaced and integrated their enterprise GIS solution with the company’s other Enterprise Systems, which encompasses all key business processes.
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The following figure shows the key business processes and departments impacted, and hence the key stakeholders that needed to be involved.
The main areas of focus were:
• Capital Expenditure Management: This process takes care of corporate growth needs in terms of planning, engineering, execution and capitalization (financial closure).
• Asset Management: This process takes care of incorporating the asset details, their movement and retirement
• Operations and Network Management: The process takes care of system operations by the established centralized network management control centre with feature rich Distribution Management and Outage Management systems. The entire asset maintenance process is also centrally controlled and deployed through implementation of a Plant Maintenance module that is integrated with the GIS.
• Commercial Management: The key processes include new connection management, metering management and revenue management with integrated GIS and CRM systems.
Stakeholders responsible for each of these key business processes needed to be engaged to ensure their business imperatives were met by the solution.
Figure 4 Utility business processes impacted by geospatial network infrastructure management solution.
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telecoms Experience
For a telecommunications fixed-line network operator, we also suggest using the enhanced Telecoms Operations Map (eTOM) to help identify stakeholders outside of engineering to involve. The eTOM is a Business Process Framework produced by the Tele Management Forum (TMF) to enable network operators to understand their key business processes and can be used to position how network infrastructure management solutions can be used in areas outside of engineering.
The following diagram shows the Level 1 breakdown of the eTOM (there are other levels that go into more detail) with some of the key areas you should consider highlighted.
Modified from source: TM Forum; GB921 Business Process Framework; Release 8.0. Copyright: TM Forum 2010
These include:
• Marketing Strategy – the marketing group use geographic demographic and customer data to create marketing campaigns to target prospective customers close to available network, for instance.
• Resource Development and Management – groups engaged in the design, planning, construction and maintenance of the access and core networks.
• Operations Support and Readiness – stakeholders that need to ensure that the network infrastructure (both physical and logical) is “service ready” to support provisioning of specific customer services.
• Fulfillment and Assurance – network operations teams using network inventory data for operational control and response to network failures.
• Customer Relationship Management – used by customer facing groups to determine availability of service at a specific location.
Figure 5 Business Process Framework (eTOM) from TeleManagement Forum.
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Further analysis of the eTOM to more detailed levels would be advantageous to ensure that the key stakeholders within your organization are correctly identified and their opinions on the business impact of the network infrastructure solutions are taken into account.
Recommended Stakeholders
The following is a summary of the types of stakeholders we recommend, with some insight into how they are best engaged and for what purpose.
Core team - 4-6 people
Engagement Method: Interviews, Workshops, Working Sessions, Teleconferences
Representation: Team with clear insight into the need for a network infrastructure man-agement solution within the business. Able to provide direction, validate findings and make appropriate recommendations for developing the Program Blueprint & Budget/Business Case.
Key Responsibilities: Key issues analysis; review findings and validate information gath-ered from Business Primes and Functional Representatives; provide direction as to topics/themes and resources that should be involved to obtain input from a wide cross-section of the business
Time Commitment: Key contributors will be active throughout the project by participating in reviews; setting direction; validating findings etc.
Senior Stakeholder Interviews - Up to 8 people
Engagement Method: Interviews, Conference Calls
Representation: Executives with a general understanding of IT Solution(s) and their po-tential application to enable their specific business function to operate more effectively/ efficiently.
Key Responsibilities: Provide input on key objectives (e.g. revenue, cost containment, service excellence, financial/ accounting) and potential benefits of IT Solution(s) technol-ogy. During interviews we coach them and educate them on these potential benefits with examples of how other like-organizations are applying the technology.
Time Commitment: 1 hour interview during first weeks of the project, with potential follow-up for clarification or to revisit inconsistent or conflicting views with other executives.
Business Primes - 6-8 People
Engagement Method: Interviews, Workshops, Working Sessions, Conference Calls
Representation: Functionally diverse team with wide business and deep operational and strategic perspectives as reflected in their roles. Business primes are normally known leaders within the business with an understanding of the operational and strategic busi-ness drivers. They can also be those that have influence or are currently antagonists toward the program and need to be brought on side.
Key Responsibilities: Participation in interviews and follow-up discussions
Time Commitment: The primary interface between the wider business community and the Core Team are Business Primes. It is expected that these individuals will be available for interviews and follow-up discussions, and on an on-going basis throughout the project to validate, confirm and assist with analysing input from workshops.
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Functional Representation - Up to 36 people
Engagement Method: Workshops
Representation: Functionally diverse team with deep perspectives on operational issues as reflected in their roles. The workshop process provides a structured vehicle to elicit needs and input from the wider business community, while also fostering ownership and buy-in throughout the organization.
Key Responsibilities: Participation workshops for approximately 4 hours. Provide insights into the detailed operations of the business as they relate to the solution.
Time Commitment: It is expected that Functional Representatives will only be required to attend Workshops (approx 4 hours) with potential follow-up actions to obtain metrics or specific information where required to support building the business case.
Vendor/Supplier - team size as required
Engagement Method: As required
Representation: Involvement from 3rd parties as appropriate throughout the process to ensure that you are soliciting external input, specialist knowledge etc
We have provided a Stakeholder Management template that will allow you to capture and manage the stakeholders.
1.2.5 Create a Detailed PlanHaving completed the steps above, you are in a position to establish a project plan that will guide you throughout the development of the business case. The duration of the plan will be specific to your organization, as it will be guided by size, complexity, geographic spread etc.
We have found from experience that ‘rushing’ the business case process leads to execution challenges. However, elongating the timeline can also introduce challenges - stakeholders can get impatient and lose interest if the sense of urgency is lost. As guidance, 10-12 weeks is the ideal timeframe for walking through all ten steps of the methodology.
We fully expect that depending on your situation you may shorten this timeline. You may be able to incorporate work already completed (e.g. previous business case inputs); or, more often, need to meet a firm deadline that has been set by the senior leadership team!
An example Microsoft Project Plan ‘template’ (Business Case Project Plan Template) is provided that will give you a starting point - you could modify this to plan out the development of your business case.
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1.3 ConclusionPrior to moving to Step 2, we encourage you to review the checklist below to confirm that you have completed the key steps outlined above:
• Formed Core Team?
• Performed SWOT analysis?
• Built and socialized a “Case for Change”?
• Identified the Stakeholder Universe?
• Developed a detailed plan for executing this methodology?
If you have completed the above then you are ready to move on to Step 2 where we will begin to build the ‘Program Blueprint’ with senior stakeholder input.
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2 Identifying & Prioritizing Business Imperatives
In Step 2 we describe how to engage with senior stakeholders in the business to identify their key issues, challenges, goals and objectives. This step is vital to ensure that the strategy and business case are aligned to the business imperatives as defined and communicated by senior stakeholders. We describe:
• The Program Blueprint construct and how to use it effectively
• How to employ structured interview techniques to extract and collate views, opinions and direction from senior leaders.
• How to capture, articulate and prioritize the input from leaders into a structured framework
• Approaches for translating business imperatives into tangible business opportunities
• Prioritizing business opportunities based on value to the business and feasibility
2.1 IntroductionUnderstanding the senior leadership team agenda is a key step in the overall methodology. Clearly you need to understand what focus the geospatial network infrastructure management program should have in terms of benefits to be achieved. Should it focus on delivering value related to revenue growth? Cost reduction? Improving customer service? Geospatial network infrastructure management solutions can deliver value in all of these areas (and more), but which is most important to your senior leaders?
Surprisingly, we find there is often a reluctance to reach out to senior leaders to ask them directly and candidly about what they expect an investment in technology/process redesign to deliver in terms of benefits and value.
In this step we provide a structured approach to soliciting, cataloguing and prioritizing the key business opportunities that are on the agenda of your senior leaders. This information provides the foundation for your business case, and ensures that you are aligning investments to the strategic objectives of your senior leaders.
2.1.1 Using the Program BlueprintAt the core of the methodology is a construct we call the “Program Blueprint”. It supports not only topics within this step, but plays a central role in building the entire strategic plan, business case and roadmap.
The Program Blueprint is a structured approach to identifying and articulating the key components of any complex IT program. The simplicity of this approach is its
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strength, as it decomposes complex programs with many moving parts into a coherent framework that can be more easily understood. Below we describe each of the four steps that are illustrated on the Program Blueprint (note that we have already discussed Step 1 in the previous chapter).
Step 2: Identifying and Prioritizing Business Imperatives
In order to ensure there is a clear understanding of the program drivers and priorities, you will work with the key stakeholders to define and agree upon high-level program objectives and expected benefits
One-on-one interviews are the best mechanism to define your stakeholders’ objectives and expected benefits. Typically 6-8 one-on-one interviews elicit the necessary information, although this will depend on your specific situation, organizational size and complexity etc.
Step 3: Understanding the Gap: Current vs Future State
Consensus amongst stakeholders must also be reached regarding the ‘current state’ and its impact or impediment on the ability of the organization to deliver the benefit identified in Step 2 above. Analysis is focused on understanding the current ‘as-is’ state of an organization’s technology, data, organizational structure, business process
Step 2: Identifying and Prioritizing Business Imperatives
Step 3: Understanding the Gap: Current vs Future State
Step 4: Designing the Program Portfolio
Step 5: Implementation and Operational Team Design
Figure 6 Program Blueprint (template available at www.GEDigitalEnergy.com/GIS.htm).
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etc. We advocate a simple approach in this step, which avoids a long and drawn out process mapping exercise.
Being able to articulate the future state in the context of benefits/value expected by senior leaders is extremely powerful. It also supports change management activities within the organization as it helps ‘paint a picture’ of what the future will look like for each functional group and indeed each individual. Defining a clear future state is also necessary to assess the magnitude of change required to move from the ‘current state’ and for understanding the gap between ‘what life is like today’ and ‘what life will be like tomorrow’ for the business.
Step 4: Designing the Program Portfolio
Having identified the current and required states, the gap between the two has been exposed. During this step you will identify discrete projects that will collectively close the identified gap through changes to work processes, organizational design, data quality, information availability and technology. This ensures a complete view of the required activities to complete a program, and then transition into sustainable day-to-day operations.
Once these discrete initiatives have been identified and agreed, they can then be individually costed, resourced, and built into a program timeline that allows the organizational structure of the delivery team to be defined.
Step 5: Implementation and Operational team Design
Designing the ‘Implementation and Operational’ team to execute the proposed program completes the foundation for a successful Program Blueprint.
2.1.2 Benefits of the Program BlueprintBy using the Program Blueprint process, the proposed technology investment is decomposed into components of the assessment from both a top-down and bottom-up perspective. This approach maintains the critical balance between robust analysis and creativity, and provides an effective process for building ownership, commitment and consensus across the business.
The key benefits of the Program Blueprint approach, which will become apparent as the details of each process step are elaborated upon, are:
• It is a highly participative approach (via workshops & interviews), involving the senior team, managers and staff, thus ensuring consensus and full ownership of the plan and commitment to its success
• It positively draws out creativity from within the business, resulting in more ambitious plans that deliver more value than traditional approaches
• It develops plans which are realistic, achievable, and sufficiently flexible for future adaptation in light of changing circumstances
• The whole process encourages cross-functional collaboration, offering both team and individual development so that all parties are well equipped to re-run the business case process as business needs and objectives change.
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2.2 Building the top-Line - Stakeholder InterviewsThe top-line of the Program Blueprint is an articulation of the business benefits and opportunities that senior leaders are seeking to realize as a result of an investment. In other words, it is a qualitative description of what their return on investment will be as a result of funding and executing the program.
In order to build a powerful ‘top-line’, it is imperative to engage with senior leaders and solicit their views on what’s really important to them, their department, their customers, the business and the shareholders.
Broadly speaking, there is a limited set of benefit categories to consider – most of which are inter-related in some way. They are described in the following table.
Sub-Category What executives say
Reve
nue
Growth “I’m looking to increase revenue by adding new customers and up-selling more services to existing customers”
Protection “We need to reduce churn and ensure that our current revenue streams are not undermined by our competitors”
Assurance “We need to identify revenue leakage within the business and ensure we are plugging those holes to ensure we are getting paid appropriately for our product/services”
Cost
Containment “We need to contain our costs and ensure that they remain static even while we grow our revenue and customer base”
Reduction “We need to reduce our operating expenditure across the business”
Avoidance “We need to put the right controls and mechanisms in place to avoid costly reactive activities which were unbudgeted e.g. restoration, clean-up, fines”
Regu
lato
ry
Compliance “We must meet all regulatory mandates effectively and ef-ficiently – it is not a case of economics, but rather business necessity”
Reporting “We must be able to accurately report our adherence to regu-latory mandates in the most effective and efficient manner. ”
Serv
ice
Customer Service “We need to improve customer service at all levels to enhance the customer experience and foster customer loyalty”
Reliability “We need to improve network reliability because this is a key metric by which our customers, the market and regulators measure our performance”
Hea
lth &
Saf
ety Employee “We need to ensure our employees have the right information
at the right time to minimize safety related concerns on the job”
Public “We need to protect the public and ensure our business activi-ties do not cause harm to the public at large”
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Sub-Category What executives say
Lega
l & F
inan
ceFines “We need to minimize (or eliminate!) the number of fines we
received for non-compliance”
Contractual “We have contractual obligations to other parties that we must meet (e.g. franchise agreements), and we need to do this transparently, efficiently and consistently across our service territory”
Tax “Tax reporting requires an understanding of our assets and their location in relation to tax districts, otherwise we may overpay or underpay required taxes – neither of which is desired”
telecoms Experience
Revenue Growth
An innovative European network operator has used their geo-spatial network infrastruc-ture management system to query the density of residential units in a given area and hence assess the profitability of areas for fiber build. This control over areas supplied by fiber rather than DSL is a key factor in the overall profitability of the business.
Cost Reduction
A major national carrier in Europe implemented a “call before you dig” service for utility companies to request via email maps showing the carrier’s plant in areas they were planning to work and dig up the road. This reduced the need for a team of people who previously needed to photocopy paper maps and post the results. It also meant the maps were available within minutes, rather than days.
Regulatory Reporting
A large operator in the USA used their network infrastructure management system to provide reports to government authorities on where their outside plant was located. As a by-product of this compliance, the company significantly reduced their tax bill through accurate knowledge of the location of their network assets (see Finance - Tax).
Customer Service
A German regional service provider, who has won national awards for their customer service four years in a row, utilize their network infrastructure management system to support the fault management process. Once faults are identified, the operations staff can use the system to locate faults in the network and identify impacted services. As a re-sult, the process of resolving network faults is now estimated to be 100% faster and more accurate, enabling the operator to provide a better quality of service to their customers.
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Utility Experience
Customer Service
A large US operator utilized their geospatial network infrastructure management system as the backbone for asset management for disaster recovery in the wake of a major hur-ricane. Although the customer is an industry leader in storm restoration and recovery the solution was put to the test when its natural gas system was completely flooded. Fortu-nately for this utility’s customers, they had leveraged the proven scalability and flexibility of their system to complete the conversion of archaic card data into digital form. This enabled restoration crews to accurately locate gas vaults and controls in flooded areas to enable systematic siphoning of the gas system to hasten restoration.
Regulatory Compliance
A significant electric utility in Chile has implemented a network infrastructure manage-ment system to revolutionize their ability to comply with national regulatory agency requirements. Through their adoption of a spatial asset and customer data repository to support integrated project design & planning, maintenance & engineering and operations, New Value Replacement Reports (detailed inventories) now take just 5 days compared to the 3 months they previously took. Along with other direct improvements from their system, the company is now ranked highest for regulatory compliance when compared to the country’s other operators.
Cost Containment
The largest pure natural gas distributor in the United States depends on their standard gas distribution application suite to manage 82,000 miles of gas pipe network and nearly 8,000 miles of transmission pipeline. They are known to be one of the most efficient natural gas utilities in the industry due to constant cost management. This was evident as they merged two CAD systems and three GIS systems into their mission critical geo-spatial pipeline system, paying particular attention to delivering true business value at minimal expense. They simultaneously rolled out an integrated field automation system that presented geospatial data in the legacy map projection system, minimizing field user training needs.
Health and Safety
A large investor-owned US electric utility delivering power to over 2 million homes and businesses re-evaluated the way they responded to storm damage. A more efficient as-sessment of facility damage before, during and after major storms was sought. With the adoption of a new mobile solution for storm damage assessment, safe and effective res-toration of electric service was a priority. Providing the ability to determine what damage existed, where, and what resources were needed to resolve the problem in the field was key. Through the deployment of their mobile geospatial system repair crews now know the type of equipment required before leaving for site, understand the exact status and location of assets prior to arriving, and use location-to-location routing to ensure crews don’t get lost when typical landmarks may be obscured.
Of course, there are additional benefit categories but the ones listed are the most common. All of the benefit categories will probably be on your executives’ agenda; the purpose of the interview is to seek clarity from your executive on which is the most important to them.
Finally, you may consider introducing the concept of ‘operational risk’ as this is also important - describe the risk of ‘not doing something’ rather than the upside benefit of doing it. For instance, if we don’t upgrade our platform now then the cost to upgrade two years from now will have grown by a factor of four, and will have introduced operational risk as a result of integrity issues with the existing platform.
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2.2.1 Preparing for Senior Stakeholder InterviewsThe manner in which you engage senior leaders will depend on a number of factors. For instance: your relationship with them, level of established trust and credibility, their awareness of the program and its potential value, past success or failures with similar programs, their location, availability etc.
Regardless, we recommend that you be prepared and utilize a structured ‘interview technique’ as a means to capture their views in a consistent and transparent way. You also need to be prepared for the conversation you will have with them, and be in a position to suggest, lead and offer examples to help stimulate their thinking.
The most effective way to prepare for such interviews is to:
• Understand your audience (inward focus). This means researching and understanding what their responsibilities are within your organization, the size/complexity of their department, their likely receptiveness to change (e.g. technology adoption) and experience with geospatial network infrastructure management solutions.
• Know the potential value (outward focus). How have geospatial network infrastructure management solutions benefited other organizations/executives in similar roles (see examples throughout this handbook)? Understanding ‘what might be in it’ for the Vice President of Customer Service provides you with the opportunity to educate and explore what might deliver value to that particular VP.
• Prepare a Conversation Pathway. A conversation pathway is a simple expression of the key topic areas that you wish to cover with an executive during your interview. Preparing this helps both you and the executive to stay on track with the conversation and cover the areas of most relevance. Without such a mechanism, there is a tendency for the conversation to wonder off topic and, as a result, fail to capture the required input from them.
• Prepare an Interview template. An interview template is a more detailed rendering of the conversation pathway, with specific questions that you wish to ask your senior executive. Thinking about what you want to learn from this executive, ahead of time means that you have a better chance of a highly successful and valuable interaction with them. We don’t advocate reading the questions in a robotic fashion (it is not a survey, it is a conversation), but instead use them as a guide during the conversation. If your organization is primarily “data-driven” consider adding a scoring matrix to the interview questions so executives can rank their top 3 or 5 concerns. We provide a simple Interview Template to help you prepare for your stakeholder interviews.
• Schedule a meeting and provide a ‘cover note’. Schedule the interviews as far in advance as possible. Senior leaders are naturally busy and are often not able (or willing) to slot last minute meetings into their calendars. Further, it is appropriate to provide a short summary in the meeting request about why you wish to meet with them, what they should prepare (normally nothing) etc. Some executives appreciate receiving the interview questions in advance so they can give some thought to their answers.
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• Follow up with results of your discussions. Typically, executive stakeholders appreciate the opportunity to read the collated interview results and provide feedback. It is an invaluable tool for them to see how their peer group responds to your questions and may elicit further valuable insights.
The preparation above is critical to solicit the right information and ensure a successful interaction with the executive. You are not only seeking to solicit information from them - you are also establishing a relationship that is based on trust, credibility and respect.
If you execute the interview professionally and in a well-organized way, you will have taken the first step in building confidence that making an investment in your program will deliver results. If you fail to do so, then you immediately raise red flags, with the executives potentially becoming concerned about your ability to execute a complex technology program.
Get the simple things right:
• Don’t be late for the meeting
• Schedule the interview in advance, not at the last minute
• Double check you have everything in order (conference room booked, dial in information etc)
• Print the conversation pathway and bring it with you
• Do interviews in pairs – with one person talking and the other note taking
• Stick to the time allotted, don’t overrun
• Actively listen
2.2.2 Conducting Senior Stakeholder InterviewsIf you have adequately prepared for the interview with your senior stakeholder, there should be few surprises during the conversation. You should already have a pretty good idea as to what they are likely to want in terms of business value.
Conducting a senior meeting works best if there are two people interviewing – one who follows the ‘script’ and the other who takes copious and detailed notes. Trying to have a conversation and take notes at the same time is difficult and ineffective, so if at all possible have someone on the core team join you to do the interviews.
Alternatively, recording the interviews is a very effective approach, allowing you to go back to the interview transcript to make sure you understood correctly, rather than relying on notes made at the time. If you decide to use this approach then make sure you get permission from your interviewee ahead of time.
You may find that senior leaders wish to invite some of their direct reports to the meeting, and this works equally well. However, interviewing five people is very challenging, so it is best to suggest that only one or two other people join the interview. If they have more direct reports they want to participate, simply suggest that you interview them separately after the executive has set the direction, provided their views and expectations.
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2.3 Organizing the Opportunities for Delivering ValueAfter interviewing several executives, you should have a better picture of what their primary themes are with respect to value. Some examples of the core themes that could emerge from the interviews are:
theme Example
Customer experience Accurate view of services available in your area
Cost reduction Driving operational costs out of the business through automation
Revenue growth/protection Reducing customer churn, adding new subscribers, up-selling targeted services
Network reliability Reduced time to locate and repair network faults
Profitable network upgrades Cost effective capital outlay; focus on areas with high potential ROI
Service quality Ensuring physically diverse paths in telecoms networks
Customer satisfaction Successful service roll-out - network assets in place for one-time service turn-on
Environmental citizenship Reduction of truck rolls due to accurate network asset data
Management control Clear view of network usage and performance
Improving Public Safety Efficient pro-active network maintenance and repair
Regulatory reporting Efficiently meeting regulatory/compliance obligations
With these in mind your task now is to articulate ‘what they said’ in a consistent manner using the Business Opportunities Template.
2.3.1 Collating Benefit Opportunities by Stakeholder GroupThe first step is to glean as much as you can from the interviews you have completed. Rarely will an executive clearly articulate ‘what they need’ in a manner that suits your business case, so you often have to read between the lines and interpret their statements.
The following examples illustrate what might have been defined as a result of several senior stakeholder interviews. Each “benefit opportunity” becomes a direct mapping back to what the executive said they wanted to see delivered or realized as a result of any potential investment. It builds a personal connection for them by reflecting their objective/goal in the ‘top-line’ of the Program Blueprint and, hopefully, secures their commitment through an organized expansion of their vision into concrete benefits/opportunities. It may be appropriate for you to relay your interpretation of ‘what they said’ to your executives so they have an opportunity to agree or revise what you thought you heard.
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Most Impacted Stakeholder Group / Department
Benefit / Opportunity description
1 Vegetation Management Improve tree trimming planning and scheduling activities to reduce external contractor expenditure, thus reducing our overall tree trimming operational budget
2 IT Department Reduce our IT application footprint and Total Cost of Ownership (TCO), thereby reducing operational expenditure on IT support/maintenance.
3 CFO/CIO Purchase standard solutions and limit customiza-tions. This allows faster implementation, lower lifecycle costs, and faster ROI.
4 Field Operations Downloading work from home saves field workers time each day in non-productive drive time. Dy-namic rescheduling reduces the number of missed appointments/customer complaints.
5 Customer Service Real-time updates on order status or restoration status reduce the number of calls, potentially during critical storm recovery periods.
6 Safety Reducing drive times and providing accurate facility data to the field reduces field workers exposure to hazards.
7 Network Operations Fast response to network faults based on accurate network asset locations
8 Network Planning and Engineering
Accurate network designs following standard busi-ness rules.
9 Marketing Create effective marketing campaigns based on knowledge of network coverage and demographic data
10 Finance Accurate calculation of network value based on up-to-date network inventory.
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telecoms Experience
A telecoms operator serving one of the major cities in the USA was able to realize a set of business opportunities across the enterprise including enhanced customer service, increased network reliability and reduced operating costs.
Stakeholder Benefit Opportunity
Regulatory Compliance Compliance with the city’s requirements to record the position of their facilities to an accuracy of two feet and to provide a 72 hour turn-around for “call before you dig” requests
Network Operations Support for a number of functions including service assur-ance and pro-active network maintenance
Network Engineering Consolidation of data from numerous sources into a complete, consistent view of the network, enabling de-tailed planning of connections from the backbone to new customers.
Sales Network rings are displayed visually on monitors within the Network Operations Centre (NOC), their physical paths demonstrating network diversity to prospective customers to help secure sales.
Customer Relations Identification of circuits and customers that could be affected by planned maintenance operations allows pro-active notification of potential outages
Field Engineering Locating the physical location of a fibre break allows field engineers to repair the fault quickly, often before any customers are aware of the problem - in one case, a rival operator only became aware of the problem when they started to receive customer complaints.
Capital Planning Better asset knowledge enables use of available capacity, making it possible to use existing assets before embarking on expensive new build.
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Utility Experience
A combined electric and natural gas energy company with a service territory covering the western United States is an innovator and pioneer of geospatial technology. Their transmission and distribution network infrastructure management system drives improvements and productivity across system design, outage management, customer information management and field design and operations, delivering a host of real business value.
Stakeholder Benefit Opportunity
Network Engineering Over 350,000 miles of conductors and 32,000 miles of pipeline are efficiently designed, planned and managed with their geospatial infrastructure management system making it one of the largest corporate GIS systems in North America with over 300 concurrent users on any one day
Field Operations Mobile computing, dispatch, facilities mapping, and field design are essential for field crew empowerment and productivity in deploying a new streamlined outage man-agement process. Paperwork is eliminated and replaced with map correction updates and design as-builts from the field.
Marketing Corporate organizations such as Marketing and Demand Side Management perform market research analysis as a means of up-selling additional services to specific cus-tomer demographics
Finance The geospatial network infrastructure management system is the record of truth for all pole attachments and through integrating this with its corporate financial and commercial systems it is able to manage the tracking and billing of non-metered services (street lights, area lights etc.)
Smart Grid As part of the utility’s “Utility for the Future” initiative their geospatial system was used as the foundation for siting and optimal location analysis for the implementation of a fixed area network to support automated meter read-ing – a process that saved approximately $2M in outside consultant costs. Their system was also expanded to map the concurrent build out of automated meter and com-munications infrastructure.
2.3.2 Refining Benefit OpportunitiesThe result of collating the material into the Template is that you now have a concise and structured set of ‘benefit opportunities’ that can be further explored and refined with your executives’ direct reports.
Refining benefit opportunities involves interaction with those people who are closer to the actual operational activities and understand the details, interactions, impacts, players and metrics. This team will be critical to realizing the benefits, so getting them involved and engaged now helps build a sense of ownership.
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Building the expanded table below facilitates a more complete description of the benefit opportunity, the business process/activity that it applies to specifically, and the business impediment or challenge that exists in the ‘current state’. We provide a Business Opportunities template for recording your analysis. For clarity of reading, the table below is a stylized version of the template.
The column requiring a “Question we are trying to answer” is a way of transforming the statements into an actionable item – something that needs to be answered and requires a specific solution. Ideally, the possible solution is your proposed technology solution although one should not force fit the answer. If there is a more effective answer, then document it here and focus on where real value can genuinely be added by the program of work you are scoping.
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solution although one should not force fit the answer. If there is a more effective answer, then document it here and focus on where real value can genuinely be added by the program of work you are scoping.
Mos
t Im
pact
ed
Stak
ehol
der G
roup
/ D
epar
tmen
t
Vegetation Management IT Department
Benefit/Oppor
-tu
nity
des
crip
tion
Improve tree trimming planning and scheduling activities to reduce ex-ternal contractor expenditure, thus reducing our overall tree trimming operational budget
Reduce our IT application footprint and Total Cost of Ownership (TCO), thereby reducing operational expenditure on IT support/maintenance.
Busi
ness
Pro
cess
Ar
ea /
Activ
ity Tree trimming is required to meet regulatory requirements, improve public safety and reduce outage incidents during storms
Business capability is supported through a series of IT platforms, some of which are highly customized and closely integrated.
Com
plic
atio
n
/ Im
pedi
men
t
We have a manual and labor inten-sive process that relies on poorly organized and documented tree trimming schedules and plans
The complexity of our IT platforms, which have evolved overtime, has led to a sub-optimal TCO in relation to our IT portfolio.
Que
stio
n w
e ar
e tr
ying
to
answ
er
How can we reduce our the number of external contractors, thus reduc-ing our budget requirements for external tree trimming contractors?
How can we reduce our operational costs related to the support / mainte-nance of our IT platforms?
Poss
ible
sol
u-tio
n / a
nsw
er Develop a tree trimming schedul-ing/tracking application using geospatial technology which is built upon our physical network inven-tory platform.
Consolidate our disparate network inventory platforms (CAD, paper, spread-sheets) into a consolidated geospatial network inventory solution.
Rele
vant
Met
rics • tree trimming contractors
employed
• annual spend on contractors
• average spend per contractor
• annual opex costs for application support
• annual opex costs for software license maintenance
• annual opex costs for third party upgrade support
Figure 7 Benefit Opportunities (template available at www.GEDigitalEnergy.com/GIS.htm).
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2.3.3 Prioritizing Benefit OpportunitiesAfter collating all the potential business opportunities, you will likely have a large spreadsheet that shows how value could be added across the whole enterprise – that is, to all the stakeholder groups that were involved.
Very difficult to realize benefit as there are organizational and technical risks, impediments (e.g. cost) and/or opera-tional impacts to more than one organi-zation/ functional group. Not clearly un-derstood and not yet technically proven in our organization There is a complete reliance on external expertise.
Somewhat difficult to realize benefit as there are organizational and technical risks, impediments (e.g. cost) and/or operational impacts to more than one organization/ functional group. Only conceptually understood and not yet technically proven in our environment. There is a reliance on external expertise to deliver, as the competencies are not available in-house.
Somewhat straightforward and well understood, so realistic to realize the benefit. There is some organizational or technical risk, cost or operational impact to the organization, but man-ageable. Generally well understood and technically proven, but not at our organization.
Straightforward, proven and very achievable given that there is little organizational or technical risk, cost or operational impact to the organization. Well understood and technically proven. Experienced resources available who have done this before.
Small incremental value added to a single group, individual or department. In hard-currency terms there is very little measurable value to the organi-zation based on revenue, cost, service excellence, public safety, competitive advantage, regulatory compliance, etc.
Moderate incremental value added to one or more groups/departments. In hard-currency terms there is marginal measurable value to the organization. Intangible benefits are more signifi-cant. Not well aligned with strategic imperatives of the organization
Good incremental value added to more than one group/ department. In tangible terms there is good measur-able value to the organization based on revenue, cost, service excellence, public safety, competitive advantage, regulatory compliance, etc. Intangible benefits are also significant and there is real medium-term beneficial value to our internal stakeholders and/or external customer.
Significant value added to the enter-prise/organization. In hard-currency (tangible) terms there is significant measurable value based on revenue, cost, service excellence, public safety, competitive advantage, compli-ance, etc. Intangible benefits are also significant and there is real long-term beneficial value to our internal stakeholders/external customer. Fits organization’s strategic direction.
1
2
4
5
6
7
9
10
Ease of Benefits Realization Value to the Enterprise Low ValueDifficult
Easy High Value
Figure 8 Ranking guidelines for quadrant diagram.
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It is unrealistic however to think of each opportunity as having equal value to the business; nor is each opportunity achievable in practice (perhaps it is not technically feasible at this stage, or it may not culturally fit with your organization).
Therefore, you must prioritize those business opportunities that are most valuable to the organization; and also are most achievable in terms of implementation.
We recommend using a simple quadrant diagram that allows you to use some qualitative and subjective criteria (we are not quantifying value just yet) to categorize the opportunities. The ‘ranking’ guidelines in Figure 8 apply to the x and y axis of the quadrant diagram. For each business opportunity, you should discuss the merits and pros/cons and then rank it using two dimensions
• Ease of Benefits Realization – ‘how hard or easy’ will it actually be to realize the potential value based on known technical, cost, cultural, and resource issues?
• Value to the Enterprise - how valuable, in qualitative terms, would this benefit be the business?
By arranging for a ‘prioritization meeting’ with members of the core team and, if appropriate, some of the direct reports of the executives, you will be able to use a simple flip chart to plot each of the business opportunities.
With the right people in the room, you can have an open dialogue about each opportunity and collectively identify which opportunities rank highest, and which will not be addressed within your business case and strategic plan.
High
Low
Hard Easy
Value to Enterprise
Worth Pursuing
Ease of Benefits Realization
Figure 9 Benefits quadrant diagram.
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2.4 Updating the Program BlueprintNow that you have solicited, collated and prioritized the key business opportunities (benefits) worth pursuing, you can update the Program Blueprint to articulate these within a familiar structure.
This is accomplished by breaking the top-line of the one page strategy down into ‘boxes’ that represent stakeholder groups or business areas. This clearly delineates ‘where’ the benefit will be delivered into the business and helps individual stakeholders instantly recognize the value it will deliver for them.
2.5 ConclusionIn this step you will have completed the foundation of the business case. If you have not clearly identified and validated the business priorities and objectives of your senior leaders, then your business case may not hit the mark.
By the end of this step, you should have:
• Completed Senior Stakeholder Interviews
• Collated Benefit Opportunities by Stakeholder Group
• Refined Benefit Opportunities
• Prioritized Benefit Opportunities
• Completed the “top-line” of the Program Blueprint
Figure 10 Program Blueprint - Objectives and Business Goals.
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3 Understanding the Gap: Current vs. Future State
Having defined and prioritized the benefits that the business case needs to deliver to secure the commitment of senior stakeholders, you now must determine the current business design that is impeding the delivery of these benefits. The business design is described by a mix of data, technology, process and organization supporting the business. In Step 3, we review these dimensions and create a vision for the future - that is, how the business will need to change in order to deliver on the expected benefits (or mitigate the potential operational risks).
Figure 11.Program Blueprint - Current and Future State.
Given we will be identifying and proposing changes to ‘how people currently work’, it is vital to consider the change management impacts and the level of end-user buy-in. In this chapter we describe how to:
• Define and articulate the current ‘as-is’ situation (section 3.2)
• Explore and develop a ‘future-state’ business design (section 3.3)
• Understand the degree of change required to close the gap between the ‘as-is’ and the ‘to-be’ pictures (section 3.4)
3.1 IntroductionIn order to establish practical and well-defined ‘projects’ that will effect change in the current state of the business design, we must first understand the current state. The diagram below illustrates a number of different categories that must be investigated to gain an understanding of ‘what life is like today’. The future state that incorporates key stakeholder benefits can then be articulated and agreed upon. It is critical to be able to describe ‘how things will look’ after the deployment of the solution. This helps executives and end-users better understand what changes will occur as a result of the proposed investment and how these align to the defined objectives/benefits.
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Figure 12.Transforming the Current State.
Critically, this step is not about identifying solutions. There is a tendency to get bogged down trying to solve the challenges that are identified through the current state assessment. Resist that temptation to ‘solution’ too early; otherwise it will derail your ability to move onto the next step with clarity and consensus on the future business-centric vision.
Work Collaboratively across the Business
By working collaboratively to define the business design, you will be able to break down traditional organizational silos and help build a more comprehensive end-to-end understanding of workflow, data usage and decision-making. When people within your organization are drawn together through this process, they gain an appreciation for each other’s roles, challenges and needs. This in itself is enormously beneficial as it helps set the stage for change and helps to clarify what otherwise might have been misunderstood.
3.2 Understanding the Current StateThere are many approaches to determining and documenting the current state of data, technology, process and organization. Some dive into process mapping exercises that seek to document the current state in detail, although in our experience this is not necessary for building your Strategic Plan or Business Case.
We recommend assembling a cross-functional team who can be led through a discussion about individual topics – thus helping to focus on the conversation and keep it at the right level. It is best to conduct a series of brief workshops as described below to develop a view of the desired future state that is high-level, yet specific in design. A trusted “neutral” party who is familiar with the business can best facilitate these workshops.
These workshops need to be conducted in light of the fact that you already know what your Executives wish to achieve (as you discovered and prioritized in Step 2). You are not seeking to understand what could be done to deliver value; you are seeking to determine what needs to change to deliver the value your Executives said was most important. This is a subtle but important difference!
Although the number and breadth of the ‘working sessions’ you may hold will depend on your organization, geographic spread, size/complexity, the following is a useful
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guide when planning working sessions, each of which is covered in detail in the subsequent sections.
Working Session/ Meeting
Objective topics to Cover
Data To determine the current state of network infrastructure data across the organization – what it is, where it is stored, whether it is ‘fit for purpose’ and key limitations.
Current data formats, quality, completeness, geographic coverage, connectivity, landbase, positional accuracy, projections, standards, naming conventions for assets.
Technology To understand the current investment in technology, maturity of adoption across office and field workers and conformance to IT standards.
Current technology already in place for capture, management and dissemination of data both in the office and in the field; existing levels of integration; upgrades or end-of-life situations; hardware and methods for access e.g. Citrix? Replication?
Process To identify the current level of maturity around the use of geospatial network data/technology within specific business functions, groups, departments and workflows and to identify key processes related to the creation, management and dissemination of geospatial network infrastructure data.
Review of how geospatial data and technology is currently leveraged within each business group/function. This will cover the high-level workflow and need for network data and geospatial network (applications). It is also an ‘inventory’ of the existing competencies around the exploitation of geospatial network data/capability; and of existing platforms (home-grown, silo’d, disparate technologies etc).
Organization To identify if the current operating model for managing and supporting geospatial network infrastructure applications will be appropriate moving forward, or if changes will be required that have resource, cost and ownership/accountability implications.
Review of how the geospatial network infrastructure management solution(s) are currently managed, maintained, supported; and the organizational mode employed (centralized/decentralized, IT-owned; business-owned, outsourced etc).
3.2.1 DataOne of the most critical areas to explore is your network asset inventory and related data. The key here is to review and understand the data at a sufficient level of granularity to allow you to understand the impact of its quality, completeness, format, accessibility, lineage etc on your business objectives, decision-making and operational processes. It is not necessary to ‘get under the hood’ at a database level, but instead speak with business owners/users of the data to determine how well it does, or does not, meet their business need. You are not seeking to define a data model or assess the quality of asset attribute data, but understand how the current data enables or impedes decision-making and operational activities.
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The most costly component of an implementation, upgrade or integration is often related to data migration, conversion, cleansing or alignment – and as such, it is critical to fully understand what really matters to the business when it comes to data.
One key element to understand is the strategic importance of high quality network data and the need for strong and consistent business rules to maintain the accuracy of network as-built data. This is of particular importance with respect to meeting the challenge of an ageing workforce - with the retirement of engineers who have network information “in their heads” it is critical that accurate up-to-date network records are available.
We provide guidance below on key areas to explore. This is not however an exhaustive list, as each organization will have specific and unique data to consider.
topic / Area to Explore
Explanation / Relevance
Data Quality Data quality can be defined by the accuracy by which the data within the geospatial network infrastructure system reflects the asset data located in the real world. Poor data quality will impact the operator's ability to utilize the network data for decision-making and analysis.
Data Standards Data integrity and quality is significantly impacted by a lack of defined and enforced standards. These can include design, engineering, drawing, construction, data capture, naming, system, symbology etc.
Naming Conventions
Conventions for naming or labeling assets are critical to supporting consistent searching/querying but also for system integration with other corporate systems. The value of the network infrastructure system can be eroded by not having standard naming conventions that are consistently used across the business.
Data Formats Operators have evolved their network record management approaches over the past 20 years, moving from paper based systems to CAD to geospatial (or a mixture or hybrid). The level of disparity of data formats throughout an organization indicate a level of maturity to information management and hence opportunities for utilizing GIS capability.
Data Coverage and Completeness
The level of data coverage and completeness will determine an operator's capability to establish business applications or processes that are common across a territory and utilize the geospatial network infrastructure management solution. Consideration should take into account the availability and use of other network data (e.g. inside-plant records; logical network information; schematic representations) that can be used in conjunction with physical geospatial network (outside-plant) data to support key operational business processes.
Network Connectivity
The level of connectivity throughout the network data will drive the operators, capability to implement and utilize applications that rely on network following/tracing functionality and other topologically related functions.
Landbase / Base map
Landbase is described as the ‘base map’ upon which you will reference your assets. Some organizations ‘build their own’, others use open source data, acquire it from municipalities or commercial landbase vendors. Knowing and understanding the landbase data that is both required and available will influence the cost of acquiring, maintaining and disseminating geospatial network infrastructure data.
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telecom Experience
A major Tier One operator undertook a multi-year project to consolidate all their nationwide access network data that provides the basis for a ‘triple-play’ service bundle of voice, internet and digital television to consumers across the country. The new integrated IT platform manages network design, engineering and asset inventory, eliminating the need for paper network records. These have all been captured as part of the data conversion, migration and integration project that has vectorized and converted multiple regional access networks throughout the country, centralizing all the physical outside plant data into one system. As a result, users across the organization can access accurate network information at any time, improving the management of the asset network lifecycle.
Utility Experience
A leading utility based in Northern Europe made the decision to replace their existing geospatial network infrastructure system with a simpler (cheaper) solution. During the migration of the data it was realised that the capability of the new system to accurately model the network was limited and the ability to maintain accurate, high quality network records was severely compromised. As a result the simpler solution was abandoned and the business revitalized their original solution with plans to expand this to improve productivity to their mobile workforce.
3.2.2 technologyTechnology is an ever-changing piece of the equation and needs to be carefully considered in any business transformation. In particular, careful consideration needs to be given to the current legacy systems that are being used (the current state) and the capability needed to meet the business objectives identified (the future state).
The current technology solutions in use throughout the business need to be critically evaluated to determine how well they are meeting the business needs, and where the bottle-necks in performance are. Once these gaps are identified they should be used to inform the selection of future technology choices. Issues to be considered include:
• Scalability – As companies grow, either organically or inorganically, their critical business applications need to grow with them. The ability to scale to support the future size of the organization is an essential element of any technology decision, and thought needs to be given to the future number of users, the size of the resulting database, the ability to support multiple planning jobs etc. It is also critical when selecting new technology solutions that scalability is assessed through detailed analysis of established reference sites - rather than relying on polished functional demonstrations and unsubstantiated promises that the software will scale when needed.
• Performance – A key element of the introduction of most network infrastructure applications is the drive to improve productivity, either as new networks are planned and upgraded (e.g. new fiber rollout) or to leverage the existing network infrastructure more effectively and efficiently to drive greater margin (or maintain margin pressures resulting from competition). Disjointed legacy platforms often suffer significant performance issues that require workarounds and unscheduled ‘down-time’ for designers. New technology should offer high-performance in terms of response times for key elements of a task. However, even more critical
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is the ability of the solution to support the complete business life cycle as quickly and efficiently as possible. This requires analysis of not only the raw power of the system to perform individual tasks, but an assessment of the overall usability of the solution to support the end-to-end business process.
• Distribution - Geographic distribution of your network infrastructure management applications is also a critical consideration. The technology may need to support remote ‘off line’ sites or those with limited bandwidth.
• Total Cost of Ownership (TCO) - Disparate and homegrown platforms require significant resource to manage and maintain them. A key benefit of a standard, integrated set of geospatial network infrastructure management applications is that it requires limited resources to manage and maintain the underlying platform.
• Consolidated systems – In many organizations, the systems used to manage network infrastructure records are distributed throughout multiple departments, each managing different data sets. As such, a common, coherent view of the network is not available, causing difficulties with communication between groups, poor support for common processes, inherent data errors and conflicts etc.
• Reliability – As systems support more mission critical business processes, so their reliability and availability becomes critical.
• Integration – Accurate network infrastructure records are a critical resource relied on by many mission critical business processes. As such, the ability of the technology to provide straightforward, standards based integration to other operational systems is vital to ensure smooth running of the network.
• Enterprise wide availability – Many legacy systems are managed and controlled by individual departments within the company, with limited or no access to the data outside that department. Often the availability of such data would greatly benefit other parts of the organization (e.g. the marketing department having access to data on planned network upgrades).
telecoms Experience
Scalability
One of the largest deployments of a geospatial network infrastructure management solution in the world is for a major German telecoms customer that supports 3,500 full client engineering users, and a further 3,000 users accessing the system via the Internet. With over 5 million plans digitalized (geographical supply plans and schematic plans) resulting in approximately 5 terabytes of data, the system supports 400,000 small and 24,000 large planning jobs annually, and 300,000 fault locations.
Performance
A leading network operator serving a large metropolitan area has seen process improvements in several key business areas since deploying their network infrastructure management solution. This includes a 100% improvement in their planning process (resulting in not needing to recruit five additional heads as the workload increased), a 70% reduction in the time taken for strategic planning due to improved access to critical network data, and a 100% speed-up in resolving network faults due to accurate information on demand to help with troubleshooting network problems.
Reliability
A key customer in Central Europe has been using a network infrastructure management solution to document, plan and operate their entire outside-plant network. This mission critical system is one of their top corporate systems in terms of reliability, with zero downtime due to software errors in the last 3 years.
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Utility Experience
Scalability
One of the largest electric utilities in the world requires support of 4,500 users working on 60,000 design alternatives at any one time. The presence of an established data management process and the ability to integrate such a large number of design alternatives, whilst managing conflict resolution in a timely manner, was a key consideration in the selection of their geospatial network infrastructure management solution.
Integration
A smaller regional utility was experiencing extremely high growth rates, adding in excess of 10% new customers annually. They improved their operational efficiency by integrating their geospatial network infrastructure system with a design/workflow system and an outage management system with their legacy ERP and customer systems. The resulting productivity improvement enabled the utility to support their rapid growth without the additional cost of extra staff or contractors.
total Cost of Ownership
A major North American utility was able to lower their system lifecycle costs by utilizing a standard data model and set of geospatial network infrastructure management applications to replace multiple bespoke systems. In addition to labor and software licensing savings, the utility was able to use the new system to bring together disparate units of the company and establish consistent design and construction processes across regions. The company experienced $900,000 of annual savings from using these spatially enabled applications.
3.2.3 ProcessExamining the data and how it will be used will also naturally require that you understand the processes that drive its creation, management, maintenance and use.
There are two types of process that need to be considered here – one are the business operations that rely on the network infrastructure application and data held within the system, which is discussed later in this section; the others are the processes required to manage and maintain the quality of the data.
Data Management
Given that network infrastructure management platforms are data-centric systems, the data management processes are arguably the most important to define. Life-cycle data management can be one of the most challenging processes to streamline due to the wide range of departments (and often contractors) involved. ‘As-builts’ historically have been treated as a final chore after construction that is less important than the next job. How well defined and enforced the as-built process is has a direct impact on the quality, coverage and timeliness of the data.
Hence careful consideration needs to be given to how you plan to manage the business critical data within your network infrastructure management solution. In our experience, companies tend to focus on the key business processes that the solution will support (see below) but do not pay enough attention to the underlying end-to-end process that needs to be put in place to manage the data. This needs to include questions such as:
• What data standards need to be established? What naming conventions should be conformed to?
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• Where is the data coming from? How will different sources of data be captured? What tools are available? How will outsourced data capture vendors be managed to ensure consistent quality?
• What is the process for reconciling different views of the network originating from different sources? Which data will be deemed to be the master? How will conflicts be identified, communicated and managed?
• How will the data be maintained? What quality audit procedures need to be in place to ensure data accuracy, completeness and consistency?
• How will changes to the data be managed? What will the impact of different business process support applications have on the data?
• What user authorization mechanisms need to be in place? How will data changes be managed in terms of ownership to ensure high-quality data? For instance, should field users be allowed to update data directly or should “red-line” diagrams be sent back to a central data management centre to make the changes?
Business Process Support
One of the key areas we have identified for ensuring strong ROI from a geospatial network infrastructure management solution is how the data can be shared across the enterprise to support multiple business processes.
Organizations who leverage their geospatial network infrastructure data widely across their organization realize the most significant benefit. Although benefits are realized within the planning, design and as-built functions through improved data management, the real upside is in exploiting the network infrastructure data within such business functions as sales & marketing, customer care and network operations.
The following business process areas are provided as guidelines for review, but the areas you focus on should already have been identified in Step 2 when you prioritized the most important areas of the business.
Business Process
Description
Network Plan and Design
The ability to plan and design well-engineered network upgrades is probably the key business process supported by network infrastructure management solutions. You need to understand how the use of current systems (and the ability of future solutions) are able to:
• design cost-effective network upgrades
• account for existing network utilization
• enforce technical constraints to ensure accurate network designs
• ensure a standard approach to network planning
• enforce corporate wide business rules are followed
• reduce cycle time for planning new infrastructure
• manage planning jobs through the evaluation and approval process
• clearly document the network design for review and use by multiple stakeholders (e.g. senior management responsible for sign-off of capital investment programs).
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Business Process
Description
Network Build
Once the network upgrade has been designed, it still needs to be constructed and deployed. The process for managing the network build needs to be understood to ensure the network infrastructure management solution can support the complete end-to-end process. This could include:
• exchange of data (e.g. Bill Of Materials) with procurement systems used to purchase required equipment
• generation of job packs containing all the details (network designs, connectivity diagrams etc) needed by engineers responsible for building the network
• access to data in the field and the ability of field engineers to upload information on as-built changes to the original design.
Network Monitor and Maintenance
A key element of keeping a network healthy and able to provide reliable service to customers is a well-organized pro-active monitor, maintenance and repair process. The ability of existing (and future) systems to support these processes needs to be evaluated. For instance, does the system support:
• the planning and management of a program of pole inspections
• tracking of equipment health
• correlation of network faults to determine geographic problem areas.
Network Operations
Even with the best maintenance and repair operation, there will always be faults in the network that require reactive response to alarms etc. The network infrastructure management solution should be an integral part of the network operations process in order to:
• locate the geographic position of the root cause of the problem
• provide network information on the location, equipment, connectivity etc to be repaired
• schedule and dispatch field crews to resolve the problem.
Field Operations
Availability of network information in the field is critical to the efficient running of the network. Applications (current and future) that support field engineers should be evaluated from a process point of view to assess their usability for field engineers performing their day-to-day tasks. Issues that need to be considered include:
• exchange of data between the central database and the end user device (e.g. ruggedized laptop, handheld)
• usability of interface when performing tasks (e.g. can data be entered easily with thick gloves on)
• ease of use – you should strive for simple options that minimize the amount of data displayed, the number of options available etc.
Sales and Marketing
Availability of accurate network infrastructure data is critical to support marketing processes such as:
• planning new marketing campaigns to exploit available network capacity
• identifying network upgrade requirements based on customer demographics
• identifying near-plant revenue streams across the network.
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Business Process
Description
Customer Care
The ability of the customer care team to keep customers informed of network issues is a key element for increasing customer satisfaction and hence reduce customer churn. The system could support customer care processes in the following areas:
• pro-actively informing customers of network problems when a fault occurs
• scheduling pro-active maintenance to reduce customer disruption
• providing customers with information on the range of services available in their geographic area
• improved qualification of service provisioning to specific end customers
• responding to customer queries about engineering work being done in their locality.
Finance There are multiple financial business processes that need to be supported by network infrastructure management solution that can bring bottom-line rewards to the business. These could include:
• assessment of network asset status and depreciation
• analysis of network plant locations for tax reporting purposes
• capital cost calculations for planned network upgrades.
Regulatory Reporting and Compliance
Network infrastructure records are a critical asset of any Utility or Telco and as such contain important data that will be needed for regulatory reporting and compliance. For instance, in the telecoms industry incumbent providers are being asked to open up their access networks and share duct capacity with new operators.
3.2.4 Organization An area often overlooked is that of ownership, accountability and governance when reviewing current state. You will need to confirm that the current organizational and governance model is sufficiently robust and has the right competencies, capacity and levels of authority to implement and sustain a geospatial network infrastructure related initiative. At a high-level, you should be asking:
• Do we have internal competencies (skills, experience) that could be applied to the geospatial network infrastructure management program?
• What part of the organization do they sit in? Are they in IT, the business, or spread geographically across your business?
• Do the required skills exist in-house or do we currently source them from one or more third parties?
• Who do they report to in the organization?
• Who controls and prioritizes the budget allocated to geospatial network infrastructure management programs? (often budget is held across multiple business groups)
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We often find that organizations have not sufficiently scaled up their competencies or capacity of resource (whether in-house or sourced externally) to support the increased level of attention that is required for an enterprise grade geospatial network infrastructure management application. Further, they do not consider how they will consolidate ‘control’ in a way that supports an enterprise-wide view, overcoming the silo’d allocation of budget and interests. We cover this topic in detail in Step 5, as there are significant implications of not establishing the right team design to deliver expected benefits successfully.
Utility Experience
Utilities are finding that it makes sense to acquire standard geospatial network infrastructure models and applications rather than to maintain and increase IT resources to augment existing customized systems. This approach also mitigates the need to pillage technical resources from operations to staff a new project implementation.
3.3 Defining the Future State VisionOnce you have collaboratively captured your current state ‘business design’, you now need to articulate what your future state vision looks like. Again, this does not need to be a full articulation in the form of “to-be” process maps, but a simple explanation that senior leaders and operational staff can understand and appreciate. Consider the following examples:
Category Current State Future State
Data • Insufficient fiber sheath or strand network connectivity within current network maps capable of supporting upstream or downstream network tracing.
• Disparate map formats (CAD, XYZ, ABC, paper) are used to record network asset data across our service territories, impeding data dissemination and exploitation.
• Full fiber strand-level network connectivity with splicing data will be maintained within the geospatial network infrastructure management platform; thus supporting full upstream and downstream network tracing at the fiber strand-level.
• Network mapping data is consolidated into a ‘single source of truth’ platform that provides business users with a consistent source of network data to support business functions.
Technology • Legacy platform used to manage network data suffers significant performance issues that require workarounds and unscheduled ‘down-time’ for designers.
• Disparate and home-grown IT platforms require significant IT resource to manage and maintain.
• Designers use high-availability, high-performance network infrastructure management platform, thus improving design and as-built throughput.
• Simplified IT environment that requires limited IT resources to manage and maintain a smaller set of geospatial network infrastructure platforms/applications.
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Category Current State Future State
Process • As-built process is currently labor intensive and requires duplication (re-drafting) of CAD drawing received from the field into our geospatial network infrastructure platform.
• Field crews utilize paper map books printed annually.
• The planning, design and as-built processes will be integrated end-to-end, with network mapping being drawn only once.
• Field crews utilize laptops to wirelessly access network data in the corporate network infrastructure repository on a real-time basis.
Organization • Multiple stakeholders in disparate business groups managing own versions of network infrastructure data
• Limited resources available for managing the network infrastructure systems with no dedicated attention
• Network infrastructure management system “owned” by a single business group who then provides a service to other business users
• Dedicated team established to manage network infrastructure system – established as a business critical system
The way in which you articulate your future vision will depend greatly on your current situation – and your level of ambition. Consider two ends of the spectrum:
• Organization A: No network infrastructure management platform. In this case it will be a significant challenge for them to consolidate their disparate network data; implement and deploy a new solution.
• Organization B: Established network infrastructure management platform. In this case they may set a vision to embed geospatial capability into the fabric of their business, so users across their organization use it as part of their ‘day job’.
We recommend asking yourself “Where should (and can) we be, in terms of future state, within 3 years?”. This will make sure that you don’t paint a picture of nirvana, which is not achievable, for senior stakeholders and operational staff. You must define a realistic ‘future state’ otherwise you will undermine your own credibility.
telecoms Experience
A market leading network operator in Asia Pacific set themselves the target of transforming all of their network operations systems (including their network inventory system) within very aggressive timescales. Legacy systems were to be replaced with out-of-the-box solutions that would then be integrated together to form a comprehensive network operations environment. Unfortunately different elements of the grand picture failed for numerous reasons. As such, the operator scaled back their ambitions, focusing on coherent, largely independent projects that delivered early business value. Based on the success of these projects, credibility was re-established and senior management could then support a phased approach towards the integrated vision.
Your level of ambition during the 3-5 year time horizon must be reconciled with what you can realistically achieve. This is based on:
• What you can afford. How much money will really be available each year for this program?
• What the business can absorb in terms of change and the pace of that change (e.g. some organizations have a business culture that embrace change; others move at a very slow and measured pace).
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• What your internal resources and subject matter experts can handle based on what else is happening in the business e.g. are there other major initiatives going on such as a network upgrade, workforce management deployment or smart grid deployment.
• What level of risk that your senior executives are willing to accept.
Utility Experience
Over a five year period, a bold plan for business transformation centred on geospatial technology was successfully achieved by a prominent South Asian electric power operator. Through meticulous project planning, senior management support and a dedicated team driving the project, a leading network infrastructure management system was deployed and fully integrated in the enterprise IT environment. Geospatial network data was leveraged across all central business processes including, but not limited to, network planning and engineering, asset management, maintenance planning, outage management, distribution management, and revenue management. Key benefits included faster, enhanced service for consumers, higher employee productivity, and top line growth for investors. In total the utility estimates an annual benefit of ~$750,000.
3.4 Magnitude of Change: Closing the GapOnce you have defined the future state and gained agreement amongst your stakeholder group, you must then understand the gap. In the next step, we will be building specific initiatives that address the gap, but it is important to validate your future vision against the ‘magnitude of change’ that you have articulated.
Using the example from above, we are in a position to look at magnitude of change. We have provided a Magnitude of Change (Current State .v. Future State) template to help capture your findings.
Current State Future State Size Magnitude of Change
Dat
a
Insufficient fiber sheath or strand network connectivity within current network maps capable of supporting upstream or downstream network tracing.
Full fiber strand-level network connectivity with splicing data will be maintained within the geospatial network inventory management platform; thus supporting full upstream and downstream network tracing at the fiber strand-level.
9 This is a significant undertaking requiring a major manual data conversion/capture of our splicing data.
Disparate map formats (CAD, XYZ, ABC, paper) are used to record network asset data across our service territories, impeding data dissemination and exploitation.
Network mapping data is consolidated into a ‘single source of truth’ platform that provides business users with a consistent source of network data to support business functions.
9 This is a significant undertaking requiring a complicated data conversion of our all of our network data from multiple sources. Will likely require us to use third party /off-shore resources.
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Current State Future State Size Magnitude of Change
tech
nolo
gy
Legacy platform used to manage network data suffers significant performance issues which require workarounds and unscheduled ‘down-time’ for designers.
High-availability, high-performance network infrastructure management platform is used by designers, thus improving design and as-built throughput.
2 Low effort to effect change.
Disparate and home-grown IT platforms require significant IT resource to manage and maintain.
Simplified IT environment which requires limited IT resources to manage and maintain a smaller set of geospatial network infrastructure management applications.
4 Low effort to effect change.
Proc
ess
As-built process is currently labor intensive and requires duplication (re-drafting) of CAD drawing received from the field into our network infrastructure management system.
The planning, design and as-built processes will be integrated end-to-end, with network mapping being drawn only once.
8 Significant change to our existing processes, accountability and workflow.
Field crews utilize paper map books printed annually.
Field crews utilize laptops to wirelessly access network data in the corporate network inventory repository on a real-time basis.
5 Limited change to our existing processes, accountability and workflow, but technology change for our field crews will need to be managed to ensure acceptance. No union issues expected
Org
aniz
atio
n
Network design activities are currently fragmented across multiple regions which utilize different design standards, drafting specifications and map production platforms.
Network design activities will be based on standardized tools and standards across all regional network design and drafting centers.
5 No changes to organizational structure but there will need to be an alignment of standards and specifications to ‘common’ standard with agreement from all stakeholders.
By examining your proposed future state versus the current state in this manner, you are able to clearly see where you will have the most investment, risk and challenges. We recommend that you review this with your stakeholders to confirm that everyone is aware of the size and complexity of the ‘change’ required to achieve the business benefits that you previously identified.
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3.5 ConclusionThe work involved in preparing the current and future state is not insignificant, however, it is not meant to be a deep investigation. In our experience, you can obtain most of the information you need from the structured and facilitated working sessions that we outlined above.
By the end of this chapter, you should have:
• Completed a current state assessment of the business design
• Developed a future state articulation of the business design
• Understood the magnitude of change required to move from current to future state
We now move on to Step 4 where we will design a suitable program of work that will ‘close the gap’ through a series of initiatives which will alter the business design appropriately.
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4 Designing the Program Portfolio
In this step we now start to build a portfolio of projects that, collectively, will deliver the required benefits by closing the gap between the ‘current business design’ and the ‘future business design’. We provide guidance on how to approach the complex task of formulating this program of work. This portfolio of projects may include:
• Hardware infrastructure and architecture
• Mobile / field projects
• System Integration projects
• Data conversion, cleansing, migration and/or consolidation projects
• Application development, customization and configuration
• Business process re-design
• Standards development and implementation
4.1 IntroductionGeospatial technology programs have evolved over the years and are now considered in the same class as Enterprise Resource Planning (ERP) implementations. There is a complex mix of data, technology, process, change management, standards etc, all of which cross multiple business functions and groups.
The best approach to tackling these large and complex programs is to decompose them into manageable pieces. This allows you, and others internal and external (e.g. vendors) to the organization, to understand the role they need to play in delivering specific aspects of the overall program.
Traditional approaches tend to use end-user applications that deliver a specific capability to a specific group as the basis for project planning. For example, at a Utility there may be a Vegetation Management business need that is resolved through the deployment of a tree trimming and scheduling geospatial application. Or at a Telco, for instance, there may be a Network Operations requirement to locate network faults and dispatch a maintenance crew to fix the problem that can be solved with a geospatial network infrastructure solution. These approaches seek to identify the hardware, software, labor (internal and external), application development, data (internal and externally acquired) and process changes required to deliver that value. The project would be costed, resourced and structured around that particular application.
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Although this is intuitive in many ways, it fails to capitalize on the economies of scale of planning an enterprise program of work. Further, you open yourself up to having senior leaders pick and choose between applications to implement e.g. “Move forward with Application 1 and 3, but not 2”. By doing this, you lose out on the opportunity to leverage fully the core foundational components of hardware, software licenses and data, all of which should be shared resources across the enterprise.
We advocate structuring the portfolio of projects based on their type (hardware, software, data, process, standards, governance), not the geospatial end-user applications.
Figure 13 Cost Benefit analysis based on specific applications.
Figure 14 Cost Benefit analysis based on project type.
Cost Benefit
Cost Benefit
Hardware
Software
Data
Process
Standards
Governance
Hardware
Software
Data
Process
Standards
Governance
Hardware
Software
Data
Process
Standards
Governance
Project1 Project 2 Project 3 Program
Cost Benefit
Application 1 Application 2 Application 3
=
+
+ +
+ =
total CostTotal Benefit
++
Hardware Hardware Hardware
Software Software Software
Data Data Data
Process Process Process
Standards Standards Standards
Governance Governance Governance
Project 1
Project 2
Project 3
Project 4
Project 5
Project 6
________
= Program
Cost
Cost
Cost
Cost
Cost
Cost
_______
= total Cost
total Benefit
nPV
Application 1 Application 2 Application 3
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This affords you the opportunity to:
• Group like activities that cross functional or application boundaries together. For instance, instead of seeking to purchase three computer servers capable of supporting three different geospatial applications, you would be identifying the cost of acquiring hardware suitable for supporting the performance needs of all three applications.
• Group like activities which can be bundled to achieve economies of scale. For example, data conversion vendors will often provide volume discounts. The more data cleansing/conversion projects you can ‘bundle’ into one, the more you can achieve costs savings due to volume. You reduce the sourcing (RFP/procurement/contracting) costs and timeline as well.
• Align your internal and external resources based on competence/expertise more appropriately. For example, you can bundle the Hardware Infrastructure work activities together and have those tackled by your IT department as a block of work, rather than a piecemeal set of activities.
• Remove the opportunity for your senior leaders to remove certain applications/ projects since you have presented the program of work as a coherent whole – not as individual projects that independently deliver applications. You are justifying this whole body of work based on the total benefits and total cost.
4.2 Building the Program (Portfolio of Projects)In the previous step, we identified the key gaps between your current business design and the future business design. We now examine those gaps and seek to identify how to practically close them over the next few years. This will populate the bottom part of the Program Blueprint, as shown below.
Figure 15 Program Blueprint - Portfolio of Projects.
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The types of projects you are seeking to identify align broadly with the categories we have already discussed:
• Data (internal and external, including landbase; naming conventions; design and construction data management standards etc)
• Technology (hardware, software, applications, customization, integration)
• Process (workflow and accountabilities)
• Organization (training, organizational design, stewardship etc)
In Our Experience
technology
When determining the hardware environment needed for the network infrastructure management solution many aspects need to be taken into account including:
• what operating system(s) will need to be supported?
• what hardware configuration is preferred (e.g. traditional client-server, distributed or thin client (Citrix) architecture)?
• how flexible does the solution need to be in order to operate on a heterogeneous mix of platforms and architectures to suit individual departmental requirements?
• what are the numbers and types of users, volumes and types of data, usage patterns, and distribution of office locations and network infrastructure that need to be supported?
• what tasks will each of the elements of the hardware solution be used for (e.g. database server, file server, application server, web server)
• what is the appropriate sizing for each server and client machine in terms of processer, memory and disc size etc?
• what is an effective backup strategy to ensure successful disaster recovery?
• what mechanism will be used for high availability and failover?
There will be many other issues to contend with. This list just highlights the complexity involved and the need to engage with IT experts within your organization to resolve these.
In Our Experience
Data The capture and migration of data is a key element of most initiatives to establish a consolidated, central network infrastructure management solution. As well as sourcing the base data (e.g. landbase) it is critical that the network data is in an accurate and consistent format. This data is often captured from a myriad of different sources including network surveys, paper records, existing GIS systems, network inventory databases, and network operations systems. The data from each of these needs to be collected, cleansed (i.e. data inaccuracies and anomalies corrected) and reconciled (e.g. data in the network infrastructure management system could be different from the on-line view of the network held within the network operations team). When conflicts arise decisions need to be taken on what is the master data and how will these conflicts be corrected – some of this reconciliation can be
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automated, but often a business process needs to be established to get the required consensus and sign-off for alterations to the data.
For instance, a major telecoms customer in Europe undertook a multi-year exercise to build their geospatial network infrastructure database. This involved a number of third party companies performing different tasks including capture and vectorisation of data from paper records, analysis and conversion of on-line records. The result is a consolidated view of their entire network which has delivered 99.9% data consistency and is now the base for the sustainable construction and operation of their physical infrastructure, allowing 500 concurrent users across their organization to access accurate network information at any time.
At this stage, your objective is to identify discrete projects that need to be completed in order to close the gap. You should be guided by the work you completed in the previous step to identify the Magnitude of Change required to move from the current to future state.
We have provided a template (Program Portfolio Worksheet) that will allow you to capture these projects in a structured format and build up the overall program of work. In the template you will define and record:
• Category. The general project categories (e.g. Data, Technology, Process, Organization) are listed previously, although your individual program may have additional ones. You should also identify projects to a granular level if you’re able to, so clearly specifying a project related to Training for example will help you scope, cost and define the scale of effort required.
• Project name. Label the project appropriately so that you and others can identify it easily. For example, the project name for our Training example might be “End-User Training for Network Designers”.
• Description. This is a description of what the project is seeking to do or achieve. For example “This project will secure an external trainer who will provide on-site training to our end-user designers”.
• Objective. The objective of the project is critical and must be clearly stated. This might be “To train all end-user network designers on how to create network designs for new build, extensions and upgrade scenarios using relevant examples from our own service territory.”
• Key Activities. Key activities are the high-level ‘steps’ required to achieve the objective. For example:
• Define our training requirements and needs sufficiently to support the procurement of services for training
• Source an external training organization through an RFP process
• Train all end-user designers in each of our locations over a 4 week period
• Key Outcomes. Key outcomes state either how the ‘gap’ will be closed, or how the benefits sought will be delivered. For example “Network Designers will be fully trained and able to perform network design duties in the new geospatial network infrastructure management platform”.
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• Estimated Duration (weeks). The duration equates to the project’s start and end date, so in this example it is not simply five days of training. This would include the determination of training requirements/needs, writing and releasing the RFP, securing and contracting a training vendor, and also executing the training.
• notes. Capture of free form notes that augment the information above for better clarity and understanding.
Program planning is best achieved with input from the right people. Therefore, if you are planning the hardware infrastructure project, for instance, and are seeking to scope it in terms of size, objective, key activities and so forth, we recommend you involve your IT department and, if appropriate, external vendors. The more clarity and detail that you establish at this stage the better, so involving others with specific expertise is a great way to ensure that you are building a realistic and achievable program of work.
4.3 ConclusionBy the end of this chapter, you should have:
• Developed a portfolio of projects, that equates to a complete Program
• Gained consensus amongst your core team and internal/external resource pool to confirm that the timelines, activities and scope of the initiatives are achievable
• Updated the Program Blueprint to illustrate all key projects
We now move on to Step 5 where we will cost each of these individual projects. This will allow us to build a bottoms-up multi-year capital and operational budget forecast.
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5 Implementation & Operational Team Design
In order to successfully deliver and realize the value from the proposed program, it is vital to ensure that your team and organization are capable of actually managing and controlling (governance) the delivery and realization of benefits. In this step, we provide guidance on how to assess the business readiness of your organization to take on a major technology-enabled change program, and to help establish an appropriate delivery model for the program - including post-deployment when it is operational in a business-as-usual setting. We cover:
• Program governance
• Establishing an appropriate Implementation team
• Establishing an appropriate Operational team
• Considerations for sourcing expertise and competencies from within and external to your organization
• Business transformation (organizational change management) considerations
5.1 IntroductionHaving defined your program of work in Step 4, we now need to determine what form of Implementation and Operational team is required to successfully deliver the program benefits; and sustain the program in an operational environment post-deployment.
Figure 16 Program Blueprint - Organization Model.
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The lack of suitable program governance (control) is a leading cause of failure amongst technology programs. It is for this reason you need to define the right scale, size and form of teams that will implement the geospatial solutions and operate them post-deployment.
The key questions that need to be explored are:
Questions Considerations
What level of rigor and program management formality is required to successfully manage the program and deliver the expected benefits?
If the program of work you defined in Step 4 is complex (multi-year, multi-million, involves multiple geographically dispersed stakeholders etc) then the level of rigor and formality required is more significant than if you are executing a small program of work with limited scope and complexity. For instance, you may require a full-fledged Program Management Office (PMO) or you may only need to designate an internal Project Manager. The scale and size of the work you defined in Step 4 will govern what is required.
What size, type and form of team do you need to implement and deploy your geospatial network infrastructure management solution(s)?
This is a complex question since it depends upon the internal competencies (and capacity of resource) that exist within your organization already. For larger implementations, you will likely need to blend internal and external resources together to secure the right mix of skill, experience, competencies and resource capacity.
What size, type and form of team do you need to operate the resulting geospatial solution(s)?
This is an often-overlooked question that is dealt with as an afterthought. It is vital that you understand what the business-as-usual operating environment will be so that you can budget and plan accordingly to ensure you have the right competencies/ capacity of resource available to sustain the implementation/ deployment.
Should we establish an in-house team or should we outsource – or should our talent mix be somewhere in between?
The talent management requirements around building and maintaining a team of in-house geospatial specialists can often be very high. Conversely, outsourcing the geospatial capability entirely means that you lack a center of excellence within your own organization on how to apply and leverage your network infrastructure solution. Your specific situation will dictate which is most appropriate for you, but clearly there is merit in examining a hybrid model whereby you keep core competencies in-house, and source commodity-based skills/capability from third parties.
Where will the operational team ‘sit’ within the organization?
There is often debate about where a geospatial technology-focused team should ‘sit’ within the business – within IT or the business itself (e.g. Engineering, Network Design, Network Operations etc). This decision establishes the responsibility and accountability for the management and operation of the geospatial network infrastructure management solutions on a go-forward basis. Your organizational structure will likely dictate this, but it is critical to ensure the team is placed where they can remain business-focused (on delivering capability and value), and not technology-focused (on delivering applications and functionality).
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Questions Considerations
Will we need to add headcount in order to support/manage the geospatial solution(s)?
Although this question is wrapped up in those listed above, we call it out explicitly since we find it is often overlooked. Automation and technology-enablement of the business often carries with it the need to increase headcount to operate and support the solutions. If you are in a head-count freeze situation, as many organizations are, then you will need to be creative about how you source the right expertise for the implementation and operations teams.
What are the internal resource limitations?
Most organizations have multiple projects ongoing that have allocated key business & IT resources. If possible, use a master schedule (usually PMO-administered) to identify resource “double-bookings” early to minimize churn of the internal team resources.
Finally, a key consideration in defining your program governance, delivery and operational teams is that of ‘business transformation’. There is a tendency to view geospatial network infrastructure initiatives as ‘technology projects’, with a strong focus on architecture, performance, data, applications etc. Although these technical aspects are entirely relevant, it is also important to consider the soft side of technology implementation.
The organizational challenges are often more difficult to navigate since they encompass more than technology, they involve cultural and, at times, emotional challenges which can impede the successful realization of business value.
5.2 Program Governance - Capability Maturity Model (CMM) AssessmentIn order to assess whether your existing approach to program governance will be appropriate and sufficient for the program of work you defined in Step 4 we provide you with a Capability Maturity Model (CMM).
We recommend using this model with your Core Team to collectively determine where you have potential gaps in competencies or resource capacity across an array of program management competency measures.
Below we list two examples that are contained within the CMM.
Capability Capability Description
Change Management The ability of Delivery Team to effectively manage changes in scope will be essential for delivering the project on time and budget.
Communication The level of acceptance of users to change will be impacted by the quality, quantity and timeliness of communications they receive i.e. how well informed they are of changes and how it will impact them. The level to which users are listened to will also impact acceptance.
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Associated with each capability is a summary of ‘maturity’, as shown below:
Capability Entrant Developing Committed Best Practice
Change Management
No change control process is in place. When changes are accepted, work has to be re-prioritized with little consideration of the impact on project delivery schedule.
Change requests are documented and follow a process, which includes a suitably represented change control board. Some informal consideration of impact. Possible residual resistance to the process exists.
Change requests are recorded and follow a clearly defined process, which includes a change control board and a person assigned to coordinate the process. Impact Assessments are carried out for perceived major changes. Following change request acceptance, project plans are updated. Deliverables are under change control.
Change control is embedded in the delivery lifecycle and accepted as part of the process by the stakeholder and project community. Impact assessments are carried out for all change requests. A change control board is in place to evaluate changes. Changes requests are formally recorded. Project deliverables are under change control. Project plans are updated following changes. Process linked to configuration and release management.
Communication Limited and ad-hoc communication between stakeholders and project team.
Regular, clear communications are distributed
Communication plan exists and is adhered to, which outlines reporting and communication frequency, audience (including project team) and format. Communications are regular, clear and timely.
Published communication plan exists and is adhered to. Communications are timely, clear and honest. Stakeholders have opportunity to provide feedback.
Using the Capability Maturity Model Template provided, you are able to work with the Core Team to collectively agree your ‘current state’ assessment of capability; and the maturity level required to successfully manage the program and deliver your expected benefits.
The tool automatically produces a spider diagram that illustrates your current and desired state of maturity across all the measures. Using this tool, you can have a structured discussion with the Core Team members about where there might be a gap in existing capability, allowing you to agree a means to address that gap.
The additional benefit of using this model is that it allows you to demonstrate to senior leaders that you have taken active steps to ensure that you have the right governance model in place to ensure successful delivery. This provides them with confidence that the program will be well managed and executed.
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5.3 Delivery team and StructureEstablishing a suitable delivery team and governance structure will be driven by your organization’s structure, culture and geographic footprint. Some key components of your team that you should consider on top of what is highlighted by the CMM tool, are:
• Project Sponsor. There must be a project sponsor who will support the program and act as your leader at senior levels.
• Steering Committee. Given the program benefits will likely be delivered across the organization (not just to the project sponsor’s area of business responsibility) we recommend establishing a cross functional senior Steering Committee. This group provides resources, direction, guidance and collective support to the program.
• Champions or “Super Users”. If your service territory is spread over multiple geographic areas then it will be difficult for the project team to have a presence across all geographies. Therefore, it can be helpful to have the Steering Committee designate “champions” in each location to serve as local project contacts and conduits for communication and information flows both to and from the Delivery Team.
In addition, we have identified the key characteristics that represent a strong Delivery Team. Your Delivery Team should be:
• Agile, allowing them to respond to shifting technology and business need by changing the required mix of competencies quickly
• Innovative, taking advantage of new technologies and best practices as they develop in the marketplace
• Risk Aware, managing and sharing risk with vendors and internal business partners appropriately
• Collaborative, leveraging the expertise in the marketplace and internal business partners
Figure 17 Capability Maturity Model (template available at www.GEDigitalEnergy.com/GIS.htm).
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• Commercially-driven, building metrics and controls into commercial contracts with vendors to effectively manage accountability and quality of service
• Service-based, maintaining a consistent focus on service quality to the Customer
• Business-focused, retaining and fostering domain expertise relating to strategy and business goals of the organization
• Guided, by sound Project Management principles that highlight issues early and keep all team members aware of their responsibilities and deadlines
5.4 Operational team and StructureThere are several different approaches that organizations take to providing operational support to the end-user community. These are described below in general terms, but of course there are many variations on these traditional models.
The manner in which you establish, manage and fund the team that runs, supports and leverages the geospatial technology solution will depend on a number of factors specific to your organization. However, it is vital to think through who will own, operate and pay for the support (hardware, software, process, user etc), on-going application development, special analysis or ‘special projects’ and data management/clean-up activities.
Org
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time
Traditional geospatial team that acts as a service bureau. Employs specialist geospatial technologists to perform analysis, produce maps and provide geospatial data. The business has no direct access to capability/data.
Service bureau concept still in place, but some geo-spatial capability has been provided to support users within the business. Specialist skills still required to perform geospatial analysis. Business users have rudi-mentary access to geospatial data and capability.
Geospatial applications specific to functional groups deployed. Business users perform their own analysis to drive decision making. Decen-tralized geospatial competencies exist across the business, not within a specialist group.
Geospatial data and capabil-ity is part of the fabric of everyday working across the business. Users use and view geospatial applications as they do email – part of their daily life.
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2
3
4
Figure 18 Organizational maturity.
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Successful organizations tend to promote project team members to key positions of responsibility in IT and business operational roles. Utilizing people with the background in business process vision, vendor management, and technology enablement contribute to building strong leadership for the future.
5.5 ConclusionBy the end of this chapter, you should have:
• Gained consensus amongst your core team about the Program Delivery competency gaps which exist and which need to be addressed
• Designed your Program Delivery Team by naming the project sponsor, Steering Committee and where appropriate regional/divisional champions
• Designed your Organizational team who will be responsible for operating the geospatial technology solutions once deployed
• Updated the Program Blueprint to illustrate the Program Deliver Team and Operational Team form/structure
We now move on to Step 6 where we cost each of the individual projects. This will allow us to build a bottoms-up multi-year capital and operational budget forecast.
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6 Building a Multi-Year Budget Forecast
Having defined the Program (which is a portfolio of discrete projects) in Step 4, we now provide guidance on how to forecast the capital and operational cost of executing those projects.
The collective cost of the individual projects will create a multi-year budget forecast for the entire program. Obviously, this will represent the ‘investment’ side of the ROI equation, so we need to think carefully about how to deliver the required projects in the most cost effective manner. In this chapter we provide:
• Explanation of how to use our Budgeting Tool. This tool allows you to build a bottoms-up capital and operational Program budget in a robust and structured manner
• Strategies for addressing challenges around capital and operational budget allocation
• Guidance on how to forecast expenditure, taking into account cash flow implications, budget cycles etc.
6.1 IntroductionCapital and operational budget planning activities are often discrete and well understood activities within a Network Operator. Budget planning activities typically start in the second quarter, with high-level forecasts provided to the Finance department for planned expenditure in the next fiscal year.
Finance is interested to know what the business plans to do in the next fiscal year so they can plan overall financials for the business at a macro level.
Since we are planning a multi-year business transformation, we expect there to be a finite amount of capital expenditure in the first few years; and on-going operational cost to own and operate the network infrastructure management solution.
In this step we share some insights and approaches that will help you develop a realistic multi-year budget forecast that is sufficiently granular to give you, and your executives, the confidence that you will have sufficient financial resources to complete the required projects and deliver the expected value.
team with your Finance Department
Understanding how your organization budgets and allocates money will provide you the insight that you need to develop a realistic budget. Teaming with your finance department to gain their support, buy-in and help in crafting your budget will help you be successful. We recommend engaging with them early in your budget cycle to help bring them along with you as you develop your budget forecast.
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6.2 Important Concepts for BudgetingSecuring funding for a major business transformation program requires you to consider a number of issues and factors. We have outlined these below as questions to ask yourself, with some explanation so that you can apply these to your specific situation.
What you should ask yourself
Why might you need to know
Do you know your capital and operational budgeting rules and guidelines?
The allocation of money to either a capital or operational budget is significant because capital dollars add to the net asset (so positive on a balance sheet) whereas an operational expenditure does not (so negative on a balance sheet). Simply put, capital dollars are easier to secure from senior executives than an increase in operational expenditure.
There are many general accounting rules that govern what can be considered a capital investment and what can be considered operational but each organization interprets these guidelines slightly differently.
One of the largest areas of contention for network infrastructure management programs is data conversion – is it a capital or operational expenditure to convert your existing digital maps into a new platform? The answer is “it depends”. You need to seek guidance from your finance department because their interpretation of the rules (and historic precedents in your organization) will dictate the answer.
Who will own and have accountability for this budget?
The program budget will deliver value and benefit across the organization, not just to a single department, such as network engineering. Therefore, it often becomes unclear as to who the owner of the budget should be – since they will have accountability for expenditure that does not necessarily impact their particular department/area of responsibility. This needs to be discussed and agreed with your project sponsor and ideally a broader executive steering committee early on.
Will the funds be top-sided or will they come from operating divisions/individual business units in a federated funding model?
Funding a multi-year business transformation program requires sustained funding. Some organizations choose to ‘top-side’ the funding for such a program as they view it as a corporate initiative. Others seek to embed the cost of the overall program in some ‘federated’ fashion by having each business unit, service territory or department pay ‘for their share of it’. Clearly a single source of funds from corporate is more manageable, but not always feasible or appropriate.
Whose budgets will this program impact?
If there is a federated funding model in place then you will be able to determine ‘whose paying’ and know whose budget is being impacted. Similarly, if there is a corporate funding model (top-sided) then you will have a single budget stakeholder (the corporate budget owner, perhaps your program sponsor).
However, there is a more complicated question about understanding whose budget is being impacted by the benefits that this program will deliver in the next fiscal year.
For instance, if your expectation is that a particular department’s operational cost will decrease by 20% then their budget forecast for next year should reflect this fact.
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What you should ask yourself
Why might you need to know
Is there existing hardware/ software we can repurpose without having to buy new?
You may have an opportunity to avoid buying new by repurposing existing hardware or software licenses. This can have a significant impact on your budget – particularly if you can get started with limited capital investment in new hardware so worth considering.
Do you know how depreciation is handled?
We handle the specifics of depreciation in Step 9, but it is important that you understand how your organization approaches the depreciation of assets.
Does your organization capture charge backs from other departments?
When budgeting the real cost of a project you should include Inside Labor costs. For instance, if you expect to use 20 days of an internal IT Database Administrator on one of your projects, then you should capture that internal cost so it can be factored into your ROI calculation. If your organization has a method for capturing these ‘charge backs’ (e.g. via job codes that staff charge to on their timesheet) then you will likely need to capture it in your budget.
However, some organizations consider inside labor as paid for and do not require them to be factored into a business case. Obviously for a true ROI calculation you need all costs to be incorporated, but if your organization doesn’t do this then you may be able to avoid incorporating them.
Have you considered how to manage/track the opportunity to capitalize your internal labor?
Tied to the question above, you may be able to capitalize much of the internal labor that is dedicated to the program. If a full-time staff employee is typically dedicated to an operational role, but participating in a capital project for half their time (say) then your organization has the opportunity to capitalize that labor – which is a good thing for the balance sheet.
Does cash flow matter and if so, how much?
Some organizations seek to spread out expenditure on their large programs so as not to impact cash flow. Simply, this means that your finance department may like to see you spread your data conversion costs over four months, instead of incurring the full cost all in one month.
Of course, there will be many other questions that surface depending on the circumstances you are facing, but these are the most common we have come across.
Finally, you should follow the saying “start with the end in mind” when developing your budget forecast. You should know what your sponsor, executives, finance team and other stakeholders expect in terms of budget categories, format, granularity, and supporting documentation – and you should know this before you start building the budget.
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6.3 Building Your BudgetWe have provided a comprehensive budget planning tool (Budget Template) that helps you budget each project you identified in Step 4 and then sums the totals into a multi-year capital and operation budget forecast with a supporting dashboard.
Figure 19.Budget Template screen shot (template available at www.GEDigitalEnergy.com/GIS.htm).
Some important concepts are embodied in this tool. The Budget Template:
• Allows you to build your budget from the bottom-up, meaning that you can decompose the budget planning into each discrete project, and then iterate through a refinement process to determine a realistic and achievable sequence of activities that deliver the required benefit.
• Too often we find that budget planning is done somewhat haphazardly and with unsubstantiated numbers. This bottom-up approach does require some effort, but it forces you to think through what you really need in terms of investment to get to the desired benefits.
• Allows you to differentiate between capital and operational expenditure for each line item
• Requires that you specify internal labor, external labor, hardware, software, maintenance categories for expenditure (important for capitalization of labor and depreciation calculations)
• Automatically calculates the budget forecast by week, month and quarter so that you can assess the cash flow implications and make those visible to your finance department.
• Requires you to think through the sequence of project execution and durations; this ties directly to the benefits delivery roadmap that we will be building in Step 8.
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After you have build your budget, it is a simple task of transferring the key capital and operational numbers that you need for your own internal ‘budget templates’ which are often required for budget submission by your finance department.
6.4 ConclusionBy the end of this step, you should have:
• Gained agreement on the budget rules which would impact your ability to secure capital and operational budget
• Engaged with your finance department to build your budget forecast, thus lending credibility to your forecast and budget request
• Determined the budget/funding model (e.g. top-sided or federated) with clear identification of who would ‘own’ the budget and have accountability for the forecast spend
• Completed your Budget Template via a bottom-up approach resulting in a full multi-year capital and operational budget forecast for your business transformation program
We now move on to Step 7 where we calculate the benefits (or impact of risk) for a set of the business opportunities that we identified and prioritized in previous steps. This will provide the necessary ‘benefit’ side of the ROI equation we calculate in Step 9.
Figure 20.Example Budget Template results.
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7 Quantifying the Benefit
Traditionally, it has been difficult to realistically model the impact that a proposed geospatial network infrastructure solution will have on the business in monetary or quantified terms - at least to a point where everyone believes the numbers.
In this step, we provide an approach to modelling benefits quantitatively and incorporate concepts such as benefits realization curves, confidence factors, expert witness, value-driver trees, etc. that are critical to modelling credible benefits numbers. The model we provide is a toolkit that has been designed to allow individual benefits to be modelled, illustrating the ‘base case’ metrics versus the ‘future case’ metrics for a given workflow or process. This is a powerful way to show how a technology solution would enable new ways of working within the business, and their corresponding impact on business performance.
7.1 IntroductionIn order to complete the ROI calculation (detailed later in Step 9) you must be able to quantify – in monetary terms – the positive or negative impact of the planned projects on cash flow (e.g. revenue increase or decrease, capital expenditure and/or operational expenditure)
In this step we will present a pragmatic and structured approach to quantifying the tangible value of a network infrastructure management solution. We will focus on calculating the base case, which represents ‘how things are today’; and then calculate the future case, which will represent the expected quantified impact of the proposed changes to the business. The delta between the base case and future case represents the magnitude of change; and in some cases a very small incremental change to one metric can have a magnifying effect on the return.
It is also possible to use this model to illustrate benefit already delivered. Some organizations seek to capture and understand what value has been achieved to-date from previous investments in geospatial network infrastructure solutions as a means to add credibility to their business case. For instance, if your program has already been running for two to three years, you might be getting pressure from an executive who wants to know “what did we get for our money; I’d like to know before we invest further?” This approach can help you illustrate that quantitatively.
7.2 Deciding What to Model In Step 2 you identified, with input from your executive stakeholders, the benefit opportunities that were most relevant to your organization. We now need to quantify a select group of these benefits in order to support our calculation of the economic case, or return on investment.
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Note that in Step 2 you could have identified a large number of benefits that could now be modeled and quantified. The question is, should you? Be pragmatic about the number of benefits you seek to model. There is a danger of modeling too many benefits, which over complicates your business case – keep it simple.
These are some questions to consider when selecting particular benefits to model:
Question to Ask Explanation
Does it really matter to the business?
You need to determine if the benefit’s value is expected to be significant enough to get the attention of senior leaders. Using the prioritization matrix we used in Step 2 will help you identify the ‘high value’ benefit opportunities so that you don’t waste time analyzing benefits that have little business impact.
Is the business process owner onboard?
It is vital that the analysis is done with full participation of the business process owner. If you model the benefit in a spreadsheet behind closed doors it has no value, but if you model it with full agreement, transparency and understanding of the business owner then you will have secured a powerful supporting voice for the economic case.
Will the business process owner agree to realize the benefit – and commit to it?
Agreeing to model the benefits in a spreadsheet exercise is one thing, but agreeing to actually realize the benefits and commit to achieving the value is another thing entirely. Consider a business owner who works with you to determine they can reduce their operational budget by 20%; but then refuses to reduce their budget forecast by 20% next year. They have not committed to achieving the outcome. Make no mistake; this is one of the most challenging aspects of modeling the benefits – actually getting business owners to commit to the delivery/realization of the calculated value.
Are there other factors which make calculating the value of the benefit opportunity difficult or less impactful?
Some benefits are obviously more difficult to quantify and monetize than others. By simply being pragmatic, you can select those benefits that are more easily quantified and hence reduce the amount of modeling and analysis required. It is not always possible to achieve this, but our advice is to ‘start simple’ and to model benefits which are more straightforward to quantify.
Is this benefit something you can track and prove in actual figures after the benefit is realized?
Calculating and gaining agreement on the potential monetary benefit is a critical step in defining the justification and the economic case, but being able to track and prove the value delivered is even more important. If you calculate benefits that are difficult to track then it will be impossible to demonstrate that the actual benefit was realized. As discussed previously, this approach is not a ‘one-off’ to get funding, but a sustainable approach whereby you seek to deliver on-going value year after year. Therefore, being able to track the benefits is crucial to that aim.
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Question to Ask Explanation
What not to model – if you can avoid it .
There is a natural tendency for people trying to prove the value of a geospatial network infrastructure management solution to focus on ‘time saved’. This is not surprising since there are clear ‘efficiency’ gains to be achieved through the introduction of more automated processes – and using ‘time-based’ approaches is an easy way to gather metrics. However, using time-based approaches to calculate the ‘saved time per FTE’, for example, has significant drawbacks. Unless your executives have directed you to ‘find a way to push people out the door’, then our advice is to avoid calculating head-count savings through ‘time saved’.
Can it be quantified - just not monetized?
Some benefits are relatively simple to quantify but more difficult to monetize. For example, you might be able to demonstrate that there would be a 20% reduction in customer call complaints to the call center as a result of the geospatial network infrastructure management solution; but you might not be able to monetize this impact on customer service representatives as easily (e.g. 20% less calls might mean 20% less staff required…or it might not). It is valid and appropriate for the business case to use these types of quantified, but not monetized, metrics. Obviously it won’t contribute to the ROI calculation, but it’s still a powerful supporting ‘data point’ in your business case/justification.
What is the impact of not doing it?
Risk is an important factor in any business. Therefore, you may be able to more powerfully demonstrate the negative impact of not making an investment (the downside), rather than the benefit of doing so (the upside). For instance, if you are trying to justify a system upgrade then you might be able to demonstrate how the operational risk to the business of a poorly performing solution is so significant that it justifies the investment; or that upgrading this year will cost a certain amount, but upgrading next year will cost twice as much due to the complexities of the upgrade increasing with time as the software moves to end-of-life.
Do you have a diverse set of tangible benefits?
As we stated earlier, your executives should guide you as to what to model and demonstrate quantitatively (Step 2). However, you also want to ensure that you have a diverse set of tangible benefits that cover, if possible, each of the following categories:- revenue (growth, assurance, protection)- cost (containment, avoidance, reduction)- customer service- regulatory metrics- operational metrics (such as mean time to repair) .
There may be other considerations not listed here specific to your organization of course, but these factors are what we have found to be the most important. For each industry (electric, telecoms, gas, water etc) there are a host of operational metrics (and regulatory ones) that you can model to show the positive impact of your program – these should be carefully considered and we would recommend some desk research to determine what other organizations are using as benchmarks.
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Utility Experience
The following are some example metrics for utilities related to customer service and distribution.
• Number of complaints received per 100,000 customers
• Residential Customer Disconnects as a Percent of Total Residential Customers
• Total Regulated Utility Regulatory Complaints (per 100,000 customers)
• % customers > 4 outages per year
• % customers restored within 3 hours
• % of field appointments kept
• Average response time minutes
• Average number of overtime hours (including all major events) per employee per year
• Construction cost per customer
• Cost per new residential service or customer connection
• Cost per underground locate
7.3 Gathering the MetricsWe categorize metrics in the model in three ways: fixed, variable and derived.
• Fixed metrics are those that cannot be influenced or changed by the proposed solution – such as the number of service territories.
• Variable metrics are those than can be influenced or changed by the proposed solution – such as percentage of provisioning failures.
• Derived metrics are those which are calculated from known metrics (either fixed or variable). These are used to compute the final benefit and to illustrate intermediate metrics for a simplified explanation of the benefits e.g. customers experiencing a provisioning failure each year (calculated by simply multiplying the percentage of provisioning failures by the average number of new customers per year).
One of the most challenging aspects of quantitatively modeling tangible benefits (or impact) is locating and agreeing a creditable set of metrics. Most Network Operators have performance and operational metrics related to their operation of their networks, call centers and field service activities, but at times these are not consistent across their service territories. For example, something as simple as the cost of a truck roll might not be so simple, with different factors influencing the calculation e.g. based on the type of truck roll, location of the truck roll (different localities might attract a higher cost), method of calculating the truck roll and so forth.
To overcome these challenges, we recommend that you team with your finance department in the first instance to determine what performance metrics and cost information is available in existing financial and executive management systems. It is easier to model against known and established metrics than it is to define and agree new ones – so this is the best place to start.
You will also find performance metrics in regulatory reports (e.g. if your organization is a regulated network operator) or as part of previous benchmarking programs your
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organization may have participated in. The most likely source for these figures will be from the business process owners.
Finally, in the absence of any concrete metrics from finance, performance management systems or regulatory reports, we recommend you rely on what we call the ‘expert witness’. This is a credible and influential ‘expert’ in the business who can provide the most reliable metric for a given area. For example, if a 10 year veteran of customer services says that the average customer churn due to a provisioning failure is 4%, then who could argue with him? This is obviously not ideal, but it is a means to realistically model with input from credible sources within the business.
7.4 The Benefits Model TemplateThe Benefits Model Template is an Excel-based model that allows you to analyze multiple benefit cases in order to determine the monetary impact expected from the program of work you built and costed in Step 3 and 5.
Figure 21 Benefits Model Template (template available at www.GEDigitalEnergy.com/GIS.htm).
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The simplicity of the model and the ability to use it interactively with business process owners is what makes it so powerful. It works by following a structured approach:
• Select a single benefit opportunity to model. The benefit model allows you to model a single benefit at a time by using a simple structure to demonstrate the logic of the calculations. All benefits are then summarized as either revenue, operational cost (savings) or change in capital expenditure. So the first step is to focus on a single benefit opportunity (e.g. reduction in provisioning failures due to greater accuracy of network infrastructure records).
• Describe the benefit. This should be a brief description in less than 50 words that simply explains what the benefit is and what you are attempting to model quantitatively (e.g. Provisioning failure costs $75 per failure to correct. By reducing the number of provisioning failures that occur we can reduce our operational expenditure to fix them). What you are seeking to prove in this exercise is ‘by how much’ – you are seeking to monetize the benefit opportunity.
• Gather metrics. Metrics are gathered from a number of sources, which we discuss in more detail below (e.g. average cost of provisioning failure; average new customers per month requiring provisioned services; % failed provisions; % customer churn due to provisioning failures; monthly revenue per customer).
These are metrics that might be gathered from business process owners, finance, scorecards, financial reporting systems, annual reports etc. You are also able to add the source, date provided, validation (who and when), notes etc. It is important that the validity of the metrics and source are understood as this lends credibility to all the calculations.
• Account for growth. The model allows you to account for growth (or shrinkage) year on year in order to recognize that the business is not static. (e.g. subscriber growth will increase the number of provisioning failures per year if the percentage failure remains the same as the volume of provisioning requests will increase)
• Calculate the base case. Using the metrics gathered you will then be able to calculate (and validate with Finance) the ‘base case’ (e.g. annual cost of provisioning failures per year is $275,400 – this is calculated from the average cost of provisioning failure multiplied by the number of customers with failed provisioning).
• Adjust the benefits realization curve. The model is flexible enough to represent the actual ‘realization’ time horizon for the benefit. It allows you to predict how rapidly (e.g. all in one year) or slowly (e.g. over several years) the benefit will be realized (e.g. the deployment of the solution that will impact provisioning failures may have a deployment time line spreading over a few years to reflect deployment to different service territories). This recognizes that the day the application/solution is built , is not the same day the actual benefit is realized – it always comes afterward by some period of time, sometimes rapidly and sometimes over years.
Figure 22 Benefit Model Template - gathering metrics.
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• Account for the business process owners ‘confidence level’. After modeling the benefit with the business process owner, there still may be other influencing factors that impact their willingness to ‘sign up’ to the benefits as previously discussed. The ‘confidence level’ is a way to let them tone down their ambition for what they are willing to commit too (e.g. if the analysis showed that provisioning failures could be reduced and result in savings of $700K per annum, perhaps they would only be 75% confident in the realization of that value due to other factors. The model allows them to ‘adjust’ the model to account for their confidence factor, thus only committing to $525K per annum.
• Determine the ‘change’ (calculate future case). The model allows you to ‘change’ several metrics at once, thus simulating the impact to the base case. (e.g. if we reduce the percentage provisioning failure by 8% per annum, then we can automatically see the corresponding impact to the OpEx budget). This change is represented across the multi-year forecast and also takes the growth (or shrinkage) estimates and the confidence level into account.
Figure 23 Benefit Model Template - realization curve.
Figure 24 Benefit Model Template - confidence level.
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We suggest setting up working sessions with business owners whereby you project the model, in an interactive style, onto a screen. Through discussion, debate and dialogue you can help facilitate the development of the benefit model for each benefit relevant to each business process owner.
7.5 Collating the BenefitsAfter modeling multiple individual benefits, you will then need to add the total benefits so that you have impact to:
• Revenue (e.g. from revenue growth, protection or assurance)
• Operational Cost (e.g. cost saving through operational cost reduction, avoidance or containment)
• Capital Expenditure (e.g. on-going change to capital expenditure)
You should be conscious of the fact that all of these work somewhat in tandem with each other – and influence each other. For example, if the geospatial network infrastructure management solution helped to improve sales (e.g. adding more subscribers), then there would be a positive impact on revenue.
However, there would also be a negative impact on operational cost (it would increase, not decrease) because there would be an increase in the number of service installations required. In other words, because more people wanted service (which is good), there would be more services to provision (which would increase operational cost).
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This is the ‘base case’ cost of provisioning failures. It costs this company 377,993 dollars per year to resolve provisioning failures
This is the ‘future case’ cost of provisioning failures. It would costs this company 177,897 dollars per year to resolve provisioning in 2017 failures if the investment/intervention is made using the geospatial network infrastructure management solution being proposed
This is the amount of operational expenditure cost reduction which could be achieved if there is 100% confidence in the expected outcomes and they are delivered at 100% in all years (un-factored) (essentially, this is the delta between base case and future case)
This is the amount of operational expenditure cost reduction which could be achieved if there is 75% confidence in the expected outcomes (factored)
This is the cumulative amount of operational expenditure cost reduction which could be achieved if there is 75% confidence in the expected outcomes (factored)
Figure 25 Benefit Model Template - calculate future case.
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7.6 ConclusionBy the end of this step, you should have:
• Identified the benefits (or risk) that, if modeled, would provide the most compelling, tangible and realistic monetary return.
• Gathered metrics to use in your modeling analysis from the Finance Department, performance management reports, executive management dashboards and other sources.
• Modeled the benefits in collaboration with the business process owners who would be the recipients of the realized benefit
• Validated the metrics, calculations with Finance Department to confirm that they are supportive of the modeling
• Collated all the individual benefits that you modeled so that you have a set of multi-year benefit numbers for revenue, operational cost and capital.
We now move on to Step 8 where we build a Benefits Roadmap that will illustrate the implementation and, more importantly, benefits delivery time line.
The ROI Summary is essentially the inputs required for NPV calculations - it shows the impact to cash flows year on year
You can turn on and off benefit groups to see the impact on the cumulative benefits
Graphics depict the results
Benefits are summed
Figure 25 Benefit Model Template - collating the benefits.
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8 Building the Program Benefits Roadmap
In Step 8 we discuss how to create a powerful illustration of ‘what is going to happen’. One way is to develop an implementation roadmap that demonstrates, quarter by quarter, which projects are being executed e.g. sequence, dependencies, duration etc. An even more powerful representation is to illustrate when the benefits will be delivered as a result of the execution of the projects. This helps the budget holders understand when they can expect to see value created and realized, rather than simply see when project milestones are reached.
8.1 IntroductionCommunicating a complex geospatial network infrastructure program to senior executives can often be challenging. There are a lot of complexities and moving parts that encompass a wide spectrum of activities. A powerful way to illustrate the steps that needs to be followed to deliver the expected value is to construct a poster size ‘roadmap’. This roadmap is a graphical representation of the ‘practical things that need to be done’ in order to achieve the expected value.
The roadmap, as well as being a powerful communication tool, is also a good way to help you really think through what is going to need to happen. By constructing it and explaining it to others, you will validate the team’s thinking and probably expose a few things that you might not have considered. Simply going through the process of building the roadmap will help you reconcile your expected delivery time-line with reality.
What is different about the Benefits Roadmap is that it illustrates when the value will be realized by the business, not just show when project milestones will be reached. The roadmap should answer the “so what?” question - “so what, you implemented a new application – what does that mean for our business or customers?”. The roadmap will show executives why certain activities must take place before value can be delivered.
8.2 Building the Benefits Roadmap - ImplementationThere are many ways to construct a Benefits Roadmap and many different rendering options. We have provided a template ‘example’ to work from but you should adapt this to what will work within your organization. You may choose to make it more simplistic or more detailed, showing dependencies and even other programs of work that have an impact on or are impacted by your program.
Ideally, your roadmap should be based on the same categories we discussed in Step 3 – namely Data, Technology, Process, and Organization. However, you should be flexible and add other categories if helpful as a communications tool. Use your best judgment about level of detail and how to represent individual ‘workstreams’ of activity.
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Typical categories that you might break down into more granular pieces to illustrate what is going to happen might include:
• Program Management/Governance – a series of activities you might represent on the roadmap such as monthly Steering Committee Meetings. Highlighting the fact that there is a clear set of activities dedicated to managing the successful delivery of the program will instill confidence in your stakeholders and remind them of the role they play in the execution of the program.
• Hardware/Software Infrastructure – these are the hardware and software infrastructure projects you specified in Step 4. For instance, Procure Hardware, Install Hardware, and Test Hardware might be a series of activities.
• training – identifying training activities is useful to show the downstream users when they can expect to be trained on the new solutions, hence helping in their understanding of what the change will mean for them personally.
• Process change – showing the specific business processes that will be changed (redesigned perhaps) will help both executives and business process owners (or those involved in those processes) know when and how the program will influence or change their current activities.
• Standards – with the addition of new technology often comes a need for some revised or new standards in order to support the next level of automation that is accompanied by such programs. Defining naming conventions for assets is a common project that needs to be on the roadmap – showing when these should be defined, agreed and enforced.
• Data Migration, Cleansing, Conversion, Re-Drafting – for a green field implementation this is undoubtedly the most costly aspect of implementation, representing the ‘long pole’ of activity. You may choose to breakdown the sequence of events into component pieces such as: Data Migration-> Specification-> RFI -> RFP-> Vendor On-boarding->Pilot Conversion-> Conversion-> Backlog completion.
• Organizational – defining what activities or changes will be made within the business e.g. Establish IT GIS Support Team. This helps demonstrate where/how responsibilities and accountabilities are being established or changed to support the success of the program.
• Integration – showing an integration workstream helps to illustrate where/how the proposed solution will ‘touch’ other corporate platforms
• Applications – if you are building new applications (or upgrading) it might be useful to show when certain applications will be deployed. Again this gives visibility to various stakeholders as to when they can expect to receive an output from the project that will materially impact how they currently operate
8.3 Building the Benefits Roadmap - Overlay the BenefitsHaving defined the ‘Gantt’ style implementation roadmap, you now want to overlay the expected benefits to show when the actual business value will be realized. By using the information and calculations you did in Step 7 you can selectively choose illustrative or powerful benefits and map them onto the roadmap.
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For example, if you know that you will be achieving a 15% reduction in operational costs for a particular business process in Q3 as a result of projects running Q1-Q3, then you can show this on the roadmap.
8.4 ConclusionBy the end of this chapter, you should have:
• Created your Benefits Roadmap that illustrates the sequence of activities/projects and resulting benefits realized along the roadmap
• Socialized the Benefits Roadmap with key stakeholders to confirm that the plan was sufficiently ambitious but also realistic
• Revisited the Costs (Step 6) and/or Benefits (Step 7) if you identified required changes to either during the construction of the Benefits Roadmap
We now move on to Step 9 where you will calculate a series of financial metrics and/or a robust ROI-based model based on the requirements of your organization.
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9 Proving the Economic Case
Having created a multi-year budget (the investment) and modelled the value delivered (the expected benefits) we now have the key pieces of information required to calculate the Return On Investment (ROI). Although we use the term “ROI’ throughout this handbook to generically describe ‘value’, in this step you will use financial methods such as net present value (NPV), internal rate of return (IRR), discount rate, discounted payback etc.
In this step we explain at a high level what these terms, and others such as time value money (TVM) mean in the context of justifying investments over several years. Specifically we:
• Provide insight into the different flavours of ROI models (e.g. scenario-based, monte carlo, NPV) and their relative strengths and weaknesses
• Demonstrate and explain how to calculate a number of financial metrics using the outputs (cost and benefits calculations) from previous steps
• Discuss how to account for discount rates, depreciation and other factors that influence the economic case and calculations
We have been selective about explaining financial metrics and terms in this step and have focused on providing insights into their application in the context of a geospatial network infrastructure management solution business case or budget submission. With a significant body of literature already available on the topic of calculating ROI, we did not want to repeat what was already available.
9.1 IntroductionThe term Return on Investment (ROI) is often used as a catch-all term for an analysis that answers the following questions:
• What strategic value does this initiative/investment have for our business? e.g. competitive advantage
• What financial value does this initiative/investment have for our business? e.g. improving cash flows, shareholder value, rate recovery
• What financial return will the investment deliver? e.g. expressed as net present value (NPV), internal rate of return ( IRR), discounted payback period
• Is this investment going to deliver value for money? e.g. whether we can quantitatively prove it or not, does it feel like a good use of our money?
Typically, senior leaders are looking to understand all of these to some degree or another. However, it is critical to understand what your senior executives are really asking you to prove, justify or describe to them. Often, it’s more about value for money than it is about traditional NPV.
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You also need to consider what the focus of the ROI-based analysis should be. For example, is it:
• to communicate the value so people ‘get it’? e.g. to elicit an intuitive or emotional reaction
• to prove the value quantitatively so it is irrefutable (based in fact)?
• to help drive toward the actual realization of value (i.e. measuring success, not just ‘doing projects’)
• to secure the right amount of funding to support your program
• to spend what you know you have most effectively, in the case of budget already allocated to you
• to help make/drive decision making about investment decisions, priorities etc moving forward
• All the above?
The depth to which you perform the ROI analysis will depend on the primary reason you are conducting the analysis in the first place.
9.2 Making the Desired Benefits the Priority is CriticalMany organizations approach ROI by putting the investment first. They calculate what a particular investment will deliver in terms of benefit instead of determining what benefit they need to achieve for the business; and then follow a structured process for determining the right level and pace of investment that will achieve that level of benefit.
Investments > Drive > Benefits
This is typically how people think about justifying expenditure
Desired Benefits > Require > Specific Investment
We advocate starting with the end-in-mind – the benefits. First state what the business needs to achieve (e.g. reduce OpEx by 20%); and then determine what level and pace of investment will achieve that outcome
9.3 Rear-view vs. Forward-Looking ROIThere are two directions – backward and forward - to consider when you are calculating the ROI of a geospatial network infrastructure management solution(s):
• What ROI has already been realized based on past investment? i.e. an executive asking “What did I get for my money?”
• What ROI can be realized based on a potential future investment? i.e. “If I invest in this how will it contribute to our strategic goals/objectives monetarily?”
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A lot of time and effort can be spent in determining the ROI already delivered; but you have to ask whether this is useful or not? The money is already spent, so whether tangible value was realized or not, you probably can’t give them their money back!
Furthermore, just because the solution did or didn’t deliver value in the past, doesn’t mean incremental investment now will or won’t deliver substantial value in the future.
What is valuable is knowing where there was perhaps under-investment in the solution; and hence where some small incremental investment made now would deliver a larger amount of tangible value than previously recognized.
In Our Experience
At a large network operator in the US, the geospatial network infrastructure management program had already spent multiple millions of dollars, without delivering much in the way of tangible value. Although the executives could have dwelled upon the money already ‘lost’ to the program, they chose to focus on what was within their control – and that was how to make sure future investment in the program was done in a disciplined and structured manner to deliver real value to the business where it mattered.
It is also beneficial to understand what the “lessons learned” were from previous engagements, from a data, technology, process and organization standpoint. You can then explain how the same risks are mitigated moving forward.
Of course, politics and frustrated executives demanding answers sometimes mean that you have no choice but to analyze the past investments made and their return delivered; but if you can avoid this then we have found you can be more productive by focusing on the future investments and value-deliver opportunities.
Determining the level and type of future investment that will deliver significant ROI is what should ideally drive your business case.
9.4 Isolating ROI by Platform Limits Your Ability to Demonstrate Cumulative ROISome organizations seek to identify the ROI for each component of their enterprise architecture as illustrated in the diagram below e.g. for GIS, OMS, Workforce Management, ERP etc. This is typically because these platforms are funded separately creating the belief that each has stand-alone ROI merit.
Approaching ROI in this manner does not take into account that enterprise architecture is a collection of platforms working in concert to deliver business value. The whole is greater than the sum of its parts. Therefore, it is important to consider your approach to modelling ROI from a broad perspective and not necessarily isolate it to the network infrastructure management solution itself.
Furthermore, there is a real danger of double-counting benefits in multiple disparate business cases. For instance, if a business case for a mobile platform determined it would save 50% of operational cost of a particular department; and another business case for a geospatial network infrastructure management application also found
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it could save 50% of the operational cost of the same department, then in essence the department should have zero budget, since all of its operation costs would have been eliminated. This is highly unlikely to be the case, but rather a symptom of double counting benefits.
9.5 Range of Options for ROI AnalysisThere are a range of approaches to calculating and expressing the ‘tangible value’ that the proposed investment will deliver. The most common approaches that we see applied are (in order of increasing complexity and sophistication):
• Discounted cash flow analysis (DCF). This is commonly used to value a project by using the concept of Time Value Money (TVM). This approach uses estimated future cash flows (both incoming and outgoing) and a discount rate (the cost of capital) to determine the present value of the cash flows. The sum of these cash flows represents the Net Present Value (NPV).
• +/- Discounted cash flow analysis (DCF). This approach is the same as above, although you can apply a range to your NPV calculation by using ranges for cash inflows and outflows. This approach is often applied when you wish to illustrate to your senior executives a ‘best case’ scenario for NPV; and a worst-case scenario when taking risk and other issues into account.
• Scenario Based Modelling. This approach leverages NPV as well, but it provides a means to change the cash flows (incoming and outgoing) based on specific scenarios. This allows senior leaders to understand how to best balance the level of investment and corresponding anticipated return (benefit) with risk considerations (or the change impact to their organization). For instance, one scenario might be to implement a geospatial network infrastructure management solution only. This
Figure 27.Identifying ROI by individual platform fails to demonstrate cumulative ROI.
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scenario has a specific cost, expected benefits and an expected ‘impact’ to the business from a change perspective. Another scenario might be to implement the same solution, plus an associated mobile solution as well. The mobile solution would attract an incremental cost to the program, but should also deliver more benefit. Another scenario might be to integrate to the ERP platform and deploy the Mobile solution as part of the program. Again, this would have a different cost than the first scenario, but also a higher benefits return. At some point, the level of complexity and risk will outweigh the anticipated benefits. It is this point that this analysis seeks to determine – the optimum level of investment while balancing risk and reward.
• Shareholder Value / Profit & Loss Statement. This approach requires a much more sophisticated approach to determining how the proposed investment will impact the organizations Income Statement and Balance Sheet. The idea here is to illustrate how shareholder value is impacted by the proposed investment, not just specific parts of the business (e.g. 20% operational cost reduction in a particular department).
In all the cases above (and other potential approaches) we recommend that you team with your finance department. It is critical that you have their support and buy-in to the calculations that will be done; and often they are the ones who have access to the operational and capital budgets and finance information (e.g. discount rate, depreciation methods/rules) which are required to perform the analysis. They can also provide guidance as to which components of the investment may be capitalized and whether the capitalization can be phased along with the project implementation.
9.6 Using the Work You’ve Already DoneIn Step 6 (budget) you calculated the capital and operational cash outflows, defined by your multi-year budget forecast. The spreadsheet that you populated sums the capital and operational cost (investment) on a year-by-year basis. This is one part of the ROI equation that you require.
In Step 7 (benefits) you calculated the capital and operational cash inflows (e.g. they are positive if revenue and negative if cost savings, for instance). The benefits spreadsheet also sums these on an annual basis so that you know the annual impact to cash flows as a result of the expected return on the investment. You will have chosen how many years to model the return over when you completed Step 7 (between 5 to 7 years is most common).
To calculate a simple NPV, you will also need the discount rate (which is basically a finance charge) from your finance department; and you will need to include deprecation appropriately – something that your finance department should also be able to provide for you.
With the pieces of information above, you can perform a straightforward NPV calculation with the help of your finance department. We have provided a simple Financial Metrics template to assist with these calculations, although as stated previously it will usually be better to follow the established financial practices of your company where possible.
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9.7 ConclusionBy the end of this step, you should have:
• Determined the most appropriate ROI analysis, whether it be simple NPV or complex analysis, that is right for your organization and meets the expectations of your senior executives
• Engaged your Finance Department to elicit their input, support and participation in the ROI Analysis that you will undertake
• Performed the ROI analysis in the form determined to be most appropriate, and validated the results with key stakeholders. This step is critical as it is vital to ensure that your calculation is correct. One mistake in the analysis, even an innocent one, can undermine the whole effort by throwing the overall results into question.
We now move on to Step 10 where you will assemble the outputs from the whole process into a complete business case/ budget submission suitable for review and approval from senior executives.
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10 Executive Communication: Delivering the Case
The final step of the process is really one of consolidation and summarizing the key pieces of information at the right level of abstraction for the executive team.
This step should be for completeness, not as the final step in a budget submission where you cross your fingers and hope that the budget is approved. If you have completed each step appropriately, then by the time we reach this point you should already be confident that the senior leadership team fully appreciates the benefits that our solution will deliver.
10.1 IntroductionThere are several forms that an executive communications package can take:
• a short document brief with headlines only
• a slide deck ‘presentation’
• a fully detailed ‘binder’ document that has a complete set of detail
How do you determine which is right for your senior leadership team? Ask them! Whether you have a direct channel to your senior team or you ask your sponsor to determine what they expect/desire, it is critical that you know exactly what their expectations are for laying out the case.
Also, you may be influenced in what you need to produce as an official ‘document’ based on internal rules or processes, particularly if you are a regulated business that has to make public disclosures.
So What?
When putting together your final report, you must keep in mind your objective – to present a compelling business case that will receive funding support from your execu-tives. This should be used to focus the information you include in the report – use the “So What?” test and ask yourself whether this material is adding anything to your case.
This decision should be guided by your understanding of the audience – what are their key business imperatives, as discovered during Step 2 of the ROI process.
And finally you need to be clear about what you want your executives to do with the information you have presented. An unambiguous Call For Action is necessary that states what you are asking for and when.
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10.2 Assembling Your CaseNotwithstanding the need to socialize the business case/budget submission as much as possible, your case should address the questions we identified at the start of this process:
1) How will the investment in a geospatial network infrastructure solution impact revenue; costs; service levels; regulatory compliance; public safety; and shareholder value; and how will it contribute to our overall business goals & objectives?
2) What are the initial capital and operational expenditures required, and what is the on-going cost of ownership?
3) When will we realize these benefits?
4) What resources are required to deliver, implement and sustain the solution in order to realize the benefits?
5) What is the economic case?
We recommend constructing a ‘storyboard’ that helps tell a compelling and fact-based story about why this investment is the right thing to do.
10.3 ConclusionBy the end of this step, you should have:
• Socialized your plan for assembling the business case ‘package’ for presentation/submission to the senior leadership team
• Assembled your business case into a coherent ‘storyboard’ that tells a compelling story about why the planned investment is important for the business and/or your customers.
• Presented your case to your senior leadership team and secured approval.
In the final chapter we will present methods and strategies for ensuring you can track and report on the benefits realized as a result of the program of work.
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Tracking the Benefits
Many business cases (or annual budget submissions) are put on the shelf after they have been used to secure budget. In this chapter, we present various options for using your business case in a more sustainable way. We discuss strategies for putting the right mechanisms in place to capture the real impact of the program, and demonstrably prove that the benefits described in the business case are in fact being realized. This is an incredibly powerful way to demonstrate to your executives that the investment is indeed having the expected return.
IntroductionWithin this handbook we have discussed a structured and rigorous approach to determining and communicating the value of your investment in geospatial network infrastructure solutions. Although this is necessary to secure initial funding for your program of work, we have not yet discussed how to track the benefits that are actually delivered throughout the course of the program. Modeling the benefits and predicting outcomes is one thing, but tracking and reporting on actual results is clearly more powerful.
As we have discussed previously, multi-year programs often have to re-submit revised budgets annually – and in many cases they need to remind senior executives why the investment was made in the first place and assure them that the expected benefits are in fact being delivered. If you put in place ‘tracking metrics’ that allow you to capture the actual impact your program is having, then you will have irrefutable proof that the investment is delivering the expected return for the business.
Tracking Benefits - ConsiderationsBoth financial and operational metrics can provide powerful views into the value your program has provided to the business. Financial metrics include those metrics linked to items on your company’s various financial reports like Cost of Goods Sold, Net and Gross Revenue, Average Revenue per Customer, and Margin. Operational metrics are usually closely linked to a business process and may not have a direct link to a monetary unit. These metrics include items like Mean Time to Repair, Calls per Customer, Campaign Conversion Rates, Average Response Time and Service Visits.
You will already have modeled (in Step 7) a number of metrics that your program is expected to have a positive impact on. From this list of metrics, you need to think about the feasibility of tracking and monitoring the metrics for the duration of your program and beyond. When deciding which metrics to track, think about which metrics your organization already emphasizes and tracks regularly. Which metrics are included in monthly, quarterly, and/or annual reports? Which metrics are under constant scrutiny
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by senior executives? Using metrics that are already in use and well defined within your organization ensures you won’t need to worry about defining new ones and that your organization already finds the metrics valuable indicators of performance. It also suggests that there are mechanisms in place to capture the data, making your job that much easier.
By making use of existing reports, you can focus on ensuring your program delivers the benefits modeled instead of focusing on gathering, analyzing and reporting on data. However, this strategy is not without its issues. In most cases, different departments within the organization will impact the metrics tracked by the business, which means your program isn’t the only one that has an impact on any given metric. Because of this, it may not be possible to identify your program’s precise contribution to the improvement in the metric due to it being only part of the total contribution made by all other groups. That said, assuming you build a robust benefits model (per Step 7), you should have an expected impact amount at any given reporting interval that coincides with a milestone in your project. And unless there are multiple other programs with similar benefits expectations, the benefits provided by your program should be clear in the trends evident in the data.
For example, soon after completing an integration between an outage management system and a geospatial physical network infrastructure management platform, organizations should see a drop in their Average Response Times and Mean Time to Repair. Although there are many factors that may impact these two metrics, your model should provide an expected improvement in these two metrics against which you can track the actual values your organization reports. Remember that it’s not the milestone that’s important but the value that achieving that milestone has delivered to the business.
The “before” and “after” view of any metric, linked to your program’s milestones provides a compelling view into the value your program has provided and facilitates the process of re-justifying your program at regular intervals. However, just linking your milestones and expected benefits to existing reports may not be enough. Providing your own reporting view that shows all the benefits your program provides, not just a few key metrics for the business, shows a more complete picture.
Developing a metrics dashboard allows you to track many different metrics in a single place. Creating a consolidated, aggregate view of the benefits you’re providing can be even more powerful. A benefits dashboard is a great way to do this and can be as simple or as robust as is required – from simple Excel-based charts in a single page to robust, business intelligence powered online dashboards.
Again, when thinking about what sort of report or dashboard to develop, you should consider what already works for your organization. If the organization uses a simple tool for this type of reporting then consider leveraging it. If people in your organization are already comfortable using more advanced business intelligence tools, perhaps that would be appropriate. However, if Excel charts are how metrics are communicated, stick with them. This ensures you are focusing on your programs delivery and not re-inventing the “reporting” wheel inside your organization.
Whether your just linking your milestones to existing reports or developing a complete picture of the value your program provides via a benefits dashboard, communicating the availability of the reports/data is critical. After all, a dashboard is only valuable if people know it is available and use it . The business owners that supported the
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modeling process described earlier should be the key users. As they see the value in numbers they understand, their support for your program is likely to increase – facilitating further development and benefits.
Tracking Benefits - DashboardWhile milestones are critical for managing your program, they are less so when it comes to proving the value added to the business. With that in mind, your dashboard must consider the timing of milestones but focus on the key performance indicators for your organization.
Figure 28.Creating a dashboard to track benefits.
If possible, create your dashboards by mashing up the specific metrics your program is impacting from existing reports. Understanding the format and layout of these existing reports is critical in this regard. If the format is difficult to work with, or incompatible with your planned dashboard format, you’ll spend too much time transforming the data itself and not enough time ensuring it paints an accurate picture of the value provided. Understanding the format of the data is critical to ensure your time spent on reporting is not wasted. Understanding your audience and how it interacts with various metrics is critical to ensure their time spent reviewing your reports and making informed decisions as a result is not wasted.
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To that end, some visual representations may be more appropriate than others for different metrics and for different audiences. If there are existing representations in use within your organization then use them (assuming people are comfortable with them). If not, think carefully about both the metric itself and the audience for that metric. While a simple table showing a metric changing over time may be sufficient for those very familiar with the measure and its relevance to the business, other audience groups may need more information to understand what the data is telling them (e.g. color coding to indicated the relative value of the change in the metric over time).
Many dashboard solutions make it very easy to use simple, easy to understand representations of a metric (e.g. speed gauges and traffic light based widgets); however, keep in mind that for some metrics these may be too simple and not really show the user the information which he/she is looking for. Sometimes a simple tabular format may provide far more value to a user than a graphical representation like a speed gauge.
The key with a dashboard is to walk the fine line between too much information and not enough. Overwhelming the user with rows and rows of numbers is typically counter-productive and results in more discussion over what the data means than what to do about it . On the flip side, showing just a Red, Yellow or Green light may provide some insight into whether or not the program is going well, but doesn’t help inform decision making.
ConclusionBy the end of this chapter, you should have:
• Determined which metrics, both financial and operational, you will track throughout the life of your project
• Identified the most appropriate reporting mechanism and approach for your senior leaders
• Put in place a process that will capture, validate and report the metrics you identify on a regular basis
SummaryThis chapter concludes the ROI Handbook. We hope you have found the structured methodology and insights valuable. We wish you success in developing quantifiable business cases for geospatial network infrastructure management investments that in turn will drive indisputable business value for your organization.
g imagination at work
GEDigital Energy
ROI Handbookfor geospatial network infrastructure management solutions
The information in this ROI Handbook is derived in whole or in part, under license, from the ROI Methodology of PA Consulting Group, Inc.