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Capability Based Planning for

Enterprise Services

Capability based planning fits naturally with Strategy Based Planning and Business Process Improvement

Prepared by

Niwot Ridge, LLC

May 2005

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Risk management is the delivery of a positive

outcome in the presence of uncertainty

Political disorders can be quickly healed if they are seen well in advance; when, for lack of a diagnosis, they are allowed to grow in such a way that everyone can recognize them, remedies are too late.

Niccolo Machiavelli,

Il Principe, 1513

3/35

“End to end” delivery of Enterprise Services rests on

the keystone of Project Portfolio Management,

balanced by a Scorecard and a Capabilities Plan

Business Mission and Vision

drives capabilities need

Balanced Scorecard defines

the testable strategies for

delivering business value

Capabilities Based Planning

defines business outcomes

Event based tasks are the

basis of increasing

capabilities maturity

Project

Portfolio

Management

“Done” “Demand”

4/35

The supporting elements must be in place to enable

Capabilities Based Planning to succeed. This

presentation focuses Capabilities Based Planning

Project Portfolio Management defines the “trade space” for decisions that impact value

Capabilities Based Planning defines business outcomes resulting from these decisions

Event based tasks are the delivery mechanisms for increasing maturity of the capabilities

Project

Portfolio

Management

“Done” “Demand”

5/35

Capabilities Base Planning transforms enterprise

services from the delivery of features and functions to

the delivery processes that support strategy

Capabilities Based Planning is planning, under uncertainty, to provide capabilities suitable for a wide range of business challenges and circumstances, while working within an economic framework

Capabilities Based Planning emphasizes flexibility, adaptiveness and robust capabilities, implying a modular building-block approach to Enterprise Services

When transformation takes place it is because new modules have come into use

6/35

Capabilities Based Planning is understood at the

execution level, but needs to be raised to the level of

enterprise process analysis

1. Identify a needed capability in operational requirements terms;

2. using the set of capability options to;

3. assess the effectiveness in a operations paradigm, and;

4. make choices about requirements and ways to achieve the capability using an integrated portfolio framework;

5. to produce of output set of options based on these operational paradigms.

7/35

For a requirement (1) consider the options (2), apply

mission system analysis (3) to circumstances (4) to

generate assessment of options (5)

1

Business

Mission and

Vision

2

Optional

Capabilities

3

Analysis of

Capabilities

5

Assessment

of Options

4

Scenarios

8/35

Many enterprise projects focus on the delivery of

improved features and functions; ignoring the delivery

of the capabilities needed to implement strategy

Standish Chaos Report Failure Modes Capabilities Based Planning

Absence of a clear vision and statement

of the requirements expectations

Maturity assessment program events

provide visibility of progress independent

of effort or time

Estimating difficulties and organizational

politics result in unrealistic expectations

Capability assessment points define

“done” using agreed on measures of

progress

Poor project decomposition Master Plan and Master Schedule

vertically and horizontally integrated

Inadequate staffing Resource loaded schedules

Lack of stakeholder involvement Capabilities defined by business needs

Lack of strategic focus Capabilities connected to Balanced

Scorecard

9/35

Putting Capabilities Based Planning to work requires

a change in our approach to planning – a business

process improvement maturity focus

Emphasis on operations rather than features

and functions

Operational capabilities are the building blocks of

change

Emphasis on evaluating capabilities under

conditions of uncertainty

Deploying robust building blocks

Analysis illuminates the feasibility of alternatives

10/35

Capabilities Based Planning starts with business

scenarios, the tasks needed to implement the

scenarios, and testable capability outcomes

Scenarios

The business units

operational needs in

scenario terms

Merge a General Ledger

from a 3rd party database

through a data

conversation process

Work Tasks

The individual work

processes needed to fulfill

the scenarios

1. Define the data to be

acquired from the new

firm

2. Verify data

conversation can take

place

3. Verify that business

operations can

continue

Capabilities

The planned capability of

the Business Units at each

level of maturity

“Acquire a $100M business

unit in 90 days or less”

“Process 100% AP invoices

from tier 1 vendors saving

$9M annually”

Business Process

Improvement Strategy Management Project Management

11/35

Balanced Scorecard is augmented through a

capabilities based planning process by mapping

strategies to assessment maturity events

Balanced Scorecard is a framework with

intrinsic stakeholder focus – placing emphasis

on internal alignment and elimination of projects

with little or no strategic value

Balanced Scorecard does not adequately

reflect a project management focus, instead on

objectives and their process indicators

12/35

Defining the desired maturity of a business processes

is the starting point for integrating Balanced Scorecard

with the Enterprise Services deployment processes

The Integrated Master Plan (IMP) for Enterprise

Services starts with the identification of

increasing maturity of capabilities

The successful delivery of supporting features

and functions can be measured by the

completion of the Significant Accomplishments

and their Criteria

13/35

The focus of Capabilities Based Planning is on

assessing the increasing maturity of functionality

defined by the Balanced Scorecard strategy

Planning under uncertainty, provides capabilities suitable for a wide range of challenges and circumstances while working within an economic framework that necessitates choice

Focus on “possibilities” rather than features “What features do we need to achieve the desired

capabilities?”

“How much of each capability to we need at this point in time?”

“How robust, flexible, and capable should we be at a point time to provide the needed capability?”

14/35

Capabilities Based Planning takes a near term and

long term view of the emerging functional maturity

needed to implement the Enterprise Services strategy

Near term effective use of processes, tools,

features and functions

Future use of sound infrastructure and system

capabilities

Joint solutions to problem by identifying vertical

connections between business processes

Risk tradeoff assessment of vertical solutions within

and across business processes

Build capability to respond to a wide variety of

possible demands

15/35

The difference between capability and function is the

difference between the delivery of a solution and the

creation of the foundation for change

Focus on outcomes is important

Focus on the underlying tasks that produce

outcomes is all important

Defining the needed maturity and assessing its

presence provides feedback to the business

strategy in ways KPI’s can’t

16/35

Six trusted friends of a project based organization are

the basis of capabilities based planning and balanced

scorecard

Why are we doing this? Balanced Scorecard

What is it we’re doing? Program Events

How is this going to be accomplished? Significant Accomplishments

When will we know it is done? Accomplishment Criteria

When will we be done? Tasks

Who going to do the work at what cost? Resources

Where will the work take place? Teams

17/35

Start the hierarchy of Enterprise Services processes

with strategy and end with plans; traceable to this

strategy through portfolios of projects

Strategies define the desired outcome

Capabilities enable the strategy

Portfolios manage capabilities

Plans manage the delivery effort

18/35

The measure of Enterprise Services Business Effect’s

is made visible at each maturity assessment point.

“Is this want done looks like?” must be the question

Derive business effects from capabilities

Link capabilities to effects

Explicitly identify cross links and

interdependencies between capabilities

Highlight “enabler” capabilities

Sub-

Capability

Capability

Business

Effect

Business

Effect

Capability Capability

Sub-

Capability

Sub-

Capability

Sub-

Capability

Sub-

Capability

Functional decomposition of capabilities

Capabilities must be Collectively Exhaustive

and Mutually Exclusive

Provide a “menu” from which operations can

choose required capabilities

Capability 1 Capability 2

Sub-

Capability

Sub-

Capability

Sub-

Capability

Sub-Sub-

Capability

Sub-Sub-

Capability

Sub-Sub-

Capability Sub-Sub-

Capability

Sub-Sub-

Capability

Sub-Sub-

Capability

19/35

Evidence that the strategy is being fulfilled is tested in

the “units of measure” of the capabilities of a project

whose maturity is assessed at periodic events

Program Maturity

Assessment

Events

What are the maturity assessment points

along the way to completion?

Significant

Accomplishments

What accomplishments must take place in

order for this maturity to have occurred?

Accomplishment

Criteria

What is the evidence that the

accomplishments occurred?

Tasks What effort must take place for the

accomplishments to have be completed?

20/35

Capabilities Based Planning separates effort from

results, measuring an assessment event’s effect on

the organization, rather than the passage of time

The passage of time does not mean progress;

delivery of capabilities does

Measuring increasing maturity of capability

makes visible the systems value in terms the

business units can directly assess

21/35

The process drivers for Capabilities Based Planning

starts with functionality and ends with deliverable

effects on the business process

Functional or feature planning does not deliver

the real value to the business units

Features are not connected to strategy

Balanced Scorecard connections are capabilities not

features

Testing strategy involves a capabilities impact not the

presence of a feature

Features are not connected to business value

Business strategy is tested through scenarios and

capabilities

Delivered value results from the use of a capability in a

scenario

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Capabilities Based Planning augments features with

business value, traceable to strategy through a

portfolio of projects and their Program Events

Plan the delivery of capabilities rather than the

delivery of features and functions

Features and functions are the raw materials of

Capabilities

Capabilities enable the delivery of the strategy

23/35

Program Events are evaluation points in the project

for assessing the maturity of the capability and its

effect on the business

Program Events are Celebratory Opportunities

along the path to maturity

Significant accomplishments enable a new capability

that supports a strategy

The maturity of the derived effects are assured

through the assessment of the Significant

Accomplishment

24/35

Significant Accomplishments describe the delivery of

capability needed to fulfill a business strategy using

work processes of the system

A Capability is the deployment or delivery of a

feature or function in support of a business

process, product or service initiative

Significant Accomplishments deliver this

capability

Stating the needed maturity connects the

capability with strategy

25/35

Accomplishment Criteria are the “exit criteria” for the

Significant Accomplishments, assuring the intent of

the Accomplishment is met

Exit criteria are the evidence that the significant

accomplishment has been achieved

The gathering and assessment of the Balance

Scorecard KPI in support of a Significant

Accomplishment

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Tasks are the raw material to implement the

functionality needed for the business process to

deliver on the capabilities

The effort expended to deliver the

Accomplishment Criteria in support of the

Significant Accomplishment

Short duration activities (20 to 40 working days)

with clearly defined deliverables

0% or 100% credit for the deliverables

No partial completion of tasks

Predefined technical outcomes

27/35

Management consists of Capabilities Assessments

(Events), the Significant Accomplishments (SA) and

the Accomplishment Criteria (AC)

Business Strategy

IMP Process Step

WBS Element or

Subsystem

Events

Tasks

Accomplishments

Criteria

Significant

Accomplishments

(SA)

Accomplishment

Criteria (AC)

Subsystem

State of the

Project

State of the

Capability

State of the

Process

Demonstrates

Maturity

Identifies

End Item

How

Defines

Customer/Program

Direction

Program/Team

Direction

Team Direction

Performance

Team Status

Team Status

Something

Completed

Effort

Expended Deliverables

28/35

A set of concise capability specific phrases provide a

“stand alone” description of “done” independent of the

existence of individual features

Perform

Work

Maturity

Adjective

Action

Verb

Close Preliminary

Capability

Noun

General Ledger

Demonstrates

Maturity End Item

“A01B02a: Preliminary Month End Close of the General Ledger Successful”

Step in the Process

State

Verb

Successful

Closure

State

29/35

Starting with a “mini-Kaizen,” the maturity Assessment

Points (Events) are gathered along with the Significant

Accomplishments and Accomplishment Criteria

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A mini-Kaizen transfers “Sticky’s” to a Mind Map, then

to a Master Schedule then, to a Hanging PERT –

producing a “Wall of Truth” for Enterprise Services

Working session Sticky’s

A Mind Map™ of the Sticky’s

MS Project™ export of

the Mind Map

PERT Chart Expert™ on the Wall of Truth

31/35

The three levels of the Integrated Master Plan define

the granularity of the deliverables, report progress to

plan and project the future cost and effort of tasks

Monthly statusing:

– Validate schedule status (start/complete/slip)

– Validate work package % complete

– Claims earned value

– Identify/process cost ETCs

Weekly statusing:

– Roll up of lower level schedule status

– Roll up of lower level % complete

or

– Milestone start/complete

– Milestone slip (early/late, start/complete)

– % complete of tasks

Weekly statusing:

– Milestone start/complete

– Milestone slip (early/late,

start/complete)

– % complete of tasks

Near term RW period

Future RW periods

Funding Profile

Schedule tasks

(at Work Package

level)

20 to 40

Workday tasks

Or even

weekly tasks

Schedule tasks

(one/two levels

below WP level)

IMP WBS

Levels

1, 2, 3

WBS

Levels

4, 5

WBS’s

Below

Work

Package

Planning Package

32/35

A simple example of vertical and horizontal linking of

the capability — provisioning a new employee

illustrates the assessment of maturity

Human Resources

New Employee Ready to Work

Insurance

Orientation

Laptop Account Setup

Charge account setup

Information Technology

Finance

Buying authority available

Supply Chain Management

Capability: Provide Buying Authority within 10 working days of hire

33/35

Maturity assessments allow progress to be measured

in how terms of “capability” effects the business; not

just the consumption of time and resources

Define the desired maturity points along the

path to completion

Measure the accomplishments

Assess the effect on business improvement

Engage all participants in a conversation about

capability

34/35

The deployment of Capabilities Based Planning is the

basis of managing the deployment of Enterprise

Services

What does done look like in terms of

operational capabilities?

How can we measure the increasing maturity of

Enterprise Services in terms of “done,” rather

than the passage of time?

How can the user community define their

operational needs in terms of capabilities rather

than features and functions?

35/35

References

Miller, Roger and Donald R. Lessard, The Strategic Management of Large-Scale Engineering Projects: Shaping Institutions, Risk, and Governance, MIT Press, 2001.

Guide to Capabilities Based Planning, The Technical Cooperation Program, Joint Systems and Analysis Group, Technical Panel 3.

Allen, Tom, Analysis to Support Capabilities-Based Planning, Capabilities-Based Planning Workshop, October 19-21, 2004.

Davis, Paul K., Analytical Architecture for Capabilities-Based Planning, Mission-System Analysis, and Transformation, RAND Corporation, MR1513

Davis, Paul K., “Exploratory Analysis Enabled by Multiresolution, Multiperspective Modeling,” Proceedings of the 2000 Winter Simulation Conference.

Machiavelli, Niccolo, The Prince and The Discourses, Introduction by Max Lerner, Modern Library,1950