Value Realization is the key to understanding how strategy implementation impacts your operational and transformational goals.
A successful enterprise transformation relies on a well-founded business strategy that matures through senior executives who vocalize sponsorship and demonstrate an ongoing commitment to a clear and transparent vision. The strategy must be one that an organization (top-down and across) believes in, has confidence in executing and rallies behind. Value Realization is instrumental in understanding the characteristics of strategic change and how that change affects your operational and transformational goals in order to craft an implementation strategy.
What is Value Realization?
In the simplest terms, Value Realization is the ability to measure the direct influence of projects and people to executive-level business objectives. By tracking the value a business or stakeholder receives from an enterprise initiative, they are provided a tangible way to track the actual business impact an initiative has on customers, operations and, ultimately, shareholders. The alignment to business outcomes accelerates an enterprise’s hybrid cloud journey by clearly establishing a risk-adjusted Return on Investment (ROI) of an overall portfolio transformation with insights and evidence.
Why should you adopt Value Realization?
True change requires specific leadership behaviors, coaching and early adopters to ensure long-term change. Teams and organizations must be flexible and willing to change to become effective as possible. Clear metrics for success must be established while examining all core processes and functions to prevent regressing to old ways of working. This includes understanding the current objectives, establishing a solid baseline and defining clear values and guiding principles. Value Realization enables quantifiable value and provides evidence of progress along your transformation journey.
A Value Realization journey requires a “North Star,” and the Objectives and Key Results (OKR) approach is a market-leading way to find one. The OKR approach provides a goal-setting method that helps improve performance and drive change throughout your organization. These objectives are aligned to enterprise strategy and mapped to key results expected as an outcome from the strategy. Key outcomes are formulated through a set of Key Performance Indicators (KPIs) or tangible outcomes through various initiatives. KPIs then roll up to outcomes, showing direct visibility of the end business objectives.
What are the benefits of Value Realization implementation?
We have seen that alignment of working KPIs or metrics to organizational objectives leads to significant improvements, including a 40% reduced Total Cost of Ownership (TCO) and a 25% increase in time to market. An enterprise can enable a distributed agile rollout of Value Realization using a standardized approach emerging from a Cloud Center of Excellence (CCoE). As organizational agility matures, the focus of the CCoE often shifts to standardizing your approach, measuring value and accelerating change. Standing up a Value Realization Office (VRO) will help to define best practices for leadership.
Initially, the VRO focuses on evaluating current parallel agile practices and determining how those practices can be logically standardized across the enterprise. With a standardized design for scale, the VRO leads the alignment of teams to the enterprise design and pilots scaling to new teams. Using learnings from the data gathered from mature agile teams and pilot areas, the VRO continues to refine and iterate on the scaling model as it rolls out the design.
We have seen that clients who stand up Value Realization Offices enjoy the following benefits:
- Consistent and quantified results linked to client’s OKRs
- Empowered leadership to make decisions and view tangible impacts based on KPIs
- Enabled data-driven decisions to improve team performance
- Team members with well-defined KPIs and integrated reporting
- Improved accountability of all levels of the organization
- Connected team outputs to key outcomes
How do you achieve continuous realization of business value?
For enterprises to achieve alignment to their business goals, it is critical to clearly define and communicate the value delivered by enterprise strategy and technology objectives. A VRO will validate and ensure continuous alignment to business strategy through the process of monitoring, adjusting and calibrating defined goals. Providing a holistic framework and key metrics for quantifying outcomes linked to strategic objectives allows for greater transparency, accountability and engagement.
In a cloud transformation journey, typical KPIs reflect improved speed to market, customer experience, improved IT developer productivity and employee satisfaction and reduced IT labor costs. These provide a single source of truth for stakeholder(s) consumption and drive value across the enterprise. Laying out visualized outcomes through a dashboard across the enterprise is key for transparency and the ability to continuously adjust toward goals. The art of creating these dashboards requires the right matrix of well-designed business outcomes mapped to key objective metrics across the organization.
Fitting pieces of Value Realization with process and people accountability — empowered through technology/tools — is the role of governance. Governance is not a Project Management Office (PMO) — it is about making choices. Effective governance means decision-making from the bottom-up. It is important to empower teams to make choices that evolve over time and find leaders who proactively remove blockers for teams. Middle managers accelerate change by shifting to a people-centric, emotionally intelligent and authentic workplace.
An agile governance mechanism to track OKRs and KPIs, paired with continuous alignment to leadership, allows for rapid pivots and interventions to remain aligned to objectives. This approach allows teams sufficient headroom, removes distractions and clarifies how much time commitment is needed to prioritize objectives accordingly. Stable operations are foundational, but incidents, outages and delays will constrict savings.
Value Realization summary
Value Realization requires a new way of thinking about measuring and driving business objectives across the enterprises. In order to succeed, the Value Realization solution needs to be cross-functional and collaborative, breaking down barriers and involving a wide variety of stakeholders. From squad-level programmers to top executives, Value Realization requires both practical actions and strategic leadership.
A Value Realization Office offers the opportunity to lead the alignment of teams. It will become part of the enterprise’s DNA, with every choice and action shaped around the question of: “Is our organization able to link this action or initiative to the overall enterprise strategic objectives?”
IBM Consulting Hybrid Cloud Advisory Practice leverages client-proven strategies with industry-leading assets and accelerators to bring seamless and continuous alignment of cloud adoption. To learn more about IBM’s Value Realization Offering, please visit IBM Hybrid Cloud Advisory Strategy.