Portfolio Scorecard Methodology
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Transcript of Portfolio Scorecard Methodology
Steve Lewin10 September 2009
Analyze Benefits Analyze Barriers Determine Time Criticality Assign Weighting Score Initiatives Prioritize Initiatives Assess Individual Initiative vs. Hurdle Reassess initiative performance
High Low
High Major Initiatives “Low-HangingFruit”
Low Non-justifiable Secondary Initiatives
Barriers(CSF’s, Costs, External Risks)
Ben
efit
s(Q
uan
tifi
able
, S
ub
ject
ive,
In
tan
gib
le)
High Low
High Major Initiatives “Low-HangingFruit”
Low Non-justifiable Secondary Initiatives
Barriers
Ben
efit
s
Rewards & Risks can change over time (note initiative A to A’).
Time
AA’
Quantifiable Incremental Revenue / Market Share ROI Profit Improvement Productivity Improvement Cost reductions Cost avoidance
Tangible / Non-Quantifiable Regulatory compliance Quality improvement Customer Satisfaction increase Service Level Improvement Cycle Time improvement
Intangible Environmental impact Public relations (external image) Employee satisfaction
Critical Success Factors Data Collection Technological Feasibility System Implementation Organizational Support Management Commitment
Cost or Difficulty of Implementation External Risk Factors
Competitor actions Economic conditions Obsolescence
Sensitivity to: Market Share implications Risk as a factor of timing Calendar implications Competitor initiatives Workload result on delivery Coincidental product and service
introductions Econometric variables
Use Relative Index (0-1) Utility application by consensus
Select “key” measures for initiatives Develop Analytical Hierarchy of Performance
Measures Adapt for Management priority Identify Mission-critical vs. “Nice-to-have”
Benefits Determine $’s and $ equivalents (for non-
quantifiable) Apply weight for relative importance Develop cumulative benefit index (1-100)
Barriers Determine cost or cost equivalence Weight by criticality Factor by risk Develop cumulative barrier index
Aggregate Index Build Matrix (Benefits to Barriers by initiative) Normalize Develop relative score
Synergy Incremental additive effort to perform one
analysis in conjuction with another (0 to 1) Default = 1 If synergy exists, subsequent effort for
secondary initiative reduced
Adapt factor weightings Group by time frame Prioritize by aggregate index Schedule based on available budget Reassess on quarterly basis
Methodology Quantify benefits in $’s by year
Expected / High / Low Estimate implementation and operating costs in
$’s by year Expected / High / Low
Determine ROI Range Compare to hurdle rate Assess Risk Determine Risk / Reward Value Recommend further study or table initiative
Post-Implementation review at quarterly intervals
Compare projected volume to actual Determine reasons for variance If applicable, revise forecast Update measures and weights based on
confidence levels