Programme assessments can help CFO’s rapidly shape the tactical “new normal” and make informed decisions about their programme’s future.
As we head further into the new normal, many CFOs’ will be left facing a financial shortfall, scarce resources and conflicting priorities which require them to make difficult decisions about whether to proceed with their planned digital transformation programmes. Organisations with a mature digital operating model pre-COVID may have been able to adapt and survive more easily than those with without but either way, CFO’s will be under pressure to invest in tactical digital programmes which help sustain the survival and move an organisation to the new normal. Time and cost already invested, business and investor expectations and commitments made, can make it challenging to reach the right conclusion in a short space of time.
In this two-part article, we explore the options to enable CFO’s and senior business leaders to make the right tactical decisions.
Part 1: Defining and assessing the new transformation priorities:
What are the options for inflight transformation programmes
There are three main options for CFO’s to consider,
- Continue – continue with the programme and adapt where required
- Pause – take a time out for now, accept some ongoing risk and spend.
- Stop – accept that the situation has changed and the programme is no longer viable.
Once this decision has been made, it may allow CFO’s to seize the opportunity of change and reallocate funding and resources to programmes which meet the immediate tactical needs of the business.
How to assess programmes
Programmes need to be assessed objectively on their own merits, ideally this should be conducted with the with the support of experienced digital programme professionals who have experienced similar situations on multiple occasions. Most importantly though when assessing programmes it is best to do so in a structured and consistent manner. Below we outline five key lenses to assess a programmes ongoing viability through.
Lenses to consider
- Strategic and Tactical Alignment (Understanding the Operational big picture)
It is likely that the pandemic will have changed the organisations immediate priorities and that, at least, in the short to medium term strategic plans need to be revised. Many organisations will be heavily focused on immediate survival, sadly, some organisation’s will be facing extreme financial difficulty at this time and will be focused on additional savings programmes to meet short term cashflow needs, followed by the adoption of new digital business operating models to meet the challenge of a recessionary economic climate in the months to come.
Whatever the current tactical priorities, it is crucial that any assessment considers the wider strategic context in which programmes operate. Changes to which could easily result in current programmes needing to be expedited, paused or even stopped and replaced by more pressing endeavours.
- Business Case (Understanding the benefits)
Arguably the most important lens to consider. A decision about a programme’s future cannot be made without first giving strong consideration to the reasons that you started the programme in the first place.
In theory, programmes should not start without robustly scrutinised business case, in practice though that doesn’t always happen. Perhaps there wasn’t a clear business case to start with or the decision to proceed was made by the board several years ago the intended benefits have been eroded over time. Where resources are scarce and organisations face conflicting priorities, a sound case for change is crucial and now is the time for you to make sure you only proceed with programmes which a valid business case.
One way to do this would be to re-visit each programme and consider their viability against any relevant criteria. For example, the HM Treasury’s Business Case guidance (known as the Five Case Model) recommends considering programme viability against five distinct, yet interconnected dimensions. This would enable CFO’s to ascertain whether potential programmes:
- are supported by a robust case for change – the Strategic Case;
- optimise value for money – the Economic Case;
- are commercially viable – the Commercial Case;
- are financially affordable – the Financial Case; and,
- can be delivered successfully – the Management Case.
All of these dimensions are important; their weight however will likely vary depending upon individual organisations current circumstances and the nature and complexity of specific programmes. The fact remains though that programmes without a robust case should be stopped and the scarce resources reallocated – it’s that simple.
- Risk Profile
In times of uncertainty and change it is doubly important for programme Sponsors to re-review a programmes risk profile which may have changed due to a change in circumstances or the inability to implement mitigating actions effectively.
Sponsors should consider risks on two levels, the individual programme risks and the overall programme risk. These two levels can be distinguished as the risks in the programme, for example missed milestones or cost overruns and the risk of the programme, which could, for example negatively impact on the organisation’s liquidity or result in reputational damage.
Most programme sponsors will be used to seeing the programme risk register or at least a series of escalated risks on a fairly regular basis. However, once a programme is underway and has gained momentum the overall risk of a particular programme can often be overlooked. For example, a planned programme to transform an organisations digital retail offering and supporting 3PL supply chain may need to be accelerated (as in the case of Marks and Spencer’s Food delivery partnership with Ocado) as the tactical cashflow and EBIDTA benefits far out ways the risk of the programme over spending.
When considering whether or not to proceed with multiple programmes, one way to objectively assess them would be to conduct a series of rapid risk workshops (virtually if required) to ensure that the full risk profile of all major programmes is consistently understood and the appropriate mitigating actions in place, in order for leadership teams to determine which programmes should proceed. This approach isn’t new for example back in 2000 this approach allowed Cable and Wireless to stem a haemorrhage in working capital and to recalibrate and refocus the organisations strategic priorities.
Part 2 will focus on transformation delivery performance, resource capacity and the need for a formal programme assessment framework.
This article was written by Alisdair Bach, a senior SAP Business Transformation Programme delivery turnaround specialist and SAP Enterprise Architect.
If you are considering assessing your programmes, the Programmes assurance and turnaround experts at One Eighty Advisory can help you consistently evaluate your options and make the right decision for your organisation. You can learn more about us here.