Top 10 Benefits of MS Sharepoint Services for document management

At my client site we have started using Microsoft Sharepoint services for the management of our business case and benefits related documents. So far this is working out great and I am really enjoying the collaborative benefits of this tool for document management. I recommend you look into it and perhaps even conduct a pilot in your group or department. From the Microsoft site, here are the top 10 benefits for sharepoint (good for the business case to justify the platform).

1. Improve team productivity with easy-to-use collaborative tools

Connect people with the information and resources they need. Users can create team workspaces, coordinate calendars, organize documents, and receive important notifications and updates through communication features including announcements and alerts, as well as the new templates for creating blogs and wikis. While mobile, users can take advantage of convenient offline synchronization capabilities.
 
2. Easily manage documents and help ensure integrity of content

With enhanced document management capabilities including the option to activate required document checkout before editing, the ability to view revisions to documents and restore to previous versions, and the control to set document- and item-level security, Windows SharePoint Services can help ensure the integrity of documents stored on team sites.
 
3. Get users up to speed quickly

User interface improvements in Windows SharePoint Services 3.0 include enhanced views and menus that simplify navigation within and among SharePoint sites. Integration with familiar productivity tools, including programs in the Microsoft Office system, makes it easy for users to get up to speed quickly. For example, users can create workspaces, post and edit documents, and view and update calendars on SharePoint sites, all while working within Microsoft Office system files and programs.
 
4. Deploy solutions tailored to your business processes

While standard workspaces in Windows SharePoint Services are easy to implement, organizations seeking a more customized deployment can get started quickly with application templates for addressing specific business processes or sets of tasks.
 
5. Build a collaboration environment quickly and easily

Easy to manage and easy to scale, Windows SharePoint Services enables IT departments to deploy a collaborative environment with minimal administrative time and effort, from simple, single-server configurations to more robust enterprise configurations. Because deployment settings can be flexibly changed, less pre-planning time is required and companies can get started even faster.
 
6. Reduce the complexity of securing business information

Windows SharePoint Services provides IT with advanced administrative controls for increasing the security of information resources, while decreasing cost and complexity associated with site provisioning, site management, and support. Take advantage of better controls for site life-cycle management, site memberships and permissions, and storage limits.
 
7. Provide sophisticated controls for securing company resources

IT departments can now set permissions as deep down as the document or item level, and site managers, teams, and other work groups can initiate self-service collaborative workspaces and tasks within these preset parameters. New features enable IT to set top-down policies for better content recovery and users, groups, and team workspace site administration.
 
8. Take file sharing to a new level with robust storage capabilities

Windows SharePoint Services supplies workspaces with document storage and retrieval features, including check-in/check-out functionality, version history, custom metadata, and customizable views. New features in Windows SharePoint Services include enhanced recycle bin functionality for easier recovery of content and improved backup and restoration.
 
9. Easily scale your collaboration solution to meet business needs

Quickly and easily manage and configure Windows SharePoint Services using a Web browser or command-line utilities. Manage server farms, servers, and sites using the Microsoft .NET Framework, which enables a variety of custom and third-party administration solution offerings.
 
10. Provide a cost-effective foundation for building Web-based applications

Windows SharePoint Services exposes a common framework for document management and collaboration from which flexible and scalable Web applications and Internet sites, specific to the needs of the organization, can be built. Integration with Microsoft Office SharePoint Server 2007 expands these capabilities further to offer enterprise-wide functionality for records management, search, workflows, portals, personalized sites, and more.

Who owns the business case and benefits management process?

Ownership of the business case process, templates, and guidelines is the critical factor in a firm's investment decision-making. The IT steering committee, comprised of IT and business execs, should own the business case process and standards. The business via its enterprise project management office (EPMO) — or by default, the IT PMO if there is no EPMO — should manage the process, moving the business case through the steps of its development journey within the firm, all the way through to sign-offs by stakeholders and the steering committee's decisions. Why the PMO? Best practices show that a significant role of the PMO is the standardization of IT-related processes, tools, and methodologies across the business — one of which should be the business case process. And business case creation skills may exist in a PMO center of expertise, with its unique, unbiased, cross-functional view of the firm. What does "owning the business case process" mean? PMOs that step up to the process  ownership role will:
· Create a collaborative environment to develop the standards. Business cases stall when the stakeholders aren't committed to the process and the framework. The reason: Stakeholders won't
participate without the consultation, input, and feedback necessary to generate buy-in and their own sense of ownership.
· Get the sign-offs. A business case can be thought of as a set of predictions — and each business case prediction must have a sponsor. Predictions without commitment have no credibility
with decision-makers. Signing on the dotted line gives a business case teeth and identifies a commitment to review success or failure post-project.
· Use business case best practices. Follow a standardized template with a consistent table of contents. Quality business cases are living documents for the expected life of the investment and
form the basis for extracting full value past project implementation.
· Own the process, not the content. Be clear about that. PMOs should not get sucked into being a misplaced proxy for another business case element owner. Instead, PMOs manage the process
by which project requests are evaluated and initiated.

Source: Forrester Research,

Pros and Cons of NPV, IRR and Payback calculations

Net Present Value (NPV), Internal Rate of Return (IRR) and Payback Period are some of the most common metrics used in the calculations of quantified benefits and costs when justifying projects via business cases. Here I take a quick look at each one and the pro's of con's of using these metrics.

Net Present Value (NPV)

Description - Perhaps the mostly widely used technique for analyzing a potential investment opportunity or project is the net present value of cash flow or NPV approach. Using the NPV of cash flow technique we would discount all cash flows in our business case at the opportunity cost of capital - in most cases the weighted average cost of capital for a company. The business rule that is applied with this analysis is to accept all projects or investments where the NPV of cash flows is greater than zero - so we're looking for positive NPVs.NPV compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account. If the NPV of a project is positive, it should be accepted. However, if NPV is negative, the project should probably be rejected because cash flows will also be negative.

Pros - Accounts for the fact that the value of a dollar today is more than the value of a dollar received a year from now - that's the time value of money concept. The other strength of this measure is that it recognizes the risk associated with future cash flow - it's less certain

Cons - Does not give visibility into how long a project will take to generate a positive NPV due to the calculations simplicity. Our NPV rule tells us to accept all investments where the NPV is greater than zero. However, the measure doesn't tell us when a positive NPV is achieved. Does it happen in five years or 15? If at all. Another limitation of the NPV approach is that the model assumes that capital is abundant - that is there is no capital rationing. If resources are scarce, then the analyst has to look carefully at not just the NPV for each project they are evaluating, but also the size of the investment itself. Fortunately, there is another measure that can help overcome this weakness - the calculation of internal rates of return.

Internal Rate of Return (IRR)

Description - The internal rate of return, or discounted cash flow rate of return, offers analysts a way to quantify the rate of return provided by the investment. The internal rate of return is defined as the discount rate where the NPV of cash flows are equal to zero. The IRR can be calculated using trial and error (changing the discount rate until the NPV = 0). Generally speaking, the higher a project's internal rate of return (assuming the NPV is greater than zero), the more desirable it is to undertake the project. The rule with respect to capital budgeting or when evaluating a project is to accept all investments where the IRR is greater than the opportunity cost of capital. Under most conditions, the opportunity cost of capital is equal to the company's weighed average cost of capital (WACC).

Pros - It is widely accepted in the financial community as a quantified measure of return and it's also based on discounted cash flows - so accounts for the time value of money. And when used properly, the measure provides excellent guidance on a project's value and associated risk,

Cons - There are three well known pitfalls of using IRR that are worth discussing:
1. Multiple or no Rates of Return - if you're evaluating a project that has more than one change in sign for the cash flow stream, then the project may have multiple IRRs or no IRR at all.
2. Changes in Discount Rates - the IRR rule tells us to accept projects where the IRR is greater than the opportunity cost of capital or WACC. But if this discount rate changes each year then it's impossible to make this comparison.
3. IRRs Do Not Add Up - one of the strengths of the NPV approach is that if you need to add one project to an existing project you can simply add the NPVs together to evaluate the entire project. IRRs on the other hand cannot be added together so projects must be combined or evaluated on an incremental basis.


Payback Period

Description Payback allows us to see how rapidly a project returns the initial investment back to the company. In practice, companies establish "rules" around payback when evaluating a project. For example, a company might decide that all projects need to have a payback of less than five years. This is also referred to as the cutoff period.

Pros - Allows for an easy understanding by management and stakeholders of when the initial investment will be recouped. This allows go, no-go, decisions to be made based on simple cutoff date rules.

Cons - Does not take into account the time value of money. Discounted cash flow should be the preferred way to evaluate payback since it does recognize the time value of money. That is cash in the future is not worth as much as much as cash today. Payback period also ignores all cash flows that occur after the payback period is reached.


Related Posts:
- Payback Period
- NPV Definition and Sample Spreadsheets
- Parts of this article were sourced from a detailed analysis of the above at Money - Zine. For a detailed template covering the above click here to visit the site.

Rules for effective benefit realization

Saw a great article recently summarizing the need and framework for benefits realization. Here are some highlights and key points:

For most companies IT is a significant component of capital spending—typically between 50%-75%. For the vast majority, more than 70% of this is in fixed costs, and when you take into account the prior year "carry over" spending, and depreciation, a very small percentage of IT spending in a given year may be creating real value for the company (and that's assuming that those initiatives are successful). Now consider this scary fact from survey and interview research we've done over the past decade: Fewer than 12% of companies can accurately measure the business impact of their IT investments

Benefit realization is about the proactive forecasting, management and measurement of financial, operational and strategic benefits being realized. It's about driving accountability for IT results across the organization. And it's in this role where the CIO can be the greatest advocate and most effective. Most companies either have little or no benefit realization in the critical areas, or they have too many processes and artifacts, and in turn, are viewed as overly bureaucratic, draconian, and non-value add.

Here are a few rules to live by for effective benefit realization:

1. Start Building Selectively:
- Pilot with a particular business unit and set of initiatives.

2. Secure Business Co-Ownership:
- Ensure senior leaders collaborate in selecting IT measurements.
- Work with corporate finance for their input and support.

3. Recalibrate Benefit Measures
- Regularly review and adjust performance measurements being used (yearly) to prevent them from getting stale or obsolete.

4. Demand Business Accountability For Funding And Delivering IT Results.
- If the business is unwilling to have the benefits be incremental to their operating plan, that's a red flag.

5. Be Selective With Benefit Realization Metrics
- Focus on a select few performance measures and take great care not to dilute the need for focus with too many measures.
- Strong CIOs are relentless about determining what results truly matter.

6. Give Yourself and Others a Break
- Do not use the same level of measurement and process rigor on all initiatives as you'll risk killing the effort with bureaucracy.

7. Use A Business Performance Language
- Use metrics that are business-relevant and matter to key stakeholders.
- Ensure measures are speaking to stakeholder interests.
- Take care to not use the same benefit lens across the entire IT landscape (e.g., infrastructure spend is different than new business applications).

8. Measure the Benefits of the Benefit Realization Process Itself
- Done well, this should yield improvement in key areas such as improved ROIC (return on invested capital); and reduced variance of planned to actual costs and benefits.

The bottom line " benefit realization practices are not cookie-cutter. Rather, they are a specific set of processes, methodology, a toolkit, and most of all, a journey. Successful ones are very context-driven and take into account the organization's culture and management style. Don't wait to have everything thought through to perfection " it won't ever be. And most important, make such capabilities part of the organizational DNA, rather than an effort that is a reaction to down or tough times.

The full article "Rules To Live By: Benefit Realization - Improving the Yield on IT " by Amir Hartman can be found here. If you are or planning to work in this area, I highly recommend reading the entire article.

Become expert at benefits realization

A nice summary from Forrester Research to becoming an expert at benefits realization. The full article can be found at their website.

IT should take the initiative to help process owners confidently estimate project benefits and give them the tools within the business case to know when the benefits are not achieved and how to go about benefits remediation. IT should:

- Develop expertise in project benefits management. Promulgate the expertise across the firm. Get to be known as the experts in business case benefits management and benefits workshop facilitation. These skills will become indispensable.

- Standardize on a benefits estimation process. Use the same process repeatedly for the benefits calculations to derive the benefit of continuous improvement based on experience.

- Ensure clarity around assumptions. Business case benefits are predictions. These predictions are based on future events that may not unfold exactly as forecasted. Treat assumptions as risks — the risks associated with benefits realization. And be sure that these assumptions are provided, and supported, by the business process owners.

You Need Portfolio Management if …

• You can't identify your IT expenses to provide the foundation for calculating return on investment (ROI)
• You  base your IT investment decisions on intuition instead of facts
• You can't tie your IT asset management system to your financial system
• You don't know how, or if, you will save money by consolidating legacy networks
• You can't find $100K for an initiative that will save you $6M

Project Funding Process and Control

Interesting times for me right now on the current client I am with. I am working for the finance division looking at the funding process for projects. However, the technology (CIO) group has suggested their own process for this and currently both organizations are fighting over who will have control over the project funding and selection process. I have been on both sides of the fence before and its interesting to see how political this is getting, rather than focusing on the underlying principle of what is the simplest process that will bring the best return on investment and benefits for the organization. I see this time and again at big organizations and I guess this is what creates more work for me!

Your thoughts on this?

Payback period

I needed to find some information on Payback period which is required for the business case my client is currently developing. Here is what I found from Wikipedia.

Payback period in business and economics refers to the period of time required for the return on an investment to "repay" the sum of the original investment. For example, a $1000 investment which returned $500 per year would have a two year payback period. It is intuitively the measure that describes how long something takes to "pay for itself"; shorter payback periods are obviously preferable to longer payback periods (all else being equal). Payback period is widely used due to its ease of use despite recognized limitations, described below.

The expression is also widely used in other types of investment areas, often with respect to energy efficiency technologies, maintenance, upgrades, or other changes. For example, a compact fluorescent light bulb may be described of having a payback period of a certain number of years or operating hours (assuming certain costs); here, the return to the investment consists of reduced operating costs.

Payback period as a tool of analysis is often used because it is easy to apply and easy to understand for most individuals, regardless of academic training or field of endeavor. When used carefully or to compare similar investments, it can be quite useful. As a stand-alone tool to compare an investment with "doing nothing", payback period has no explicit criteria for decision-making (except, perhaps, that the payback period should be less than infinity).

The payback period is considered a method of analysis with serious limitations and qualifications for its use, because it does not properly account for the time value of money, inflation, risk, financing or other important considerations. Alternative measures of "return" preferred by economists are internal rate of return and net present value. An implicit assumption in the use of payback period is that returns to the investment continue after the payback period. Payback period does not specify any required comparison to other investments or even to not making an investment.

Basic formulae
Payback period = Investment / Cash flow Used if cash flows are the same for the duration of a project
Payback period = (Last year with a negative cash flow) + (absolute value of net benefits / total cash flow next year)

The one issue I have with payback is that projects or programs that take a while to payback (but have big benefits) down the line, may be missed if payback is one of the key selection criteria. Ah well, trying to explain that to my client.

IT value

Here are some key points from a good article in CIO Magazine about demonstrating IT value to the business.

There are three components to the concept of value from a business perspective
1. Understanding exactly what IT delivers,
2. Believing that the cost is fair
3. Evaluating the contribution of those deliverables to the bottom line.

In many cases, clients' poor perception of IT value is as basic as not understanding the full bundle of products and services that IT delivers.Sure, everybody knows that IT delivers essential services like desktop computers, network services, applications engineering and applications hosting. But that sounds simple. Many clients don't understand why IT has to cost so much just for that. The problem is, many IT departments don't clearly define the specific products and services they deliver for a given level of funding. Typically, there's a lot more in that bundle than clients know. When the specifics are defined, clients come to understand why IT needs the budget that it does.

Does IT contribute to business value? To optimize its contribution to the bottom line, IT must install processes that ensure two things: that the enterprise is spending the right amount on IT, and that the IT budget is spent on the right things.

What can IT do? There are two things.

First, IT can ensure that clients are in control of what they buy and are accountable for spending the IT budget wisely. This means implementing a client-driven portfolio-management process. Note that portfolio management is far more than rank ordering projects on an unrealistically long wish list. Clients must understand how much is in their "checkbook" (a subset of the IT budget), and what IT's products and services cost, in order to know where to draw the line. That is, they must work within the finite checkbook created by the IT budget as well as understand the deliverables that they will (and won't) get. Thus, true portfolio management is predicated on the above steps of defining IT's catalog, costing it, and presenting a budget in terms of the cost of its deliverables. Once all that is done, an effective portfolio-management process can be implemented.

Second, even if clients know the costs of their purchases and are working within the limits of their checkbook, they'll make better purchase decisions if they understand the returns on technology investments. IT can help clients estimate ROI of their proposed purchases. The cost side of the ROI equation was handled by calculating a budget by deliverables and rates. The remaining challenge is to quantify the benefits. Cost-displacement benefits (which include both cost savings and cost avoidance) are easy to measure. The real challenge is measuring the so-called "intangible" strategic benefits

In summary, the question of IT value is fully addressed when:

- IT has defined its product and service catalog in detail, associated all its costs with its products and services, and calculated rates that can be compared with the market.
- Clients understand exactly what they're getting for the money spent on IT, and indeed can control it by deciding what they will and won't buy from IT.
- IT can help clients assess the value of their IT purchases by measuring the benefits.


The full article can be found at : http://cio.com/article/161150

CIO Blog

Discovered a good blog written by a real CIO. He had a few topics about governance, which are a good read and related to the topic of this blog.

http://geekdoctor.blogspot.com/2007/12/it-governance.html

Benefits Realization Case Study and Outcome Management

While doing some research on-line I recently read a presentation about the Benefits Realization experience of the Government of Canada. Here are some interesting concepts raised in the presentation that are applicable to any organization - public or private.

Benefit Realization Principles:
        1. Benefits realization is the pre-planning for, and ongoing management of benefits promised to be enabled by the successful implementation of change projects.
        2. Sound project management can only enable a business owner (program) to realize intended benefits
        3. Accountability for the realization of intended benefits must rest with the business function, not with the IT project  [This is very true and I would make it my first principle]

 Outcome Management is a set of methods, processes, tools and techniques for planning, selecting, managing and realizing results and benefits:
        1, An outcome (benefit) is the desired result of an initiative undertaken to meet a need or solve a problem (e.g. to reduce gun related crime by 25% within 5 years by implementing a national gun registry system)
        2. Outcomes are final results supported by intermediate outcomes (benefits milestones).
        3. Cost benefit analysis is a subset of Outcome Management
        4. Focuses on realizing benefits not just providing the deliverables. Facilitates on-going and ex post evaluation of "hard" and "soft" benefits

I think the whole presentation is worth reading and can be found at : http://www.tbs-sct.gc.ca/emf-cag/outcome-resultat/benefits-avantages/benefits-avantages_e.ppt

Key Requirements for a Portfolio Management System

Following on from my previous post, here are the best practice capabilities to look at for a portfolio management system:

1. Managing demand. Requests for projects are generated by multiple sources in an
organization. All projects, regardless of their size, represent work efforts in the organization
that have to be evaluated and, if appropriate, planned and executed. The
portfolio management system acts as the repository of all project requests and
allows for the standardization of requests for more objective evaluation of projects
based on uniform criteria.

2. Project topologies. Within an organization, requests will be generated for different
types of projects that vary in size, cost, and deliverables. The portfolio management
system permits grouping of projects into multiple portfolios for comparison on an
equivalent basis for similar project types.

3. Stakeholder involvement. The importance of portfolio management systems has
increased with the focus on corporate governance. Organization wide decisions with
significant impact now require greater oversight. Portfolio management systems
now have workflow capabilities out-of-the-box. All stakeholders from the project
requestor to the financial managers, project managers, and finally senior leadership
can be involved in the creation of a project request, its completion, and signoff by
different participants.

4. Strategic alignment. The ability to bridge strategic objectives to projects that will
support their achievement continues to be an important capability of portfolio
management systems. With the development of more sophisticated strategic planning
models, portfolio systems have maintained the ability to define the impact of
projects on the organizational strategy.

5. Prioritization and optimization. Together with strategic alignment, prioritization
continues to be one of the main objectives of using a portfolio management system.
Although Excel is a viable alternative for ranking projects, portfolio management
systems now have more sophisticated modeling capabilities for multiple prioritization
perspectives and optimization based on different types of constraints.

6. Budgeting and cost tracking. The planning of budgets at a summary level has
always been a project attribute taken into consideration in portfolio selection and
prioritization. A portfolio management system provides the capability to disaggregate
costs by cost types and cost centers. In addition, the tracking of project cost

7. Executive dashboards. Reporting of status at the portfolio and individual project
level is a requirement for the portfolio manager and the senior leadership involved
in the governance process. Because the portfolio management system acts as the
central repository of all portfolio information, executive dashboards with summary
performance metrics can be produced directly from the portfolio management
system.

8.Integration To enable both inputs and outputs from the portfolio system to other
line-of-business systems, integration becomes a key component for leveraging
project- and portfolio-level data. Status updates of selected projects in their respective
portfolios might come from disparate systems making the need for system interfaces
even greater. Therefore, an application programming interface becomes a
critical component of any portfolio system.

Any others you can think of?

Project vs Portfolio Management

One of the first things I am doing at my new client is to get involved in the selection of a Portfolio management tool/system. The first thing to do is to differentiate between Project Management (which the client does plenty of) vs Portfolio management. This will form a key factor in differentiating the two areas and explaining the difference to senior management.

Here is a good definition provided the Project Management Institute :  " Portfolio management is the centralized management of one or more portfolios in order to achieve specific strategic business objectives. As a process, portfolio management enables organizations to identify, categorize, evaluate, select, prioritize, authorize, terminate, and review various portfolio components to ensure their alignment with current and future business strategy and goals, which in turn helps organization optimize limited resources.

As it is frequently stated, portfolio management deals with "doing the right project(s)" while project management deals with "doing the project right."

The last line is the one that sums it all up. Here is a more detailed description of the difference between Project and Portfolio management systems:

Project management and portfolio management systems have gone through significant growth and evolution in the past 10 years as technology has allowed portfolio and project
systems to merge while exhibiting capabilities that address each discipline respectively.There are, however, key differences between project and portfolio management capabilities.
Although both summarize project-level attributes, a project management system tracks individual project performance against the original project plan. The emphasis is on single project controls and resource task assignments. Updates to the project plan are reflected in the project management system. The availability of resources for project work is known to all project managers through an enterprise resource pool. From a process perspective, a project management system will enable any standard project management methodology such as the initiate-plan-execute-control/monitor-close life cycle from the Project Management Institute.

The summary of all project work in the organization is available for review; however, planned projects in the project management system are assumed to have gone through a selection and prioritization process by the senior leadership team. As a result, the capabilities of a project management system generally do not include the assessment of project opportunities, strategic alignment, and scoring and ranking according to defined prioritization criteria.  

The portfolio management system enables the creation of project opportunities, each associated with one or many portfolios in the organization. The project request will follow phases and activities in which different stakeholders provide input on the project request. All requested projects are analyzed against each new and existing project, based on defined criteria to determine whether a project (or sets of projects in the case of a program) is worth executing. Selection, prioritization (or ranking), and optimization of projects and resources are critical components of the portfolio management process. The portfolio management system provides the analytical toolset to achieve this. Once projects are reviewed and approved (or rejected) by the senior leadership, the rest of the organization is then informed, and the assigned project manager continues with the project life cycle. During the project life cycle, the portfolio level data will be synchronized with project information to ensure the accuracy of project- and portfolio-level information.

Now to find the right tools. We will be issuing a RFP to a number of vendors. While I cannot let you know which one we select (due to client confidentiality), I will let you know the vendors we looked at and what were the key selection criteria used.

Happy Newyear

Back from holidays so sorry for falling behind on my posts. Topics I want to look at early this year:

- Portfolio planning vs Portfolio governance
- Benefits metrics that are meaningful
- Business cases for Agile development projects

Let me know if you have any ideas on the above.

Sponsored Link:

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