# Business process management/Charter for alignment
## Related lessons

* The Charters for BPM Program Governance - An Overview
* Charter for the BPM Engine
* Charter for BPM Democracy
* Charter for Alignment
* Charter for Conflict Resolution
* Charter for BPM Investment
* A Charters Glossary

## Executive Summary

The promise of BPM is that it enables organizations to realize business benefit more quickly and with lower costs than other programs and mechanisms. An organization must be able to accurately measure the solution-level benefits, to associate those metrics with specific objectives, and to determine if project changes must be made to achieve greater returns.
A program must be able to properly forecast returns and conversely, to validate that those returns are realized. A comprehensive set of metrics would include some measurement of change management impact as well. BPM impacts the way the business operates, and the less disruptively this can be done the lower the cost of implementation.
In the longer term, regular application of benchmarks and targeted metrics reinforces critical consistency that provides confidence in the assessments. Ensuring alignment becomes the status quo.
This Charter examines the importance of developing a system that best supports the decision makers using critical information and how to ensure that the information is reliable.

## Objectives

Large organizations face difficulties in achieving strategic objectives. Top-down goals are pushed through departmental and structural funnels until the tactical mission of projects is unrecognizable from the original intent. With limited funding to support a finite number of solutions, organizations must exercise discipline and rigor in managing their BPM programs. At the extreme, BPM programs should behave as if the funding could be stopped at any moment should insufficient justification be available.
This Charter
* Outlines the essential elements of an opportunity selection framework,
* Sets guidelines for the budgeting process, and
* Links the costs of projects to their results.

## Scope

Alignment is the discipline of determining whether an organization is on course to reach its strategic targets in a timely manner. Opportunities should be prioritized based on their benefit to the organization and its intended goals. An organization must be able to
* Enumerate the anticipated benefits of its opportunities,
* Show how the solution benefits support the top-level objectives,
* Estimate the costs required to deliver such benefits, and
* Regularly assess whether the benefits are being delivered.
When benefits are not meeting expectations or if objectives change the organization must be able to re-evaluate its active and planned projects.

## Plan
### Anticipated Benefits

All opportunities should be required to
* Quantify the anticipated benefits,
* Justify how these estimates were determined,
* Demonstrate how these benefits support organizational objectives, and
* Include plans for specific metrics that can be easily used for validation.
Some benefits are more easily quantified. In this list are those outputs that are directly linked to the objectives. For example, an opportunity that aims to reduce material costs by 20% should be able to easily prove how it can increase margins by a corresponding percentage. A measurement before and after the project is implemented will prove whether that particular goal was reached.
Other projects seek benefits that are less easily quantified. The list includes goals like better compliance, a happier workforce, removal of process steps, reduction of rework, and reducing dependence on knowledge workers. The effect of these goals are harder to measure, especially because one cannot simply measure the before and after effects.
Part of the problem is that goals like these are not sufficiently defined at the project level. There must be specific outputs that can be considered. For example, better compliance can potentially result in fewer infractions which leads to fewer penalties and fines.
What is needed is a framework that takes seemingly difficult to quantify benefits and assigns a number to them. Continuing the example, a simple system for quantifying the benefits of better compliance might multiply the possible fines by a risk factor indicating the likelihood of occurrence and impact to the organization.
The key to this system is not in the specific technique used to quantify potential benefits. In fact, this Charter does not seek to specify one. Instead, the key is the ease with which comparisons can be made once a standard measurement system is used.
Each organization will need to establish its own formulae and calculations. Every opportunity should have a known benefit score before being approved for implementation. If the system is correctly constructed then opportunities that align with strategic objectives will have a higher score and will be selected first.

### Costs

Costs for pursuing an opportunity must similarly be quantitative, and there must be supporting evidence for how the costs were estimated.
There are some costs that can be estimated quite easily. These include costs for software, tooling, and resources. The cash outlay is often the easiest to estimate.
Other costs are difficult to assess in advance. The cost of initially lower efficiency when a new system is first rolled out to end-users is an example.
Change management costs are one of the more difficult areas to assess, and some guidelines should be included in the system that an organization chooses. A project should consider the costs associated with various techniques of quality assurance. While this might affect delivery time and increase project costs, there are also corresponding costs that increase if vocal end-users put up a fight to the new tools. The Charter for BPM Democracy discusses how to reduce the impact of negative feedback from users.
However, just like benefits, it should be possible to adopt a measurement and ranking system that quantifies and includes cost implications. The system should be comprehensive and provide a consistent mechanism for all opportunities to be evaluated.
Project estimates for cost must also take into account aspects which may not be under the direct control of the project team. These include shared parts of the BPM engine, renewal of IT systems and infrastructure, and consolidation of IT systems and infrastructure. These estimates are critical for properly understanding the impact of an opportunity, and they will need to come from numerous sources, both within and external to the program.

### Time Factor

The time axis adds a complexity element to the task at hand. Some projects will only deliver anticipated benefits after significant costs have been incurred over a long period of time. Other projects will require less time but may not offer as great a set of benefits.
In creating the Alignment framework, the time element should also be considered with benefits and costs. The set of quantitative anticipated benefits, quantitative estimated costs, and the timeframe for delivery form a trio of data that can be used to compare opportunities in the portfolio.
Again, the entire opportunity impact plays a part in this analysis. Non-BPM projects that provide services or rely on BPM outputs will need to have their timelines merged with the BPM timelines. This generally requires that a holistic interface roadmap be developed for both BPM and non-BPM solutions to leverage.

### Planning

In every opportunity's plan, the three items above should be captured for evaluation. The format and methods should be consistent for the organization. Everyone should use the same mechanisms to arrive at the anticipated benefits, the estimated costs, and the realization timeline. Roadmaps should indicate how a solution gets delivered across multiple releases and when the regularly scheduled reviews will occur.
Without this consistency, the plans are not comparable. The Leadership team cannot determine which opportunities to select.
However, once the plans can be compared the Leadership team can assess plans based on a ranking that takes all three criteria into account. Organizations can choose the set of opportunities that meet their appetite for investment and that may deliver some really significant benefits.

### Budgeting

The collective set of costs for the chosen projects can be structured into a budget. That budget should define the amounts and the rate of expenditure, and it should be a roll-up of the individual project costs.
Ensure that the costs account for shared investments. Some projects may be able to benefit from reduced investments if they can be delivered in combination with other projects. An organization's framework must consider whether it is the first project that bears the cost burden or if those costs can be recognized by multiple projects at once.
Project budgets should be revisited in an ongoing manner. As costs are consumed, the benefits to the organization should be realized. Adding checkpoints to every project's timeline provides a reminder that the selected projects only exist to deliver results to the organization. If the actual costs and the actual benefits realized do not match the plan, the Leadership team can determine whether adjustments must be made.

### Transparency

The estimation techniques and the review processes that ultimately result in a budget should be generally open for examination. Peer reviews, both internal to an organization and from external agencies, can help with the validation process and benchmarking against the industry.
It should be clear how the active projects were selected and the benefit that these projects provide back to the organization. Along with the consistency discussed earlier, one of two things will happen by providing this transparency.
On the one hand, all parts of the organization will understand how their projects impact strategic objectives. It will reinforce an element of corporate citizenship. It will provide confidence to the Leadership team such that they can reasonably state that the strategic objectives are being addressed.
Without this visibility and transparency an organization is unable to confirm whether it is any closer to meeting its strategic objectives from its active projects. Today, organizations try to meet strategic objectives and do not really know whether they are on course. The data does not support justifiable conclusions because the measurement systems are inconsistent. The organizations are fooling themselves.
Alternatively, the transparency will enable the identification of opportunities that are not aligned. These projects can then be examined for modification and adjustment to get the organization back on track.
Utilizing this transparency is an ongoing activity. It occurs for new opportunities, existing, active projects, and projects that might continue into subsequent phases. The Leadership team must pick the specific metrics, the reporting mechanisms, and the frequency and means of evaluation for all opportunities.

### Adjustments

The projects should be adjusted for better return to the organization if costs are higher than expected or benefits not as high as anticipated. This was already discussed above as part of regular budget checkpoints.
Similarly, the framework itself should be constantly evaluated. If an organization finds that it is consistently picking projects with less than stellar returns then it needs to adjust how opportunities are documented and justified. If the less tangible costs or benefits are not meeting expectations then the formulae should be changed.
On the positive side, this means that the system does not need to be perfect from the outset. An organization can and should get started with a basic set of techniques and evolve them from there. It is better to be nimble in the ability to adjust and to enhance the system than to try to get it completely correct at the outset.

## Assumptions

* Most organizations today delegate departmental budgets to managers. Instead of actually delivering strategic objectives through solution-level benefits, these managers only try to meet cost objectives. Their incentives do not motivate them to use their budgets to deliver strategic improvements. Unfortunately, it is a challenging task to reorganize the incentive schemes to align with the goal of improving the company. Incentives need to be constructed to take the strategic objectives into account.
* The Leadership team, and specifically the Financial Director role, are responsible for selecting and enforcing the Alignment behaviors.

## (Anti-)Behaviors
### Behaviors

* Pipeline Selection
* Metrics Are Essential

### Anti-Behaviors

* Inconsistent Metrics Are Meaningless
* Opacity Leads To Higher Costs

## Conclusions

A properly constructed system forces opportunities to be assessed on the impact they will have on the organization. The costs and the benefits along with a time perspective will allow the more meaningful opportunities to rise to the top and to secure the attention of the program.
Consistent methods and processes are required. Otherwise, the metrics and the entire system are suspect. With consistency, the great projects become easily identifiable from the less desirable projects.
Regular review of the projects determines whether benefits are realized. The reviews also reinforce the importance of alignment and provide a way to determine if the costs are justified. Where the reviews uncover discrepancies, adjustments can and should be made. The ability to stop losses quickly is as important as picking the right projects. Since it is not always possible to pick the right projects, the former becomes an important skill.