# Presentation: 027752

## Information Policy and Technology Staff
OMB, Office of Information
 and Regulatory Affairs (OIRA)
April 2002

**OMB, Office of Information**
** ****and Regulatory Affairs (OIRA)**
**April 2002**

***Building Better Business Cases***
***(OMB Circular A-11 Training)***

**April 2002**

## Why do we need better business cases?
Why are business cases important?
A “Green” on Expanding E-Gov
The Federal Government’s IT Portfolio
Roadmap for Better Business Cases
Winning Strategies

- Why are business cases important?
- A “Green” on Expanding E-Gov
- The Federal Government’s IT Portfolio
- Roadmap for Better Business Cases
- Winning Strategies

## The FY03 Budget Review Revealed:

- Automation of outdated processes
- Duplicative IT investments
- Many IT investments do not significantly improve mission performance
- Many did not demonstrate linkage of IT to business of the agency

## The FY03 Budget Review Revealed:

- Major Gaps in agency and government-wide computer related security
- Agency does not meet the threshold for reporting defined by A-11
- Little to no visibility into e-business and e-gov type efforts

## Why are Business Cases Important?

**Clinger Cohen Act (CCA)**
- 	Agency submissions
- OMB Action
- Budget Process
- Analyzing, tracking, and evaluating
**Federal Acquisition Streamlining Act**
- FASA Title V - Budget Actions

## Clinger-Cohen Act: IT investments are to be defined, selected, and managed on the basis of a well-founded Business Case

- Agency Guidance

**Define Technical **
** ****Alternatives**
- -- Status Quo
- -- Process/Organization
-     projects
- -- Security projects
- -- Technical/System/IT
- -- Outsourcing

**Benefit/Cost Assessment**
- -- $ Benefits and Costs
- -- Business Benefits
- -- CFO/Budget Spreadsheet
- -- Risks

- Business Line & IS Inputs

- Modernization Blueprint (EA)

- Strategic Plan

**Define Acquisition & Program Management Plans**

***Refine Selected Alternative***

- CCA and FASA

- OMB A-11 and A-130

**IT Investment Guidance**

**Define Strategic Business**** ****Needs/Value Capture**
**-- Derived from Strategic Plan**
**    ****Performance metrics and/or**
**    ****Cost Savings**
**-- Enterprise Architecture**
**Define Customer Needs**
**Define Critical Success  **
**    ****Factors**
**Gap analysis (process, **
**   ****organization, IT Capability)**

**Clinger-Cohen Act: IT investments are to be defined, selected, and managed on the basis of a well-founded Business Case**

**SEC. 5122. CAPITAL PLANNING AND INVESTMENT CONTROL. **
**implement in the agency a process for maximizing the value and assessing and managing the risks of the information technology acquisitions**

**Risk ID, Assessment, & Define Management Plan**

**Business Case**
**(OMB A-11**
**300)**

## A “Green” on Expanding E-Gov

- An integrated and comprehensive capital planning and investment control process
- Participation in the E-Gov initiatives
- An integrated and comprehensive Enterprise Architecture that provides a clear roadmap for how an agency will modernize and transform the agency

## A “Green” on Expanding E-Gov

- Business Cases compliant with A-11 and A-130 for all major projects within the IT investment portfolio that provides all control data points for:
- costs, schedule, risk management, security, project plan, tie to business and strategic issues, and performance goals and measures, use of Earned Value Management System,  project management and systems life cycle methodologies

## A “Green” on Expanding E-Gov

- Using e-business technologies and strategies with business process reengineering to modernize the business of the agency.

## The Federal Government’s IT Portfolio

- Federal Total for 2003 = $52.1 bn
- Over 1000 major projects at $18 bn
- About 460 projects at $7 bn made the business cases
- The remainder are on an “At Risk List” still trying to make the business case
- $34 bn as significant and small (no visibility for the PMA - Expanding E-Gov)

## Building Better Business Cases, and improving IT management and reporting via Section 53 and 300

## Exhibit 53 Enhancements for FY04 Reporting

- Changes to the Exhibit 53 for FY04
- Appropriation and funding sources added back
- Changes to definition for IT and what is and is not “IT” (wireless, service contracts, etc)
- Additional security requirements for inclusion in life-cycle costs formulation

## Exhibit 53 Enhancements for FY04 Reporting

- E-Gov information added to the definition for major projects in both Section 53 and 300.
- Explicit instructions for attendant documents
- Documented CPIC
- Enterprise Architecture
- IRM Plan

## Roadmap for Better Business Cases (Exhibit 300)

- Screening questions
- Dates
- Life-cycle stages sub-divided
- Additional Cyber-Security and Homeland Security information
- Performance Plan information
- Project Matrix information

## Roadmap for Better Business Cases

- I.A Summary of  Spending by Project Stages
- I.B Justification (All Assets)
- Project Description
- Mission and strategic mapping
- Alternative Source information
- Customer(s)
- Stakeholder(s)
- Multi-agency information

## Roadmap for Better Business Cases

- Reducing costs and improving efficiencies
- I.C. Performance Goals and Measures
- Strategic Goals
- Existing Baseline
- Planned performance improvements
- Actual performance
- Planned perfromance metric
- Actual performance metric results

## Roadmap for Better Business Cases

- I.D. Program Management
- I.E. Alternative Analysis & Risk Mgt
- Three alternatives required
- Feasibility/performance/benefits analysis
- Life cycle costs analysis for each alternative
- Chosen alternative and why
- quantitatve benefits

## Roadmap for Better Business Cases

- Financial summary for chosen alternative
- Net Present Value by Year
- Date of costs benefits analysis
- Risk Inventory and Assessment
- Risk Categories include:
- Organizational and change management
- Business
- Data/Information
- Technology

## Roadmap for Better Business Cases

- Strategic
- Security (sub-categories defined later in presentation)
- Privacy
- Project Resources
- For All Risk Areas:
- Date Identified
- Area of Risk
- Description
- Probability of occurrence

## Roadmap for Better Business Cases

- Strategy for mitigation or management
- Current status as of the date of Exhibit
- I.F. Acquisition Strategy
- Single or several contractors
- If multiple contracts - define relationships between contracts
- Type of Contract(s)
- Financial incentives
- Use of competition

## Roadmap for Better Business Cases

- COTS or custom designed
- Date of Acquisition Plan
- Section 508 Compliance

## Roadmap for Better Business Cases

- I.G. Project and Funding Plan
- Earned Value Management System
- Original baseline
- Costs and schedule goals
- Funding agency for multi-agency investments
- Proposed baseline changes
- Actual performance and variances

## Roadmap for Better Business Cases

- Part II.  Additional Business Case Data for Information Technology (IT)
- II.A. Project Description
- Assumptions about the investment
- Business process reengineering
- Organizational and change management issues

## Roadmap for Better Business Cases

- Lines of Business
- Implications on agency business lines
- Summary of findings
- II.B. Enterprise Architecture
- Identification in agency EA
- Conformance to EA
- Business and Data layer implications
- Data needs analysis

## Roadmap for Better Business Cases

- Application and Technology Layers of the EA for this investment
- Technical reference model
- II.C. Security and Privacy
- II.D. Government Paperwork Elimination Act (GPEA)

## Winning Strategies

- Active participants in governance
- Enterprise Architecture
- Strong documented business cases
- Know your enterprise and business lines
- Involve all stakeholders and customers (CFO, CIO, PE, HR, Programs)
- Identify, control, and manage the risks
- Continuous Senior Executive Buy-In

## Questions?

- Wmcvay@omb.eop.gov