The challenge: how to assess business value as objectively as possible, obtaining buy-in from finance, marketing, R&D and others who must make it happen?

1. Transparency in
Strategic Portfolio Management
Replacing the “White Elefants” with “Pearls”
Mr Cem Tanriover
Brussels
Zebrafish
International
2011
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2. Objective
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Key
informa,on
and
technology
(Por$olio
Navigator™)
Ø Por$olio
Navigator™
solu1on
provides
vital
informa1on
to
teams,
managers
and
execu1ves
to
accelerate
decisions
that
op1mize
the
economic
value
of
projects
and
por$olios.
Ø This
is
a
web-­‐based
system
that
may
be
accessed
in
real-­‐1me
anywhere
there
is
a
connec1on
to
the
Internet.
Zebrafish
International
2011
©
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3. How?
Two types of portfolios to be managed
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Economic Portfolio (strategic) Resource Portfolio (tactical)
• Selecting valuable projects • Allocating resources
• Feeding winners and killing losers • Meeting budget goals
• Optimizing economic value • Meeting time to market
requirements
Portfolio Navigator™ RPM
Zebrafish
International
2011
©
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4. Proposed Approach
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Value optimization results can be used to allocate
resources to the most important projects
Value analysis results
returned to SAP RPM
Optimized
Scenario # 1
Optimized
Scenario # 2
Optimized
Scenario # 3
Zebrafish
International
2011
©
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5. Value Maps guide project evaluation
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Value maps, jointly developed by
our team and client teams,
describe the factors that drive
project value.
The maps represent a powerful
underlying mathematical engine
that calculates expected NPV,
including adjustments for risk
and uncertainty.
Portfolio Navigator™ enables users to interact with value map models
via easy-to-use input screens. Users see instant results of their
changes at project and portfolio levels.
Zebrafish
International
2011
©
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6. Portfolio Navigator™ calculates value
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Technical Issues
Calculations
Commercial Issues
Cost Issues
Zebrafish
International
2011
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7. Value map templates calculate the impact of uncertainty on NPV
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“Tornado Charts” developed from Value Map analytics show the impact of
uncertainty on NPV, identifying the most important drivers of upside value and
highlighting downside risks.
Zebrafish
International
2011
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8. The “tornado” chart identifies
the three most important factors that drive value
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Challenge: mitigate downside — apply resources to drive to the upside.
Zebrafish
International
2011
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9. Portfolio Navigator™ addresses the “social” side of decision making
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Zebrafish
International
2011
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10. Scenario 1: Evaluating a current portfolio
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The portfolio contains 10 projects.
How do these projects contribute to portfolio value?
Zebrafish
International
2011
©
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11. Innovation charts compare the risks and rewards of each project
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The vertical axis
shows the Probability
of Technical Success
The horizontal axis
shows the Expected
Commercial Value
given technical
success.
Zebrafish
International
2011
©
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12. CFO charts show an optimized portfolio
based on contribution to value
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The CFO chart shows the
relative “bang for the
buck” of each project
from the highest return
for the investment (CP50)
to the lowest return
(CP06).
If forced to cut budget
and retain as much value
as possible, you might
cut CP06 and CP11, the
least valuable projects.
The balance of the
projects would return
portfolio value of around
$270 million.
Zebrafish
International
2011
©
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13. The system automatically calculates cash flow reports
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Portfolio Navigator™ computes portfolio cash flow
Zebrafish
International
2011
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14. Managers have objective information
to guide optimization decisions (1)
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The Innovation Chart
encourages
conversation around
portfolio optimization
issues
Zebrafish
International
2011
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15. Managers have objective information
to guide optimization decisions (2)
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Zebrafish
International
2011
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16. Scenario 2
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Scenario 2 illustrates how you can quickly
and easily update and evaluate the impact
of new information on project/portfolio
value.
Zebrafish
International
2011
©
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17. Scenario 2: Updating project/portfolio value
when you have new information
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You receive information that causes you to re-evaluate Project CP50.
1. R&D discovers a formulation problem that will delay
development. They are confident they can produce results
but it will take more time and money.
2. Focus groups reveal that initial market acceptance will be
more difficult and, therefore, will delay penetration and
impact market share.
3. Delay in launch time causes rethinking about price and
margins given the uncertainty that a competitor may enter
the market first.
Zebrafish
International
2011
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18. Revise probability of technical success
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R&D discovers a formulation problem that will delay development. They are
confident they can produce results but it will take more time and money.
The team lowers the Probability of Success factors.
Overall Probability of Technical Success
drops from 51% to 27%
Zebrafish
International
2011
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19. Revise market share data
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Focus groups reveal that initial market acceptance will be more difficult and,
therefore, will delay penetration and impact market share.
Zebrafish
International
2011
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20. Revise the project business model
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Delay in launch time causes rethinking about price and margins
given the uncertainty that a competitor may enter the market first.
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International
2011
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21. Review impact of uncertainty
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Initial Business Plan
Revised Forecast
Combined Uncertainty
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International
2011
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22. Review impact on value
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Revised Business Plan Initial Business Plan
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International
2011
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23. Review changes on “value on investment”
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Initial Business Plan
Revised Business Plan
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International
2011
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24. Review affect on value, cost, and productivity
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Initial Business Plan Revised Business Plan
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International
2011
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25. Assess the impact on risk vs. reward
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International
2011
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26. Do we have the resources to address the three critical factors?
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Value Optimization Resource Optimization
Portfolio Navigator™ RPM
Zebrafish
International
2011
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27. Value optimization results can be used to
allocate resources to the most important projects
_________________________________________________________________
Value analysis results
returned to SAP RPM
Optimized
Scenario # 1
Optimized
Scenario # 2
Optimized
Scenario # 3
Zebrafish
International
2011
©
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28. Value optimization results can be used to allocate resources to
the most important projects
_________________________________________________________________
Zebrafish
International
2011
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29. Who is available to work on the project?
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International
2011
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30. Resources allocated:
Review results one quarter later
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Value Optimization Resource Optimization
Portfolio Navigator™ RPM
Zebrafish
International
2011
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31. Assess impact on decision-making
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1. Even though project value decreased from $189 million NPV to $133 million NPV
2. Project cost increased from $1.0 million NPV to 1.34 million NPV
3. CFO and Innovation charts reveal that CP50 remains the most potentially valuable
product in the portfolio
4. The tornado chart indicates a need to focus resources on solving the formulation
problem to penetrate the market as quickly as possible
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International
2011
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32. Benefits
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1. Brings teams, experts and managers into the decision-making process
2. Provides transparency to business cases
3. Accelerates decision-making
4. Facilitates collaboration and buy in by stakeholders
5. Provides clear understanding of key value drivers and the impact of risk and uncertainty
6. Eliminates re-working spreadsheets, saving time and money + maintaining version control
7. Provides instant on-line web access
8. improving portfolio value over time.
Zebrafish
International
2011
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33. How
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''Dummy'' Project/Portfolio Demo:
To organize a demo, we invite you
to participate in a 1 hour-webinar.
Zebrafish
International
2011
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34. Enterprise References
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International
2011
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35. Workshop References
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1 SESAR Performance Assessment Workshop 08-09-10/05/07, Paris, FR
2 NATS ADS-B RAD Workshop, 11-12/07/06,Fareham, UK
3 MATS ADS-B NRA Workshop, 06-07/08/07,Valetta, Malta
4 LVNL ADS-B RAD Workshop, 03-04/09/07,Maastricht, NL
5 DHMI ADS-B NRA Workshop, 16-17/10/07,Trabzon, Turkey
6 AENA SESAR Workshop 30/10/07, Madrid, Spain
7 HCMI Workshop 17-18/04/08,Rhodes, Greece
8 AENA ADS-B Workshop 12-13/08/08,Granada, Spain
9 Air Europa Business Case Workshop 25-26/11/08, Majorca, Spain
10 Munich A-CDM Business Case Workshops 22/06/09 Brussels,Belgium
11 Gatwick A-CDM Business Case Workshop 17/03/10 London, UK
12 DFS A-CDM Business Case Workshops 09/09/10 Frankfurt, Germany
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International
2011
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36. Expected Results for Decision Makers
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Harvard
Business
Review
©
Zebrafish
International
2011
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37. Questions ?
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Harvard
Business
Review
©
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International
2011
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