Category Archives: IT Investment
Building on the Investment Logic Map for More Rigorous Front-End Programme Evaluation, An Article by Aaron Doty
For some time now, I’ve been interested in the Investment Management Standard produced in-house by the Victorian Department of Treasury and Finance. I’ve found that using an Investment Logic Map is a valuable, light weight way of mapping the logic for a business case and have posted about my use of it in the past. The Victorian Department of Treasury and Finance have released a new version of their standard which includes several different sub-types of Investment Logic Map depending on whether an investment is pitched at the organisation level, a programme of investment or an individual investment. The latest standard can be downloaded in PDF format or in Microsoft Word format.
An evaluation of the Investment Management Standard has been published in the Evaluation Journal of Australia, a refereed journal, titled “An examination of the value of the
Victorian Government’s investment logic map as a tool for front-end evaluation of investment proposals”. This article evaluates both the theory behind the Investment Logic Map and whether it actually achieves its aim. Although it is based on a previous version of the standard, the faults identified nontheless hold true in this latest version. The article evaluates how an Investment Logic Map (ILM) is an integral tool to the Investment Management Standard as it serves as both a planning and evaluation tool. The main criticisms in the article of the ILM approach is that it has “a very short chain of causality”. The article explains that while there is value in creating the ILM as a quick assessment tool, a more rounded assessment and evaluation of the programme logic should be undertaken later on to test the assumptions made within the ILM. The article gives a detailed example of “building confidence in the causality” by extending the programme logic through intermediate outcomes and their associated assumptions.
This is an article that is very worthwhile reading. I encourage you to download it.
Source: Evaluation Journal of Australasia, Vol8, No. 1, 2008, p38
Management of Portfolios (MoP) Practitioner Guide Released
It's been quite a long wait for the UK Government's Office of Government and Commerce (OGC) to release their practitioner guide for the management of portfolios, creatively called Management of Portfolios (MoP). But it has finally happened!! For a while now, programme managers and executives have known about the concept of several programmes being rolled up to an overall portfolio. However there hasn't been much in the way of formal guidance on managing that till now. Previously managers of portfolios have had to rely on conventional management theory and governance frameworks. OGC's maturity model P3M3 has been of some assistance in managing portfolios with guidance for increasing portfolio management tutorial. Nothing can beat a proper methodology however.
I haven't acquired a copy of the guidance as yet. So I can only comment on the content based on the marketing material. Portfolio management sits above project and programme management, however an efficient and mature practice of either or both is not required. Merely by applying MoP, the organisation will start to invest in programmes and projects that are aligned to the organisation's long term objectives. More than any other of the P3 disciplines portfolio management requires strong executive support. Executive have to understand the benefits of choosing the right programmes and projects. Benefit management to ensure that benefits are aligned with the corporate strategy and harvestable is also a crucial area. As is an understanding of risk mitigation and other risk management practices. The concept of a portfolio is readily applicable to the public sector where the collection of streams are known as a portfolio. Each government department then manages one or more portfolios as part of their remit. I wrote last year of my department gaining another portfolio – the National Health and Hospitals Network. To find out more about MoP refer to the new Best Management Practices website: http://www.best-management-practice.com/Portfolio-Management-MoP/A Revamped Business Model for a Government Context
It has been about two weeks since I did my last post on business models and thanks to a significant amount of feedback from my colleagues, the government business model template we’re using, has evolved. Now, I think it will add real value to our organisation. I’m adamant that this will give us the framework necessary to drive our business requirement gathering. The template has been adapted from Alexander Osterwalder’s original, Business Model Canvas, to make it more relevant to a government context, as described in the earlier post. The purpose of the template is provide a framework for a series of new, independent statutory authorities that will be created to implement the Australian government’s health reform agenda. In that way, it has a similar purpose to a commercial model, to set the context for a new organisation. Similar to Osterwalder’s original canvas, it also uses graphics to emphasise the different building blocks of the canvas, unlike the earlier version I posted which was clinical and rather boring. Now there is interest and the eye is drawn through colour and emphasis, to the most important elements first. As the authors, we want you as the audience, to read it in a certain way, so that you understand the building blocks in a particular order. We’ve used watermarks to illustrate the cyclical nature of the organisation, which is part of a value chain in the government’s new service offering.
Problem Drivers – This isn’t a business model canvas building block as such, but has been added because it adds contextual value. It is adapted from the ‘driver’ component of the Investment Logic Map created by the Victorian Government of Australia. The problem driver shows what problems the government perceived to exist, for which this canvas is a solution.
What are we aiming for? – This is the central element of the canvas. The size and colour add emphasis. Because it is used within a project environment it is more analgous to a business outcome of a project. I firmly believe that this will drive the vision for the new organisation, because it summarises the ultimate purpose of the organisation. Within a business motivation model context, it is the ‘end’ that the organisation is trying to achieve. Role – What role does the organisation play? Within a business motivation model (strategic plan) context, this is the ‘end’ (mission) the organisation is trying to achieve. At this stage it should be high level. Entity Inputs – Because this organisation sits within a value chain, it relies on inputs from other entities whether they’re organisations or key government personnel such as ministers. Business Services – What are the high level business services within a business process management (BPM) context that are needed to take those inputs and transform them into outputs? Capabilities Required – Just as services are required, so too are capabilities to transform the input into an output. Entity Outputs – What is this entity passing along to the next player within the value chain or if it’s at the end, the receiver of the end product? Governance and Authority – Under what authority is this entity constituted? Has a government statute brought it about? Is it an executive arm of the government? Key Stakeholders – Who are the key players in this entity, both internally and externally?
Concerns I Have with this Version of the Government Business Model Template
Documenting Government Business Models
Business models generally have a commercial focus. Quite rightly too, as that’s been their mainstay. They are used to lay out the combined elements of marketing, pricing model and value proposition in a way that communicates exactly how the business will run. From there it can be used to build detailed business plans or specific plans such as marketing.
The Business Model Canvas This example below, from the book Business Model Generation by Alexander Osterwalder and Yves Pigneur shows how their business model canvas is used to document the Apple iPod/iTunes business model. In this case it is used retrospectively, but the canvas can also be used to document a completly new business model too.
“In my opinion a business model has to be understood as a much more holistic concept that embraces all such elements as pricing mechanisms, customer relationships, partnering and revenue sharing.”
Later on he references the work of Paul Timmers to define the concept of a business model:
“He understands a business model as the architecture for the product, service and information flows, including a description of the various business actors and their roles and a description of the potential benefits for the various business actors and a description of the sources of revenues. In order to understand how a company realizes its business mission he adds a marketing model that is the combination of the business model and the marketing strategy of the business actor under consideration.”
While a business model would appear to be widely applied within a commercial context, from the two definitions above, it is clear that the building blocks of a business model are as applicable in a government context as they are in a commercial one. However the role of a government business model is not to make money and the elements of the business model have to be changed to reflect that aspect. Customers in particular, aren’t always apparent within a government context because the role of government is serve community interests. Generally government is concerned with providing value to multiple segments of the community. In my view the role of a government business model is to:
Provide a representation of how the Government funds services, fairly and transparently, to benefit citizens.
Example of an Investment Logic Map
