Framing a project investment business case for service providers, based on a value approach

1. Telekinetics & Associates
Capability Overview and Project History
Service provider specific business case
development – IT investment programs
Framing the case
P. Skoularikos

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Provide a business case linking business, IS, and IT strategies
and investments
•Develop business drivers in relation to importance for current and future business –
use the service provider reference domain to structure information, such as existing,
new and emerging standards , opportunities and architectures
•Understand value propositions in relation to operating constraints, competitive
threats, and assets
•Assess the specific program benefits against the overall IS, IT portfolio
o Technology, organization, process, capabilities, competencies, and resource
constraints
•Develop or Confirm the core enterprise operating model
•Defining the business alignment process for the enterprise portfolio and associated
program consists of two stages:
o Phase 1 Milestone A - develop and present business case
o Phase 2 Milestone B – sign off business case and align program scope – includes
detailed investment review and program re-alignment where necessary

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Why two distinct phases?
•We don’t want the investment program to unduly influence the business case –
that would be the tail wagging the dog
•The outcomes of the business case would impact the program in unforeseen
ways
•The various inputs, benefits, value drivers and capabilities are examined in a
structured manner independently of the way the program has been developed
setting the stage for further work in aligning investment objectives
•The program objectives can be analysed in relation to the structured output
presented by the business case development, focusing on value to the
organisation

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What is in scope
Section 1 Milestone A
• Business drivers & benefits
• Investment objectives
• Benefits analysis and quantification
• Service and service revenue
• Core operating model ( Existing and revised )
• Operational analysis – organisation, processes and impact areas
• Estimated profitability revenue versus operational costs per service * Optional
• Overall portfolio investment summary
Section 2 Milestone B
• Business case acceptance
• Project cost analysis
• Project content and technical alignment to core operating model
• Gap analysis for OSS program
• Futures and alignment to innovation
• Financial project return for the OSS program and the portfolio – one-off,
recurring, and payback
• Risk analysis

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What differentiates this approach
The discovery phase will focus on a domain specific context, including asset
and IT portfolio, capabilities, the service portfolio and the inter-relationship
with external services, partners, and business drivers – places the organisation
on a solid base for further technology, capability and numerical analysis ie.
Asset depreciation, SLA compliance, revenue projections
Focus on assets, functionality, operational metrics in order to flush out costs,
these will include revenue gain and operational losses, real or perceived
inefficiencies
Assess these costs in relation to benefits, project feasibility and ROI over a
specific period of time
 Canvass the organization for a broad range of responses, in particular
addressing two main areas:
• The customer experience
• The operational experience

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Business linkage to IS, IT investments
Business Strategy
Objectives & direction
Change
IS strategy
Business
Demand focus
Application
IT strategy
Technology
Supply side
Activity
Domain
Technology
• Use architecture to
align business
domain to IT
investments
• Elaborate as needed
to requisite level of
detail
• Iterate vertically
and horizontally
through the stack

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Soliciting business drivers
Architecture
•Function of IT, security architecture and IT governance well defined and
understood?
•Linkage between company governance, IT, and business in place?
•Prioritized IS/IT portfolio in place and approved?
•Core enterprise operations model existing and approved?
•What stage of development ie. Silo, standardized, optimized, modular
Total cost of ownership and partnerships
•Partnership model and how this impacts the proposed program – outsourced,
in-house and third-party ( ie. Supplier )
•Has the licensing model been included in the overall application portfolio ?
Competitive threats & Opportunities
Tangible and intangible, immediate, medium & long-term

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Soliciting business drivers - Operations
Operations and IT
•Which are the key processes and are these digitized end-to-end?
•Revenue & uplift – is the revenue model clearly understood and can it be
measured and traced to IT components?
•Have key issues been identified and itemized ie, data duplication, double entry
etc?
•Which are the mission critical processes ie. Is order management one of these?
•What data is readily accessible for employees and customers. Is this data the
required for making decisions leading to value ?
•Does the present infrastructure provide reach across, security, data access and
flexibility ( data accuracy is paramount, see the asset management paradigm ) ?
•What are the security policies in place and what is the governance structure for
security ?
•What are the strengths and weaknesses are seen in the business and IT
architecture foundations ?
•How many times are SLA’s exceeded monthly and what are the cost implications?
•What is the impact of competitive initiatives?
•Does the operating model enable services completely / partially / indirectly ?

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The process of building a value proposition
Identify
benefits
Plan benefits
realization
Execute
benefits plan
Review and
evaluate
Establish
potential for
benefits

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Business drivers plan and realization
Why improvement
?
What improvement ?
Measurable?What benefits
?
Quantifiable ? Has financial
value?
Capability
?
Impact
?
Resources
?
Who is affected
?
How and when can
change be made ? Benefits plan – The IS/IT portfolio and program
• Focus of business case based on
understanding and clarifying business
benefits in relation to capabilities
• The benefits plan is the program of work for
realizing the benefits

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Process
Benefits
mapping
Engagement
Workshops
Analysis
Inputs Outcomes
Customized to reflect specific conditions and domains
“No one size fits all”

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The Inputs
Source data IS/IT Business &
Marketing
Operations Status Standards and
control functions
Resource inventory
NA Asset register and CMDB
Classification
Ontologies
Application inventory
Y
Application and tools Resource
inventory
Services offered
Y
Product portfolio,
catalogue, service
portfolio
Service and resource inventory
Revenue per service,
profitability, market share
and customer satisfaction
index
Y Revenue
Service performance
(SLA etc) cost of service
maintenance and delivery
Y SLA
Core operating model
(Enterprise architecture)
Available?
Understood by 40%
of management ?
Program portfolio Y Y Y Y
Investment objectives
Business drivers analysis Y Y Y Y
Operational organization
and process
Y
Operational and technical
pain points
Y

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Buy versus build
Buy
Build
• Key decision
• Two sides of the
same coin influenced
by strategy,
alliances,
requirements,
organizational
structure, and most
of all, capabilities
• Assessment of
current and future
business road map
clarifies roles and
means

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The Outcomes
Phases Output IS/IT Business &
Marketing
Operations Status
A Business drivers and benefits
A Competitive threats and
operational challenges
A/B Enterprise architecture
mapping * application
portfolio
A Core operating model -
refined and rationalized
A Stakeholder analysis
A Investment objectives & risk
analysis
A Capability analysis
A Cost of ownership
B Project costs assessment
B Project review
B Investment project alignment
– gap/risk analysis
B Road map and risk analysis

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The Outcomes – financial project return
Three key outputs constitute the financial metrics derived from the outcome
analysis, remember that these are numbers and they don’t provide the whole
picture, especially difficult in quantifying innovation as there is no benchmark to
measure against, but we need them…
• One-off savings – cost versus benefit
• Recurring savings
• Payback period = Net investment / Recurring savings – NB: NPV or IRR excluded –
• The resulting figures may be plugged into one or more investment appraisal
tools, expanding the scope into an accounting analysis of return on assets, or
return on capital. An ROI may be calculated fairly easily given availability of
depreciation figures
o Note that these techniques are not considered as capable of providing sole
rationale for investment decisions

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Capability
Domain IS/IT Business & Marketing Operations Status
Marketing and
product development
Billing and revenue
management
Customer relationship
management
Fulfillment: Order
Management and
provisioning
Service Management
Resource
Management
Assurance
Infrastructure
optimization
Security
Cross domain Investment program delivery capability and
organizational readiness assessment

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Planning - Phase A
Discovery
Analysis
Business Case
Preparation
Business case
Delivery
Benefit
Identification
Measurement
collection
Stakeholder
Analysis
Input review
Identify and
quantify
benefits
Architecture
analysis
Investment objectives
Benefits confirmation
Stakeholder
responsibilities
Risk analysis
Value analysis
Investment
structure
Project
alignment
Workshop 1
Workshop 2
Input
Input verification and
agreement
Education
Planning
complete
Contract
Agreed
Planning
Output

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Wrap up
Quantifying the detail of an organisations operational framework goes a long way
in understanding how to manage it, from a security perspective it is absolutely
essential, how much money, effort, and people are needed to deliver value is
often an unknown. The impact of change may be unclear, leading to reduced
expectations, overhead costs, and lack of engagement by key stakeholders.
Experience has repeatedly shown that programs fail because they are not placed
into context - buy-in is essential, as well as capability in delivery, choice of
partner, and mode of operation.
An investment program may be perfectly executed with no real value to an
organization other than change for the sake of change, alternatives are neglected
and tunnel vision sets in.
Deriving value as a key driver for investment allows for a global and continuous
evaluation of objectives, engaging participating stakeholders in the process.

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Framing a business case - A Summary – 2017