February 21, 2005
(Computerworld)
In the two years since AAA of Northern California, Utah and Nevada began implementing the enterprise portfolio management (EPM) method, one of the most important discoveries we have made is the importance of managing the impact of change on the workforce.
AAA, a multibillion-dollar provider of travel, insurance and financial services, began the move to EPM with the realization that our ability to deliver our internal programs was as critical to our long-term success as the performance of the products and services we offer to our customers (see story). We came to see that the program needed to be embraced by the organization and the workforce it was originally designed to help. We came to see that an organization's ability to absorb change -- whether to its structure, technology, systems, facilities or culture -- is often the largest single factor in determining whether a program is a success. And this view is supported by a range of industry reports that identify human issues as one the largest sources of risk to large-scale program deployment and major change initiatives.
Even when the goals are clearly seen as beneficial to the company and workforce, such as an improvement to efficiency or revenue-enhancing opportunities, the change brings a level of risk, discomfort and uncertainty. If there are too many change events at once, the effectiveness of the group the program was designed to help improve will be disrupted. And without a structured, high-level approach to managing change and how it affects various organizational units, the success of a company's internal initiatives is left to chance. The structure provided by the EPM method means program managers don't have to compete with one another for organizational deployment capacity. And high-level business leadership is capable of overseeing program execution in the context of the overall benefit of the organization, which is important since most internal change initiatives involve a wide range of business interests within an organization, often including finance, IT and human resources, as well as cross-divisional and specific business unit requirements.
Air-Traffic Control
Managing the impact of change proactively is one of the pillars of the EPM method we developed and deployed at AAA. We started off by asking ourselves whether the various organizational units throughout the company could absorb all of the changes we were planning for them, and we set about creating the processes and tools to make the organization more efficient at managing this critical process.
We knew that unbalanced program rollouts carry with them a significant friction cost through angst, frustration and negative performance results. What we often heard from division managers was that they felt as though program and project managers were competing with one another for access to our staff so that they could roll out their projects on schedule. What typically happened was that there would be periods of calm, followed by a blizzard of projects that would hit their teams all at once with system changes, process changes and technology changes. There was no one in charge of how these programs were collectively scheduled or deciding whether it made sense to combine multiple project rollouts or spread things out.
In response to such perceptions, we created an "air-traffic control" system that takes into account projects and programs across the enterprise, along with the resources they require, their interdependencies and their rollout schedules. We built a portfolio master schedule for all internal activities, and using best-practice program life-cycle management techniques, we are now able to see how our programs are performing relative to key milestones and when they will be ready for rollout across the organization.
At the same time, we created models designed to capture and predict our organization's ability to accommodate change. Using quantitative change analysis algorithms and graphical reporting tools, we now can visualize potential problem areas. By comparing groups that are highlighted as being at risk of change overload with the master schedule, we have the ability to accurately predict both where problems might occur and how serious those problems might be. Today, we use these tools to provide program and project managers, business sponsors and divisional managers a snapshot of the organization's ability to accommodate planned change and of the effect of a program rollout on organizational structure, personnel skills, culture, processes, technology and facilities.
Managing for Results
Using this information, we are in a position to work with program managers and executive sponsors, allowing us to take control over program rollout and cultural acceptance. Knowing our risk factors allows us to take action in a number of different areas.
Working with all the stakeholders and using the master schedule and change-capacity report, we build the most effective rollout schedule for the enterprise. Taking into account overarching business priorities and organizational change capacity, we are able to schedule program rollouts to minimize negative effects. More importantly, we are able to make planning decisions to combine related change events and, when necessary, spread out unrelated and potentially disruptive events.
Today, the EPM office has a system in place for quantifying the organizational impact of new projects and when they are scheduled for rollout, and we use this information to work with the program managers to prepare their teams for the rollout and to build the best possible schedule for minimizing the negative impact of change.
Our range of responses isn't limited to reworking scheduling. By building deployment capacity planning into the initial program plans and into the enterprise portfolio from the ground up, we have the ability to effectively enhance the organization's deployment capacity. Using training and education, we are often able to address potential change-capacity problems that could limit our ability to roll out programs and deliver business benefit. With the advance notice that capacity impact analysis provides, we are now able to plan and deliver training programs early enough in the program delivery life cycle for them to be successful. And because we have an enterprise view of all programs, including the business benefit associated with each, we have the information we need to make the decisions and the incremental investments necessary to see the big-ticket items and high-priority programs through to completion and acceptance.
The overall process is driven by the EPM office, which supports each division through the change impact process by providing tools, templates, best-practice processes, training and mentoring at the divisional, program and project management level. The EPM office is also responsible for creating the enterprisewide operational capacity analysis process and overseeing the decision-making process on scheduling and risk management.
Delivering Results
When we started the process of re-engineering the AAA program-delivery process two years ago, the company was using traditional program management techniques and experiencing average delivery success. Additionally, there were no formal methods for assessing the actual business benefit for completed programs or calculating return on internal investment. Today, after a rigorous and disciplined deployment of the EPM method, including change impact analysis and planning on an enterprisewide scale, we have been able to meet goals and reach performance levels that few companies ever achieve. Over a two-year period covering over 150 enterprise projects and a significant corporate investment, AAA succeeded with a remarkable 80%-plus of its projects against six criteria, including schedule, budget, scope and quality (at one point, each percentage point was proxied to almost $2 million). And we are now realizing more than 80% of the promised business benefits from our investments.
The EPM method is a rich and sophisticated approach to managing internal investments and maximizing business benefit. Without pragmatic application, pursuing the EPM path can be dalue-detracting as the effort gets mired in over-engineering and tremendous amounts of data with limited information or decision-making. At AAA, we were very congnizant of this fact and focused on achieving superior results. In order to do this, we did develop some of our own tools and in many places created assets and processes that significantly extended the practical application of EPM. Change impact analysis is one of the disciplines within the EPM method that is continuing to evolve and improve. Our experience shows that organizations willing to commit time, energy and discipline to the EPM method will be well rewarded.
San Retna is chief portfolio officer at AAA of Northern California, Nevada and Utah , the second-largest AAA affiliate in the U.S. He is responsible for ensuring delivery excellence for a portfolio of 100-plus programs and projects. Mark Stabler is the delivery excellence lead for AAA's Enterprise Portfolio Management Office.