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Mark Bestauros on Value Realization

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This is a guest post by Mark Bestauros on what he’s learned about Value Realization at Microsoft.   You can think of Value Realization as simply the value extracted from a process or project.  Mark is the Microsoft IT Principal Business Value Realization manager, and a member of the Microsoft IT Portfolio Management Team, where he is responsible for the optimization of a significant IT spend across the Microsoft businesses.   Mark is also responsible for the Value Tracking for projects in scope, and that has led to some big breakthroughs in terms of reporting the value of IT investments back to the business, and demonstrating the power of Value Realization.

I’ve asked Mark to share some of his key insights and lessons learned from his adventures at Microsoft in the art and science of Value Realization.

Without further ado, here is Mark Bestauros on Value Realization …

Two Main Purposes of the Value Conversation

The Value conversation serves two main purposes in IT:

  1. Objective and Value Driven Portfolio Planning
  2. Provide Evidence to the argument that IT is not a cost center, but a corporate Propulsion Engine enabling it to reach its objectives through: Informate, Transformate and Automate processes and businesses within the company.

To accomplish the first goal, the organization need to have the Value conversation tied to the Personal Commitments for all those involved in IT work, and equally importantly, making sure that the a mutual understanding of priority positioning of the “Value” focus in the Conditions of Satisfaction conversations that usually take place between IT organizations and the benefiting business partners from the IT effort.

Without having the Value activities reflected in the commitments and missing in IT native processes, almost all involved in project work automatically de-prioritize the Value work, starting with turning a blind eye on a missing business case analysis at the inception point and ending with walking away immediately after a project Pre-deployment sign off meeting, washing their hands from any commitment to measure and evaluate the actual benefits hoped for at the Envision or “Plan” phase.

Planning and Prioritizing with Value Experts at the Business and IT Borders

The key to success is to embed Value experts at the business and IT border checkpoints.  You need Value experts who are well versed in understanding how to sell the Value argument.  You also need professionals who can guide the average IT professional through estimating effectively (versus guestimating).   You also need to embed the most cost effective, and time effective, means to measure baselines and project logical improvement deltas at the business and IT border checkpoints.  This will help you facilitate effective Portfolio Planning and  prioritize demand more effectively, prior to having the all up IT/Business Leadership Team Planning marathons.

“Tests for Success” for Value Realization

Evidencing the argument about the viability of the IT organization in any company with actual Realized Value is very compelling only if the Value reported passes these tests:

  1. Executive Support.  Wins the support of the executives who will benefit from the IT effort in the organization through proven and measureable results.
  2. Simple and Executable.  Uses “Simple to Understand and Execute” measures and algorithms.
  3. Logical Correlations to the Intangibles.  Exhibited logical correlations between intangible results (e.g. Customer Satisfaction) and monetary KPIs (or P&L report line items).
  4. Conservative.  It needs to be conservative in nature (not bullish and not overly bearish either, but provides a credible range of the benefit that aligns with a proven proxy measure).
  5. Sustainable.  It needs to be a sustainable approach.  It can’t be a one-off, or a heroic work effort. 

Characteristics of a Successful Value Realization Practitioner

There are few characteristics or knowledge areas that makes a value practitioner successful in changing the culture and move the Value Organizational Maturity in the right direction:

  1. Financial Intelligence.  Financial, able to understand the common financial metrics a CFO can relate to, able to shine the light on merits and risks using the common financial terms acceptable by the Finance community.
  2. Measuring and Estimating.  Understand the measuring and estimating techniques and able to reach deals with ultra-busy business teams (who typically consider IT organizations as suppliers or order takers), to provide reliable data, and know who to substitute the lack of reliable, large sample size data for example, with conservative measures factoring in an agreed on discounted deltas for lack of higher confidence levels.
  3. Interpersonal Skills.  A seller and artist in the art of crucial conversations, since Planning is a very competitive arena, and convincing those involved in Envision phase to dedicate time to obtain reliable data, not planned for in the original budgeting.
  4. Expertise in the Art and Science of Value Realization.  A person who can hit the ground running in quickly earning the “Trusted Adviser” title by all stakeholders due to his/her knowledge of the tools, methodologies, and acting as the defense attorney with the business case versus the classic perception of the “Auditor” or “Critic” of the spend!
  5. The Value Lens.  Understanding the role of Business Architect and being ready to provide the Value Lens cut to architectural analysis through “Value Stream Mapping”, and capturing measureable problem statements round the process bottle necks in addition to translating a Premise of benefit to a measureable ROI.

A value practitioner can’t achieve that alone, while overcoming organizational undisciplined Value approaches if any exist at all, lacking individuals Value commitments and the unwillingness of the business customers to engage in meaningful Value (BCA, VRF or BVR efforts), he/she needs air cover and a value sponsors (usually are found in the Finance Community or if lucky, a CIO or a member of two of the senior leadership) to facilitate the conversation and help open the doors.

Executing Value Realization

On the tactical and execution level the Value practitioner needs to:

  1. Make it simple. Use technology to share the “Know How” in a very hands on, simple to understand and direct way.
  2. Train the Trainer. Spread the gospel of Value through providing visual illustrations, visually appealing training modules making it easier to grasp the concepts by non-financial individuals. Etc.
  3. Lead by example.  Show willingness to roll the sleeves and help.. show them by doing.
  4. Lean the process. BCA, BVR (VRF) and ROI are the “Trinity of Value”, explain the meaning of each, and how they relate to one another. Lean the process part and standardize the ROI estimation approaches to make it easier for them to improve their Gage “R&R”: Repeatability and Reproducibility in doing the process for every engagement they have and produce the same sustainable results.
  5. Stay Connected to Decision Makers.  Stay connected to the decision makers, they are ultimately the benefactors of the Value work… they are the ones who will have the crucial conversations with their CEO, CFO and senior leaderships.. explain the approach, by simple and clear about it and be upfront in earnestly stating the time commitment. Be sensitive to the politics in each organization, for the last thing you want is to lose support and endorsement you desperately need for something that is totally unrelated to the Value work.

Three Technical Challenges to Be Aware Of

The three technical challenges are primarily:

  1. Isolating the effect of the IT project.  When there are multiple efforts going side by side, one of which happens to be the project in question for Value, to achieve a preset goal.
  2. Monetizing the intangibles.   For example, how to quantify and put a dollar amount to customer satisfaction.
  3. How to sell Soft Dollar.  For example, how do you sell the soft dollar (soft savings, potential cost and risk avoidances) side by side with the hard dollars, without over-selling, inflating the estimates, or creating audience rejection?

There are known techniques that address each, and there are some that I had to improvise to make them fit the maturity stage of the target organization. In all cases, getting stakeholder agreement to the assumptions, transferring functions, and using the Dollar as an IT solution provide horse power to go a long way.

Comments

  • Anonymous
    September 17, 2013
    The comment has been removed
  • Anonymous
    September 18, 2013
    @ Dragan -- Thank you. Here's the trick for applying Value Realization to life:
  • Identify who the stakeholders are (you, your friends, your fammily, whoever)
  • Identify what your stakeholders value (their values hiearchy)
  • Identify the benefits they care about (they'll vary from tangible to intangible)
  • Prioritize around the values, criteria, and impact
  • Find ways to deliver on the benefits, whether that's better, faster, cheaper
  • Find creative ways to illuminate your delivery of the benefits (some will be observable, some measurable, some quantifiable, some financial, etc.)
  • Check that your "stakeholders" acknowledge the benefits Obviously, you don't need to apply this to all areas of life.  But it's like a saying my friend's dentist uses: "You don't need to floss all your teeth.  Just the ones you want to keep."