COBIT 5 for Business Benefits Realization: A Preview. Sushil Chatterji, CGEIT

Transcription

1 COBIT 5 for Business Benefits Realization: A Preview Sushil Chatterji, CGEIT

2 AGENDA About the Publication Business Benefits: Why the time is NOW Short primer on Enterprise and IT Strategic Planning Business Benefits Realization in relation to COBIT 5 Practical Guidance for Benefits Realization using COBIT 5 Enablers Assessing Business Benefits Implementing Business Benefits Realization Key Take-aways

3 About the publication Publication Structure Section 1 Provides a primer on Enterprise and IT Strategic Planning, and describes briefly how there are necessary precursors for effective enterprise benefits realization that stem for Enterprise and IT Strategic Planning. This part will provide the reader with a conceptual baseline that will be built upon throughout the rest of the document Section 4 Provides practical guidance for Assessing Business Benefits. Two methodologies are presented: ISACA s Business Benefits Assessment method which is part of ISACA s recentlydeveloped Business Innovation Model, and the Gartner Business Value Model Section 2 Elaborates on Business Benefits Realization in Relation to COBIT 5 Principles; starting with why the timing for the imperative of Business Benefits Realization is now. This is followed by a detailed account of how each COBIT 5 principle relates to Business Benefits Realization Section 5 Provides practical guidance for Implementing Business Benefits Realization. Three alternative approaches are discussed: ISACA s COBIT 5 Implementation Framework, an implementation lifecycle process that is specific to Business Benefits Realization adopted by the UK Government, and the recently-published Australian NSW Government Benefits Realization Management framework Section 3 Provides practical guidance for Using COBIT 5 Enablers in Governing and Managing Business Benefits Realization in Practice. Each COBIT 5 Enabler is treated with detailed guidance sourced from best practices Appendices: Appendix A Glossary Appendix B Process enabler guidance for COBIT 5 processes relevant to business benefits realization Appendix C Mapping and guidance for COBIT 5 processes supporting business benefits realization Appendix D Sample code of ethics and business conduct

4 About the publication Key Benefits for Readers Better understanding of the increasingly complex but significant areas of business benefits realization Better understanding of key linkages of business benefits realization to enterprise and IT strategy, and enterprise architecture Clarity on the application of the COBIT 5 governance and management principles to business benefits realization

5 1. Why the time is NOW Benefits Realization is a Strategic Imperative

6 Then and Now Subhead Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut ac leo nec erat vehicula consectetur maximus vitae mauris. Aenean posuere efficitur vulputate. Sed eros eros, ornare in purus ut, tempus faucibus nibh. Vestibulum tempor odio est, quis posuere tortor maximus at. Source: Web-Scale 101 (Nutanix)

7 The Expansion of Technologies Considered to Be IT (- enabled)

8 2. Short Primer on Enterprise and IT Strategic Planning Setting the Stage for Business Benefits Realization

9 Context of Strategic Planning Source: IT Strategic Planning: 80 Insights from Australian Board and Management Teams (David Roche and Eric Kordt)

10 COBIT 5 Key Outcomes for IT Strategy Development

11 COBIT 5 Base Practices for IT Strategy Development

12 Transitioning to Business Benefits Realization: A Case Study of Change Implementation Source: Benefits Management: Delivering Value from IS & IT Investments (John Ward and Elizabeth Daniel)

13 3. Business Benefits Realization in relation to COBIT 5 A Brief Refresher on the COBIT 5 Principles

14 Business Benefits Realization in the context of the COBIT 5 Principles Source: COBIT 5, figure ISACA All rights reserved.

15 COBIT 5 Principle 1: Meeting Stakeholder Needs: Enterprise Goals Source: COBIT 5, figure ISACA All rights reserved.

16 4. Practical Guidance for Benefits Realization using COBIT 5 Enablers Applying COBIT 5 Enablers to Business BenefitsRealizaton

17 COBIT 5 Enabler: Principles, Policies and Frameworks - Principles 1. Align benefits with strategy 2. Start with the end in mind 3. Utilize successful delivery methods 4. Integrate benefits realization with performance management 5. Manage benefits from a portfolio perspective 6. Apply effective governance mechanisms and processes, with leadership. 7. Develop a value culture Source: Managing Benefits: Optimizing the Return from Investments (Steve Jenner)

18 COBIT 5 Enabler: Principles, Policies and Frameworks Example of Key Policies 1. Value Governance and Management 2. IT Investment 3. Programme Management 4. Portfolio Management 5. Benefits Alignment and Documentation 6. Benefits Realization Management, Monitoring and Reporting 7. Value Delivery Management 8. Business Case Management 9. Architecture Compliance 10. Balanced Scorecard Compliance

19 COBIT 5 Enabler: Principles, Policies and Frameworks Framework Source: Managing Benefits Lifecycle (MSP; AXELOS)

20 COBIT 5 Enabler: Processes Primary Processes 1.EDM02: Ensure Benefits Delivery this is the core of business benefits realization governance 2.APO04: Manage Innovation innovation is the key to generating business benefits in the enterprise 3.APO05: Manage Portfolio the managed portfolio has to be driven by business benefits 4.BAI01: Manage Programmes and Projects these comprise the core organizational benefits management practices 5.BAI05: Manage Organizational Change Enablement the management of organizational change is a key influencer of effective business benefits realization

21 COBIT 5 Enabler: Processes Secondary Processes 1.APO02: Manage Strategy enterprise and IT strategy drive programmes which are the source of business benefits 2.APO03: Manage Enterprise Architecture Enterprise Architecture provides the organization s technology-driven roadmap for achieving business goals 3.APO12: Manage Risk this process addresses IT-related risks, which include risks for benefits realization

22 COBIT 5 Enabler: Processes Supporting (indirect) Processes DOMAIN PROCESS Number PROCESS Name Evaluate, Direct and Monitor EDM01 Ensure Governance Framework Setting and Maintenance EDM03 Ensure Risk Optimization EDM04 Ensure Resource Optimization EDM05 Ensure Stakeholder Transparency Align, Plan and Organize APO01 Manage the IT Management Framework APO06 Manage Budget and Costs APO07 Manage Human Resources APO08 Manage Relationships APO09 Manage Service Agreements Build, Acquire and Implement BAI02 Manage Requirements Definition BAI03 Manage Solutions Identification and Build BAI04 Manage Availability and Capacity BAI07 Manage Change Acceptance and transitioning BAI08 Manage Knowledge BAI09 Manage Assets Deliver, Service and Support DSS01 Manage Operations DSS02 Manage Service Requests and Incidents DSS03 Manage Problems DSS04 Manage Continuity DSS05 Manage Security Services DSS06 Manage Business Process Controls Monitor, Evaluate and Assess MEA01 Monitor, Evaluate and Assess Performance and Conformance

23 COBIT 5 Enabler: Organizational Structures: RACI for EDM02 Ensure Benefits Delivery

24 COBIT 5 Enabler: Organizational Structures: RACI for BAI01 Manage Programmes & Projects

25 COBIT 5 Enabler: Organizational Structures: RACI for BAI01 Manage Programmes & Projects (cont d)

26 COBIT 5 Enabler: Organizational Structures: RACI for BAI05 Manage Organizational Change Enablement

27 COBIT 5 Enabler: Culture, Ethics and Behaviour Manage Organizational Change Enablement Source: Balanced Diversity: A Portfolio Approach to Organizational Change; (K. Ferris)

28 COBIT 5 Enabler: Culture, Ethics and Behaviour Ethics (Sample Code of Ethics and Business Conduct table of contents) 1. Statement of Core Values (Vision, Principles, Values, Mission). 2. Building Trust and Credibility. 3. Respect for the Individual. 4. Creating a Culture of Open and Honest Communication. 5. Setting Tone at the Top. 6. Upholding the Law (Competition, Proprietary Information, Selective Disclosure, Health and Safety). 7. Avoiding Conflicts of Interest (Gifts, Gratuities and Business Courtesies, Meals, Refreshments and Entertainment). 8. Setting Metrics and Reporting Results Accurately (Accurate Public Disclosures, Corporate Recordkeeping). 9. Promoting Substance Over Form (Accountability). 10.Loyalty (Confidential and Proprietary Information, Use of Organization Resources, Media Inquiries). 11.Do the Right Thing. 12.Information and Resources (Name and Contact Information of Key Personnel). Source: Sample Code of Ethics and Business Conduct (Society for Human Resource Management)

29 COBIT 5 Enabler: Information Key Business Information Items Supporting Functional Goals Source: COBIT 5 Enabling Information, figure ISACA All rights reserved.

30 COBIT 5 Enabler: Services, Infrastructure and Applications IT Transformation for ITaaS ARCHITECTURE VECTORS MANAGEMENT VECTORS Source: IT Transformation: Enabling the Agile Business (CIO Custom Solutions Group and EMC 2 )

31 COBIT 5 Enabler: People, Skills and Competencies Good Practices Source: COBIT 5, figure ISACA All rights reserved.

32 COBIT 5 Enabler: People, Skills and Competencies Key Reference SFIA v5 Source: (The SFIA Foundation)

33 COBIT 5 Enabler: People, Skills and Competencies 4 Key Competency Areas 1. Benefits Planning the ability to effectively identify the planned outcomes of and IS/IT development project and make explicit the means by which they will be achieved. 2. Benefits Delivery the ability to design and execute the programme of organizational change necessary to realize all of the benefits specified in the benefits plan. 3. Benefits Review the organization s capability to effectively assess the success of the project/programme in terms of the benefits already delivered and the identification of the ways and means by which further benefits might be realized. 4. Benefits Exploitation the adoption of the portfolio of practices required to realized the potential benefits from information, applications and IT services, over their operational life. Source: Benefits Realization from Information Technology (Coln Ashurst)

34 5. Assessing Business Benefits Meeting a key challenge of Business Benefits Realization

35 Assessing Business Benefits: Two methodologies explored 1. ISACA s Business Innovation (BI) Model foundation of a new report series on Emerging Business-Technology Trends and 2. Gartner s Business Value (BV) Model proprietary model first published in 2006, and refreshed periodically

36 Assessing Business Benefits with ISACA s Business Innovation Model: Overall BI Index Source: 2014 ISACA All rights reserved.

37 Assessing Business Benefits with ISACA s Business Innovation Model: Big Data example Source: 2014 ISACA All rights reserved.

38 Assessing Business Benefits with ISACA s Business Innovation Model: Chart View Source: 2014 ISACA All rights reserved.

39 Assessing Business Benefits with Gartner s Business Value Model: Process Source: Gartner, Inc. Used with permission.

40 Assessing Business Benefits with Gartner s Business Value Model: Indicators Source: Gartner, Inc. Used with permission.

41 6. Implementing Business Benefits Realization Where the tire meets the road

42 Implementing Business Benefits Realization: Three approaches considered 1. ISACA s COBIT 5 Implementation approach 7 phase generic change implementation lifecycle based on the John Kotter change model 2. Benefits Realization Management Implementation Lifecycle Processes adopted from MSP (Managing Successful Programmes) published by AXELOS of UK and 3. Australian NSW Government methodology based on the Benefit Realization Framework from the same source published in June 2014

43 Implementing Business Benefits Realization: ISACA s COBIT 5 Implementation approach Creating the appropriate environment Source: COBIT 5 Implementation, figures 3 and ISACA All rights reserved.

44 Implementing Business Benefits Realization: ISACA s COBIT 5 Implementation approach Seven Phases of the Implementation Lifecycle Source: COBIT 5 Implementation, figure ISACA All rights reserved.

45 Implementing Business Benefits Realization: MSP Benefits Realization Management Practices Phase Description 1. Identify & Quantify Consider approaches to identifying benefits as well as forecasting the scale of improvement anticipated, problems typically faced and relevant solutions. 2. Value & Appraise Address why organizations value benefits in monetary terms; approaches to valuing non-financial benefits in monetary terms; the role of value management techniques; and the main approaches to initiative appraisal cost-benefit, real options, cost-effectiveness, and multi-criteria analysis. 3. Plan Plan for benefits realization, encompassing approaches to validating and prioritizing benefits; managing pre-transition activities; selecting benefits measures; benefits risk and opportunity management; planning stakeholder engagement; and bringing all these together in the main initiative-level benefits management documentation and the Business Case. 4. Realize Transition management; tracking, reporting including collecting survey evidence, and taking corrective action; and effective approaches to stakeholder engagement to achieve behavioural change by winning hearts as well as minds. 5. Review Review as a basis for learning and continuous improvement before, during and after the initiative Source: Managing Benefits: Optimizing the Return from Investments (Steve Jenner)

46 Implementing Business Benefits Realization: MSP Benefits Realization Management Key Activities/Functions Key activities/functions Strategic and Business Planning Investment Appraisal and Portfolio Prioritization Performance Management encompassing operational and HR performance management Financial and Management Accounting Project and Programme Management Commercial and Procurement Business as Usual Main benefits related areas of common concern Benefits are related to strategic objectives so that strategic contribution can be clearly identified. Benefits reviews are used to validate the business model (the elements in the model, their respective drivers and linkages between them). Information on what works is fed back to strategic planners and policy makers. The importance of this is shown by research from McKinsey (2012), which found that organizations that are good at capital allocation and management are worth on average 40% more over a 15 year time span than those who perform less well. So it is necessary to ensure: Benefits are clearly and consistently articulated to provide a 'level playing field' for investment appraisal and portfolio prioritization. Benefits are incorporated into assessments of both return/ attractiveness (the scale of the benefits over costs required to realize those benefits) and risk/achievability (i.e. how likely is it that those benefits will be realized). Operational performance management Linking benefits measures to the organization's key performance indicators (KPIs) and making use of data available from the management information system. Ensuring planned benefits are reflected in business unit plans, performance targets and budgets where appropriate. HR performance management Aligning responsibilities for business benefits realization management with the reward and recognition processes. Reflecting responsibility for business benefits realization in individuals performance targets. Consistent rules for valuing benefits in monetary terms. Booking cashable benefits in budget baselines. Starting with the end in mind ensuring benefits led change. Ensuring successful delivery as an enabler for business benefits realization. lncentivizing suppliers to realize benefits by arrangements that include: gain sharing arrangements (where both parties share the benefits realized); risk reward (where the supplier is paid to take on the risk of benefits not being realized); and transaction based charging (where the supplier bears the risk that demand won't be as great as intended). Payment by results (dependent on those results being clearly defined and attributable). Savings from outsourcing ensuring quality standards don't suffer. Business change is appropriately scheduled. Benefit owners are identified in the affected parts of the business. Planned benefits are realized. Emergent benefits are fully leveraged. Dis benefits are mitigated as far as is possible. Source: Managing Benefits: Optimizing the Return from Investments (Steve Jenner)

47 Implementing Business Benefits Realization: Australian NSW Government Benefit Realization Framework Overview Source: (State of New South Wales Office of Finance and Services )

48 Implementing Business Benefits Realization: Australian NSW Government Benefit Realization Framework Principles (1 of 2) 1. Benefits management starts by defining the programme/project objectives and the benefits they deliver. 2. Benefit identification and understanding drives refinements to the business case. 3. Benefits must be aligned with the strategic goals of the organization. 4. Benefits Realization Management need to integrate with an organization s Financial, Programme, and Change Management Frameworks. 5. Benefits are enabled by successful change people, process, technology and organizational. 6. Benefits need to be owned and managed by a designated person in the business; they don t just happen. 7. Benefits must be measurable and linked to performance data and reporting frameworks. 8. Benefits can be tangible (financial or non-financial) or intangible, e.g. improvements in quality, efficiency, access, and financial performance. Source: (State of New South Wales Office of Finance and Services )

49 Implementing Business Benefits Realization: Australian NSW Government Benefit Realization Framework Principles (2 of 2) 9. Benefits realization requires a baseline and benefits targets in order to measure resulting outcomes. 10.Disbenefits need to be recognized and mitigated (a disbenefit is an outcome i.e. actual consequences of change perceived as being negative by a stakeholder). 11.The same benefits cannot be claimed by two or more programmes (i.e. no double counting). 12.Benefits are dynamic; they need to be regularly reviewed and updated. 13. Benefits need to be communicated. 14.Benefits are not automatically realized; active monitoring is required. 15.Intermediate outcomes are needed to realize end benefits (and are just as important). 16.Benefits tracking continues long after a programme has ended. Source: (State of New South Wales Office of Finance and Services )

50 Implementing Business Benefits Realization: Australian NSW Government Benefit Realization Framework Process & Objectives Source: (State of New South Wales Office of Finance and Services )

51 7. Key Take-aways To improve on your Business Benefits Realization, using COBIT 5 as a foundation

52 Getting a Better Understanding Common Barriers to Business Benefits Realization Difficulties enterprises face in determining precisely when and the extent of realization of business benefits. For instance, there is often a significant time lag between an investment decision and the benefits being actually realized. There are a number of common misconceptions that often compromise the effectiveness of business benefits realization management and the actual realization of business benefits. For example, some misconceptions are that business benefits realization management is a silver bullet, or that it is an out-of-the-box solution. The knowing-doing gap. This gap arises as there is a paradox in many areas of management in that good practices are known, but are rarely applied and business benefits realization management is no exception. Source: How to Increase the Business Value of Your IT Projects (J. Ward and E. Daniel)

53 Getting a Better Understanding Key Success Factors for Business Benefits Realization Active rather than passive tracking against forecast, the focus is on an active search for benefits, with ongoing participative stakeholder engagement. Evidence-based forecasts and practices are driven by evidence about what works rather than assumptions and advocacy Transparent based on open and honest forecasting and reporting, and a clear line of sight from strategic objectives to business benefits forecast and realized. Source: Managing Benefits: Optimizing the Return from Investments (Steve Jenner)

54 Getting a Better Understanding Key Success Factors for Business Benefits Realization cont d Benefits-led focusing less on the activities undertaken to realize business benefits and more on the actual realization of those benefits, i.e. just as there is expectation to change initiatives to be business benefits-led, so too should business benefits realization management be focused on what difference it is making. Managed across the full business change lifecycle extending from business benefits identification and quantification through to realization and applying lessons learned. To that end, and to quote: Benefits realisation can no longer be considered an add-on at the tail end of project delivery the prize is not optional. Source: Managing Benefits: Optimizing the Return from Investments (Steve Jenner) Forward-looking with an emphasis on learning and continuous improvement, rather than backward-looking attribution of blame.

55 Thank You