Selection and Priorisation of project themes for wave 6Six Sigma Roll-Out T-SystemsHotel Allgu Stern, Sonthofen31.07./01.08.2008

ContentBackground Proposed process for project theme collection Proposed logic for priorisation and selection of project themes

Project selection is key for leveraging potential of Six Sigma to ensure program successIn the 4 waves already realized, mixed experiences have been made regarding project selectionAlthough good themes have been identified, the following issues have been identifiedPerceived isolated/punctual project approaches without view for the big pictureProjects not always aligned with corporate strategy and goalsTime delays in project deployment due to buy-in difficulties of management and partially not well defined project themesIn part lack of information exchange of projects working in the same process areasThe aim now is to develop the project selection further to improve on the mentioned deficiencies and to assure alignment of the project portfolio with the strategic targetsTo achieve this, the following elements will be detailed:Project selection process description with responsibility definitionOperational approach to create project themes inputsLogic to prioritise and select project themes in a standardized way

ContentBackground Proposed process for project theme collection Proposed logic for priorisation and selection of project themes

The suggested TSI-specific project selection process should help to improve the quality of the portfolio* Refers always to the wave start, which would be week 0Project input generationProject prioritization & selectionBusiness line perspective (quality focus)Process perspectiveBB-/ GB-idea capturingMBBMgmt. pain-points brainstorm.Mgmt. MembersQuality KPI analysisClient feedback analysisProcess Mgr.Consolida- tion in project data- base (incl. alignment to proces- ses of pro-cess model and input of key project data accor- ding to de- fined priori- sation cri- teria)Prog. Mgmt, Process M.Pre-Selec- tion Work- shops (in MC-1 sessions with partici- pation of processManager). Result: Prio- ritized project list as input for MC/BQC approvalProg. Mgmt Project approval workshops (BQCs or MCs). Im- portant: the area resp.should pre-sent theirprojectsuggestions.Result:Finally priori-tized projectlist accord. to agr. logicProg. Mgmt.SU Mgmt.EC approval of projectsProg. Mgmt.Furtherproject defi-nition (if ne-cessary) & communi- cation to the Black BeltsMBB23Week -16 to -10*Week -9 to -5*Week -4 to -2*Business line perspective (efficiency focus)P&L/Balanc. scorec. analysisMgmt. pain-points inputProg. Mgmt.14Corporate perspectiveCorp. Quality and NGTS themesProg. Mgmt.1

Process comments/explanation2134

AreaCommentInputs are generated from a business line as well as process model and NGTS perspective This should ensure that we get a comprehensive/full view on the project needsTo structure the project suggestions, the process model should serve as a framework. This allows to build project clusters for the project prioritization. In addition to this, key data regarding benefits of the project should be documented to serve as base for prioritizationAt the same time already at this stage possible interfaces should be identifiedExperience has shown, that a lack of ownership of the project themes (i.e. a Champion is surprised by a project assigned to him) leads to difficulties in by-in/changes of project scopeIt is very important to avoid this by having a pre-selection of project themes in which the MC-1 is directly involved. The idea would be to carry out those pre-selection workshops in the regular meetings of the MC-1. To do so, it is important to identify per SUThe existing relevant MC-1 groupsThe stakeholders within each MC-1 group to ensure their Six Sigma AwarenessIt is also important, that in these sessions the responsible process managers participate to defend suggestions coming from the process perspective. This consolidation at an early stage should help to close a possible gap between process and business viewObjective is, that the new Black Belts know about their projects 2 weeks in advance, so that they can already set up (contact with Champion and Business Owner & setup Kick-off meeting etc.)

Also, in the running of projects a close interaction between Black Belts and Process Managers should be maintainedProject realizationDEFINE MilestoneParticipation Process managerMEASURE MilestoneANALYSE MilestoneParticipation Process managerIMPROVE MilestoneCONTROL MilestoneParticipation Process managerTransparen- cy regarding project sco- pe. Possib. to influence focusTransparen- cy regarding findings & direction for improve- mentsDefinition of implemen- tation mea- sures & responsibili- ty for imple- mentationParticipation Process manager

ContentBackground Proposed process for project theme collection Proposed logic for priorisation and selection of project themes

Project priorization becomes key once that possible project topics have been captured through the different channels & consolidatedIdea would be to use a standardized approach regarding prioritization criteria in pre-selection and final approval workshops. To do this, the input for those meetings has already to be delivered in the agreed prioritization format

Priorisation for wave 6 Six Sigma project themes will use two dimensions financial benefit and quality impactPrioritisation will be performed within building blocks (due to approval by business line described before)Besides projects with financial and quality impact, also analysis/measurement system projects are possible. In addition to this, general qualifying elements for Six Sigma projects have to be checked (see next page)Overall sanity-check will be performed after priorisation of building blocks to have a complete picture (see later comments regarding project portfolio)Projects without quantification will not be acceptedFinancial Impact ()efficiency increaserevenue growthQuality Impact (KPI improvement)Quantitative increase of one or more of the TOP-KPIsSpecial Bonus for projects two or more building blocksPrio 3Prio 2Prio 1LowMediumHighLowMediumHigh

Additional qualification criteria for Six Sigma projects In addition to the already mentioned basic evaluation criteria there do exist additional pre-conditions to qualify for Six Sigma projects which should be checked (in order of importance must-criteria are shown in bold)No preconceived solution existsA process with defined inputs and outputs (e.g. Incident Management process) exists & is run frequently (no yearly events or similar)The project can be implemented within approximately 6 monthsSix-Sigma Roadmap can be appliedTo understand variationsTo control variationsAnd therefore, to eliminate defectsThe process generates defects (customer complains, re-work)/shows variations in performance (fulfillment of Service Level Agreements)As guideline: attractive Six Sigma projects should havea cost improvement effect of > 200 k ORa revenue increase effect of > 1.000 k ORa reduction of capital employed of > 400 k ORa significant impact on client or employee satisfaction

Overall project portfolio should show a balanced structure of company, building block an MC-focused topics

Structure/main elements of the consolidation/prioritization matrixProject key data contains all basic information of the project theme to position it into context (i.e. process allocation, driving building block etc.). Project quality improvement contains all criteria/fields to evaluate the qualitative improvement targeted with the project Project financial evaluation contains all criteria/fields to evaluate the financial contribution/benefit of the project

Description of project key data fieldsBasic information for the project positioning. Apart from the project topic and description of the burning platform/the project objective, this also includes the process allocation starting with the overarching C2C and than going into more detailTo be able to allocate responsibility as well as the organizational reach, the driving (1) and the affected (can be multiple) units are given hereProject idea status can serve to capture the level of maturity. Everything going into the EC obviously would have an approved, but during the idea development this could have following stages: * Project idea * Rejected * ApprovedChampion and Business Owner should be fixed as soon as possible/ during Pre-Selection to ensure a smooth project start (at least for approved projects)

Description of financial evaluation data fieldsYearly estimated project costs as far as they can be predicted at project start. Typically this includes the personal costs (Black Belt & Green Belt), material and travel cost. In later project stages estimated costs for coming years can be enteredEstimation regarding financial impact. Column Type describes the category of financial benefit. We differentiate efficiency increase/cost reduction Revenue increaseWorking capital reduction (in this case only the interest rate effect is considered as benefit)Target maturity grade captures the initially intended maturity grade for this project (see financial guidelines)Overall project evaluation during selection phase is done on the base of the annualized estimated benefit without considering costs). This information is entered in the column year 0. In later stages of the project, the estimated evaluation of project costs and benefits can be entered to do a NPV-estimation. Comments field gives the possibility to additionally capture comments/explanations regarding the indicated financial benefits

Description of qualitative evaluation data fieldsThe level of improvement is given by the column KPI-improvement by (x%). To make it comparable from project to project, improvement should be given in %. If decision is taken to make the matrix prioritization based on a High/Medium/Low-categorization, this value would be translated in one of those improvement levels.Affected Top-KPI gives the possibility to enter/select one of the 12 Top-KPIs as well as sub-area the project is contributing toIf project result cannot be linked to one of the Top-KPIs, but still the project is important from the Building Block perspective (due to special requirements i.e. CMMI ratings etc.) the mainly affected KPI can be given here

Description of Six Sigma Projects SteckbriefComment: This is a reduced first page of the project workbook which is commonly used to describe/present briefly the projects in project selection workshops outside of EC (BQC/MC etc.)

Description of Six Sigma projects short EC format

Benefits of this approachContinuous improvement in project selection

Provide a structure that will allow better alignment with the corporate strategy

Improved clustering of projects to address the big picture

Increase results focus (financial and/or quality impact)

Back-up

12 TOP-KPIs

12 TOP-KPIs (contin.)