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8.0  TECHNIQUES


8.1  Through Life Business Case Analysis
The Business Case is the principal document in a decision package that evaluates proposed actions to achieve some functional objective. The Business Case has three primary uses:

The Business Case documents the functional process improvement effort and presents the business case as part of the decision package. It serves as the primary instrument in deciding which approach, if any, should be further evaluated in detail for approval. Gross measurements and estimates of cost and benefits data are usually all that is available early in the project. More data is available if there has been a complete activity based costing effort.

The Business Case presents the economic analysis various alternatives. Economic analysis is a systematic approach to the problem of choosing the best method of allocating scarce resources to achieve a given objective. A sound economic analysis recognizes that there are alternative ways to meet a given objective and that each alternative requires certain resources and produces certain results. To achieve a systematic evaluation, the economic analysis process employs the following two principles:


8.1.1  Background
The following section was adapted from a study, "Business Case Model for The DoD Logistic Community: A Guide to Business Case Development completed by ManTech, West Virginia for the U.S. Department of Defense Logistics Reinvention Office (LRO).

In today's hectic, complex world, decisions are often forced, supported by little, if any analysis or documentation. Yet, we are constantly asked to render decisions that can have both short and long-term consequences. In the NATO Alliance, such decisions can have dire results and tear at the very fabric of "freedom" because our decisions ultimately effect "Defense Readiness."

Despite the dire consequences of poor decisions, the practice of preparing, reviewing, and making decisions that are based on sound analysis or business case is infrequently applied. A properly prepared business case represents an effective tool to reverse this practice and foster timely, and accurate decisions within the NATO logistics community.

This Section is intended to assist all within the NATO logistics community who have a need for preparing, documenting, and evaluating alternative approaches as well as those ultimately responsible for decision making and directing a course of action with the development of a business case.

This Section provides the information needed to use business case modeling as an effective tool to manage change. It is simple, straightforward, and will serve as a road map for formulating a sound business case. Use the guidance provided here to create a sound business case that is also consistent with NATO Logistics Strategic Goals and Objectives. There are three simple steps:


8.1.2  Introduction
Business cases are an integral part of every competent manager's decision process. They are frequently informal and often undocumented. Such analyzes and models consist of the manager's assessment of financial, procedural, organizational, and performance implications of a proposed change. Informal as it may be, this process yields information needed to support a business decision and is therefore a business case. In general, the more complex the change of the organization, the more formal and rigorous the business case development process should be.

Within NATO, formal business cases are critical elements of on-going Business Process Reengineering (BPR) and other improvement activities, and related decision-making processes. Despite significant guidance published to date, business cases continue to be misunderstood and inconsistently applied within the NATO community. Ineffective applications of a business case are found throughout the organization, such as, being used after the fact to justify technology decisions, in-process implementations or projects, and related sunken costs. They are also improperly used to determine the value of completed technology or software development projects. This section will help in avoiding these traps.


8.1.3  Purpose of this Section
This section's purpose is to bring consistency and understanding to business case development efforts within the NATO logistics community. It highlights the process steps required to produce a simple, straightforward and easy to understand Business Case Model. The target audience is NATO logistics functional experts, program management, and others tasked with implementing change and making decisions about change within the NATO logistics community. Its objective is to promote the use and consistent application of business cases as the tool for the evaluation and management of change within the NATO logistics community.

The Need of the Decision-Maker

The need of the decision-maker is for timely, consistent, complete, and accurate information. The business case facilitates making decisions consistent with the organization's strategic goals and objectives, as well as keeping in compliance with the NATO governing directives. It provides a formal yet flexible system to manage individual initiatives more efficiently and align them with NATO initiatives underway.

This section, when properly applied, will assist the decision-maker to:

Align proposed investments within their purview with NATO mission priorities and NATO component strategic plans.

Present management with relevant decision information in a consistent framework that will allow comparison, evaluation, and prioritization of competing and overlapping change initiatives.


8.1.4  Business Case Modeling Fundamentals
This section provides the fundamentals needed to integrate business case modeling into the management decision-making process. It answers the questions:  What, Why, When, How, and Who. This section provides additional references for business case preparation and on-line training.


8.1.4.1  What is a Business Case?
A business case is a tool used to manage business process improvement activities from inception through implementation. A business case is a document that identifies functional alternatives and presents economical and technical arguments for carrying out alternatives over the life-cycle to achieve stated business objectives or imperatives. Each business case will look different depending on its application. However, essential ingredients remain constant. Essential ingredients include functional process descriptions, technical architecture descriptions, cost projections, action plans, measures of performance, and risk assessment for each alternative under consideration. Its focus is on process improvement and reengineering, not on technology insertion. Technology's role is to enable or support meaningful process change. To be effective as a management tool, a business case must never begin with any predetermined notions of the outcome or predetermined technological solution. It must be completely and totally unbiased in its conduct and presentation.


8.1.4.2  What is the Role of Business Case Modeling in Logistics Reengineering?

Linkage to Overarching Plans and Visions

Linkage to overarching plans and visions is of primary importance. Each business case must show linkages to NATO goals and strategic objectives.

A business case should include activity models that focus on relevant logistics functions. This enables the decision-maker to learn if there are any overlaps in activity coverage, and potential contentions in project dollar allocations.

Business cases should support the organizations' strategic goals and objectives. Within the NATO, this means that all business cases must clearly support the following:

To this end, each business case and the included alternatives must:


8.1.4.3  When Should I Prepare a Business Case?
Prepare a business case when any change is anticipated in a business process or supporting technology. For significant changes, the requirement to prepare a formal business case and its actual preparation should occur as early as possible in the change planning process. Formal business case preparation is imperative:


8.1.4.4  How Do I Get Started?
Establish a dialog among all of the parties involved. Those designated to prepare the business case must know what is important to the decision-maker. They must also understand the initiatives and alternatives to be included in the business case and gain an understanding of how the business case will be used to arrive at a decision.

The decision-maker should identify the critical elements of the decision process for those who will develop the model. Preferences for presentation of alternative comparisons should be discussed, agreed upon, and documented. Specialist and/or training, if any, required to support the process should be identified and scheduled. Activity modeling, financial analysis, and Activity Base Costing (ABC) are areas that are most likely to drive the need for training and or support from specialists.


8.1.4.5  What Should My Model Include?
Business cases are about choice. They must present the decision-maker with alternatives and the consequences of those alternatives. In general, not less than three alternatives should be presented. The figure at right provides the general information that should be included for each alternative.


8.1.4.6  Who Should Prepare a Business Case and What Should They Know?
The most important requirement is to be thoroughly versed in the organization's processes and activities, and corresponding goals and objectives as they relate to the business case. Know what is important to the decision-maker. Activity modeling and financial analysis skills are also required or alternatively, specialists may be used to assist in these areas. Use of specialists, when available, is highly recommended. They can significantly reduce the time required to prepare a business case.


8.1.4.7  What Should the Decision-Maker Know?
The decision-maker must have an understanding of how to use the business case and how it will apply to the expected change. The decision-maker does not need to understand the detailed analysis techniques; however, he or she should have a basic knowledge in financial areas such as return on investment and discounted cash flow. Matter-of-course knowledge of business process reengineering topics, such as activity modeling, aids in using the model to make good decisions.

Dos and Don'ts of Business Case Development

· Do include a business case as an integral part of BPR. A BPR is recommended prior to IT acquisition.
· Do establish a business case development team that is independent of those who are responsible for the project.
· Do keep IT-related measurements used in defining IT investments in terms of functional requirements, identifying which outcome-based performance measures accurately assess achievement of requirements.
· Do continuously ensure that the linkage between investments and mission accomplishment is maintained.
· Do mold the business case development process into the entire organization's way of planning and making investment decisions.
· Do directly tie the use of the business case process with funding of any initiative.
· Do adopt a timeline for completion of business cases prior to budget completion to allow approved alternatives proper funding during the next budget year.
· Do prepare a business case model prior to the selection of any alternative or technological solution.
· Do not prepare a business case in support of decisions already made or in support of implementations already in progress.


8.1.4.8  What Else Should I Know?
Several barriers exist to preparing a business case. They fall within four categories:  vision barrier, people barrier, learning barrier, and operations barrier. The vision and learning barriers have been previously addressed. The people barrier occurs when individuals within the organization may, for one reason or another, inhibit development of a business case. This often occurs when the business case represents a beginning in the process of change. An operating barrier exists because of how the organization works. One such barrier may be cost accounting systems. The political climate, and procedures and rules required by the military may also cause an operating barrier. Similar barriers may exist to the implementation of changes addressed by the business case itself. If so, the barriers and the plans to overcome the barriers should be documented within the business case.


8.1.5  Business Case Model Minimum Report Requirements: A Simple Structure
The table displayed provides the recommended outline that all business cases should follow. Each outline element is briefly discussed to provide an understanding of needed content.

Typical Business Case Table of Contents

1.0  Executive Summary
2.0  Boundaries of the Business Case

    2.1  Goals and Vision
    2.2  Context and Perspective
    2.3  Functional Performance and Metrics
    2.4  Initiatives Considered
    2.5  Baseline/Alternatives Considered
    2.6  Key Assumptions
    2.7  AS-IS Activity Model

3.0  Discussion of Alternatives

    3.1  Alternative 1
    3.1.1  Functional Process Description
    3.1.2  Performance Impact and Metrics
    3.1.3  Technical Architecture (optional)
    3.1.4  Cost Projections

      3.1.4.1  Investments/Action Plans
      3.1.4.2  Operational

    3.1.5  Risk Assessment
    3.2  Alternative 2

4.0  Comparison of Alternatives

    (Graphical Presentations Preferred)
    4.1  Functional
    4.2  Performance
    4.3  Costs
    4.3.1  Investment Costs
    4.3.2  Operational Cost Savings

5.0  Conclusions, Recommendations and Issues


8.1.5.1  Executive Summary
The Executive Summary is the foundation for senior leadership briefings and must answer the "So What?" question. The Summary should recognize sponsor and funding organizations and describe the approach used in broad terms. The Summary's objective is to establish confidence in methods followed during business case synthesis and preparation, and should focus on the results, not the activity behind producing them. Make sure that this addresses the "Why" of doing the case. The question of "So What?" is met by explaining benefits of approving an alternative and its initiatives, or emphasizing the need to continue.

The developers should answer a set of questions. Does the Executive Summary contain all basic elements? Can it stand by itself? Is the business case uniquely identified so that it stands out among others? Are all acronyms explained? Is it short (two pages or less)? Is it absolutely error free? Finally, does it support the need to continue?


8.1.5.2  Boundaries of the Business Case - Goals and Vision
As stated earlier, all business cases should support strategic goals and objectives put forth in the NATO Strategic Plans. Business cases should support implementation of the "TO-BE" State identified within the NATO Alliance and component vision, mission, goals, and objectives. Explain why the business case is being prepared. Identify sponsoring and funding organizations. This explanation of why the business case was done can reinforce the idea of aiding NATO in its transition to a performance-based organization. The starting point for identifying the business case subject is usually a proposed or planned action, but the business case's subject ultimately is defined in terms of objectives.

The Importance of a Stakeholder

A stakeholder is anyone who has a vested interest in the organization's efficiency and effectiveness. This interest gives them the ability to affect an organization's management, policies, and objectives. Typically, there are four main stakeholders of a function:

    1. Customers, or recipients of output and services produced by a process.
    2. Suppliers, or providers of inputs used by a process.
    3. Regulators, or overseers of a process.
    4. Process Participants, or employees and managers that form the product or service.

Stakeholders express their interests as outcomes. Outcomes can drive process behavior and drive investment and operating decisions about these processes or their outputs. Persuading process customers and participants, who are the most visible stakeholders, to accept change is the process owner's high order objective. While across the board acceptance is highly desirable, some stakeholders may not accomplish everything they want. The depth and breadth of firm commitments from stakeholders reflect downstream potential for process and organizational change, resistance, or acceptance.


8.1.5.3  Boundaries of the Business Case - Context and Perspective
The context and perspective should match with the context activity model developed during Functional Analysis. Define what is and is not being considered in the scope of this business case, and reinforce whom it is for and what decision is helped by it. Identify potential stakeholders, including what organizations will be affected, and who plays the biggest part in the failure or success of the alternatives. Stakeholders should be identified before functional analysis.

Once identified, stakeholders must participate in the analytical process, whether in an active or passive mode. The business case must address how carrying out an alternative will affect stakeholder interests, and vice versa. This preempts actions by those who initiate regional changes that may drive other downstream changes, while having no authority to make that change happen.

Answer the question "What does it take to fulfill our mission and achieve our vision?" The answers to this question describe catalysts of success or failure in the function's mission. Stakeholder requirements about products and services drive factors that are critical to the fulfillment of mission and achievement of vision. This is markedly true of customer requirements. These cannot be decided in a vacuum. Participants in functional analysis of activities must understand and document the impact these changes will have on employees, customers, and others.

Taking various stakeholder perspectives, scrutinize pro forma initiative events, deliverables, workflow, and integration opportunities. As they arise, examine resource and planning contentions to learn if any transition event or implementation would have a significantly adverse affect or outcome. On a best effort basis, recognize uncertainty in the plan or its outcomes, quantify transition and stakeholder risks, use previous lessons-learned that apply, and delineate any potential benefits or values. Identify underlying causes (e.g., drivers, inhibitors) of risk, and outline past successful strategies for dealing with these type of causes. Integration opportunities normally focus on shared data assets or continued use of legacy systems as migration backbones. Learn if there are established, clear lines of (internal) data ownership, custody, and access.

Develop impact statements, positions that outline concerns and recommend suggested courses of action that could mitigate, or at least lessen, impact or risk. These impact statements may also include suggesting tailored messages that would resolve uncertainty in affected stakeholders, or recommending certain time frames that may increase chances for success. Section stakeholders through resolution of impact statements, with an aim to produce impact agreements. Affected stakeholders must be given an open and fair forum to express their concerns and disagreements. Reach a consensus position; one where not everyone may agree, but everyone can support, even if their support is passive.


8.1.5.4  Boundaries of the Business Case - Functional Performance and Metrics
Measures identified within the Program Manager's business case must be subsets of the NATO Logistic Strategic Plan or other relevant documents such as Component or Agency Strategic Plans.

The Primary Measure May Not Consider Cost

Although cost is a primary measure, it is not sufficient to be able to say that the TO-BE is achieved by accomplishing this measure alone. Additional measures may be used to relate to the organization's overall goals and objectives. Performance measures are used to distinguish and weigh primary benefits received from the activity generating the measure. Meeting the desired level for these measures could imply that the level of benefit the organization seeks was attained.

"Not everything that counts can be counted, and not everything that can be counted counts." Albert Einstein

Performance measurement is the assessment of effectiveness and efficiency of activities, operations, and processes in support of achievement of an organization's missions, goals, and quantitative objectives through application of outcome-based, measurable, and quantifiable criteria, compared against an established baseline.

Good management practices require the establishment of clear organizational hierarchies of goals and performance measures. Goals and measures used at lower organizational levels must be linked to NATO's mission/strategic goals. Mission benefit, not cost and schedule constraints, must be the overriding measure of success for any IT project.

There are four classes of performance measures used in both functional and economic analysis:

Discuss what organizational performance measures are being used and how they are influenced by the initiatives, preferably through use of a selected metrics from the NATO Logistics Strategic Plan or Agency Plans.

A performance indicator is a factor used to assess speed or responsiveness, quality, or cost of a process, input, output, or outcome. In effect, it is the unit of measure for a performance measure. Indicator definitions can be used to compare projected outcomes of each alternative, as well as how the indicator will be maintained for continued feedback into the success or failure of the selected alternative once implemented. A brief discussion on the costs and benefits of collecting this monitoring information should be included, especially if a method of collection must be set up to facilitate the new metric.


8.1.5.5  Boundaries of the Business Case - Initiatives Considered
Develop high-level plans that describe new or different approaches to doing business according to performance targets and business objectives. It is likely that several improvement ideas and plans will be identified. However, not all of them can, or should, be put into place. Find possible ways to do each approach and then parse these into achievable packages of work and results. Project-level groupings of work that produce distinct deliverables are named initiatives. Initiatives can vary in scope and size. There must be a narration of each initiative included in the business case. Describe how strategies will be put into place in terms of specific actions, timeliness, and resources. Evaluate initiatives against demonstrated implementation experience or other's best practices. Identify and assess each candidate initiative's risks and define different paths to abate such risk. Match each candidate initiative to common barriers or characteristics.

Barriers to successful implementation, previously mentioned, refer to those situations that tend to be outside the span of control of those making change, or that have prevented desired outcomes of previous attempts to adopt new ideas or technologies. Similar implementation efforts must find ways to overcome or bypass these barriers to achieve closure. For most individuals, change is difficult. Therefore, resistance may be encountered when gathering accurate information from individuals within the organization. These barriers are overcome with proper communication. Explain why certain questions that are being asked can promote a more open environment for dialog. Sometimes there is nothing to do except document within the business case, any issues relating to the people barrier.

Take Care Not to Introduce Bias

Take care not to introduce bias into the process when creating alternatives. Technology initiatives must have a clear relationship to process improvement initiatives when they are combined into a single alternative. Ask this question: "Does this technology initiative enable each and every process change included in this alternative?" If the answer is no, the technology initiative should be excluded from the alternative. This approach will prevent the perpetuation of "pet" technology projects that are impractical or have no real benefit to the organization.

Each initiative must reflect progression (including phased achievement) toward affected performance targets. Convert performance targets into provisional performance objectives. These objectives can frame stepped-investment justification and selection decisions, and drive downstream development of the TO-BE process.

Providing clearly defined initiatives give the decision-maker an understanding of what the business case is about, because in the end, the business case is about initiatives.


8.1.5.6  Boundaries of the Business Case - Alternatives Considered
The objective of functional process improvement is to achieve the vision. Because each initiative considers only one or a few areas for improvement, analyze combinations of initiatives to address each goal. It is unreasonable to study all combinations, because there will be too many. A more practical method is to combine logical packages of initiatives that work well together or portfolios of a set of initiatives with common objectives or goals to form alternatives. As a rule, initiatives sharing common critical performance measures or objectives make the best business case for being put in one portfolio versus another. However, each set of related initiatives must put into place changes that handle the same predicted level of process workload within the planning horizon. Another point to consider is the decision-maker's focus on the business case and the corresponding emphasis to place on each element of analysis across all alternatives. Look at tuning the business case's emphasis in the same way the settings are adjusted on a sound system's graphic equalizer.

The reference for measurement is the status quo, or the baseline. Baseline cost and performance provide threshold values for the cost and performance of alternatives. AS-IS costs and performance measurements revised to reflect any approved changes not yet implemented would provide this baseline. The business case should include at least three alternatives, including the status quo. Each alternative must give functional management a complete view of financial and operational impacts of proposed changes.

Develop total investment cost flow and total anticipated process cost savings flow for each alternative. Quantify total risk assessments based on probability and consequence of failure for each principal initiative activity. Develop an action plan for each alternative, and assemble as a total package for review by the approval authority. Pre-test any controversial ideas with the approval authority or his or her peers. Use economic simulation techniques (e.g., risk-adjusted discounted cash flow) to develop supporting cost schedules.


8.1.5.7  Boundaries of the Business Case - Key Assumptions
Assumptions are necessary in a business case because they are explicit statements used to describe present and expected future behavior upon which the business case is based. Since no one knows what the future holds, assumptions must be used to set boundaries for painting the business case. Example assumptions include future workload, estimated useful life of an investment or system, and the period over which alternatives will be compared.

Summarize key economic and political indicators used for each alternative assessment; also briefly discuss what non-quantitative issues need consideration. Employ a sensitivity analysis or another method and focus on assumptions that are thought or historically demonstrated to cause the greatest amount of variation in costs and performance.


8.1.5.8  Boundaries of the Business Case - AS-IS Activity Model

Assumptions Should Be Documented

Assumptions should be documented for the decision-maker's consideration. Obvious assumptions such as there will be a next year, are not required. The assumptions should be clearly defined. Work closely with the decision-maker to determine critical assumptions. In some cases, the decision-maker may want to provide additional information. An example assumption would be the frequency of an event remains constant in the future.

The current process-flow of that piece of the organization that is being considered in the business case must be detailed to a level where all stakeholders can support conclusions drawn from the analysis. It also must be developed enough to understand areas affected by proposed initiatives. Finally, it must be detailed enough to assign costs and link performance measures. This step is also considered developing the baseline or baselining. It provides the picture of what is being changed that will be used to compare with the alternatives. The entire span of activities depicted in a business case should map to both the NATO CALS Data Model and other NATO process models. Integration Definition Function Modeling (IDEF0) modeling as defined in Federal Information Processing Standard (FIPS) Pub 183 is recommended.


8.1.5.9  Discussion of Alternatives - Functional Process Description
Functional Analysis is about what is done. This should describe significant outcomes, outputs, measures, and inputs involved in executing this process. It must focus on efficiency (best use of inputs), effectiveness (best delivery of outputs and outcomes), and productivity (output over input). Sometimes these differences in TO-BE versions tend to be very subtle, and this may require a greater focus on change in flows than on the processes themselves. Another approach is to build higher-level context models. These show how the change impacts upstream or downstream activities (that is, the outcome difference may not be within the scope of the activity model). Give attention to those actions that will eliminate or reduce excess and delay.


8.1.5.10  Discussion of Alternatives - Performance Impact and Metrics
Provide the projected metrics that is expected to result from each alternative and indicate how the metrics compares to the baseline. At this level, we are talking about how mission requirements, strategic goals, expected outcomes, and expected performance will be met by this alternative. A conscious, focused effort should be made at each stage of the process to recognize and document the relationship of each requirement to the accomplishment of a higher-level goal or objective.


8.1.5.11  Discussion of Alternatives - Technical Architecture (Optional)
Often, the business case will be considering technology that an initiative is driving, employing, or developing to achieve the organization's goals and objectives. Develop a clear picture to explain how technology will do this, what activities this technology will impact, and how it blends with other implementations.

Information Technology (IT) alone is not sufficient to justify the cost. It must be shown that the IT will impact the organization's activities in a way that improves benefits as well as reduces costs. This should be the predominant focus of the technological discussion within the business case, not a detailed technical discussion of its function and components. Not how it works, but how it impacts the operations that it supports.


8.1.5.12  Discussion of Alternatives - Cost Projections (Economic Analysis)
Economic Analysis is about the costs and benefits of how something is and will be done. The business case places emphasis on future economic benefit rather than on period costs, and on "value-added" as opposed to "cost savings." This section must focus on what investment option should produce the best use of investment capital.

The economic analysis should focus on productivity, and describe how it mitigates both initiative-fulfillment risk and organizational uncertainty stemming from the intended changes. It should offer the decision-maker multiple cash flow calculations.

Underscore that there is no one right answer, only one best answer. The best course of action should blend the total cost of involved processes, output performance, and outcome impacts prevailing over all sub-optimal choices; e.g., those that only justify better technology for the sake of better technology. Qualitative considerations may tip the scale between alternatives, as when data or system integration, purchase of COTS software, inadequate security mechanisms, et al. cannot meet some mission requirement.

The organizing backbone of the business case is a time line extending across months or years. This provides a framework for showing management how they can work to help put financial tactics into place:  reduce costs, increase gains, and accelerate gains.

Cost Projection Issues to Consider

· Consider the impact of the initiative across multiple fiscal years.
· Consider the time value of money. (When adding costs across years, dollars in future years must be discounted.)
· Consider inflation by including adjustments in future year cost projections by a rate consistent with this economic reality.
· Consider, for comparison, constant dollars to demonstrate the impact of the inflation assumption.
· Consider that estimations based on various operational cost data may be the best estimate. Consider using the 80/20 rule (where 80% of the costs are made up of 20% of the activities). The ratio of investment to savings should be so significant that most estimating errors will be insignificant.
· Consider the following measures:  current project funding support, dollar value of benefits, projected project costs, rate of budget expenditures compared to projections, and adherence to baseline schedule or time frame.
· Consider the Earned Value Management approach that provides an effective mechanism for linking cost, schedule, and benefits performance for acquisition programs.
· Consider Internal Rate of Return (IRR) that demonstrates what interest rate would have to be obtained outside the organization before the decision to invest funds outside rather than on this initiative.
· Consider Return on Investment (ROI), also called Return on Assets, that demonstrates what rate of return can be expected from the investment outlay.
· Consider Risk Adjusted Discounted Cash Flow (RADCF) that considers risk and discounting cash flow. It brings all alternatives back to the current year for a total cash-flow comparison. Any positive RADCF value is considered a good investment, but another alternative may demonstrate greater RADCF value, making it the preferred alternative.

The business case is not a budget, not a management accounting report, and not a financial reporting statement. This distinction is meaningful for deciding which kind of cost and benefit data go into the business case:  incremental values or total cost and benefit figures. Incremental values are probably the right choice in decision support situations, notably where both costs and benefits will enter the business case.


8.1.5.13  Discussion of Alternatives - Cost Projections - Investments
These costs should be the complete and total costs necessary to have the alternative turned into a reality. This includes training and needed purchases. Provide an aggregate, initiative-level mapping that would help view required cash flows over time as they relate to each alternative. This would also link to activities that an alternative affects. At the heart of this mapping is a high-level course of action used to frame when and how a TO-BE state becomes operational. This is called an action plan. This should enable the decision-maker to see how cash spending increases until some point at which operations costs start decreasing.

Prepare an action plan that specifies what needs to be done and when. A solid and complete action plan has each of the following characteristics:


8.1.5.14  Discussion of Alternatives - Cost Projections - Operational
At a minimum, the business case should reflect the AS-IS cost of doing the whole activity, coupled with a targeted reduction percentage that can be applied over time (tied to its initiatives). This will show expected TO-BE activity costs once changes are put into place. Moving it to the next level of output costing, or better yet outcome costing would be desirable, because this is what most people can relate to.

Activity Based Costing (ABC) relates cost of resources to activities that consume them. At a minimum, this information provides insight for calculating future out-year resource requirements and costs. ABC can provide calculations that will depict activity levels through the planning horizon. These costs should be ongoing operation costs directly contributing to activities defined within the activity model mentioned in the functional analysis.


8.1.5.15  Discussion of Alternatives - Risk Assessment
This must be discussed with or without having quantifying information. Even with these categories, it cannot be assumed that some standard mitigation routine can be applied to every one of that type. Each identified risk needs to be separately looked at and handled. To avoid paralyzing the decision-making processes, rank these factors and address the most ominous of them.

Recognizing risk does not have to hit an exact number, but instead distinguish one alternative from another by the degree of risk that separates them. This recognizes that not every decision carries an equal degree of failure or success. It allows the decision-maker to recognize the fact that estimates have varying degrees of becoming reality.

A Proper Study of Risk

A proper study of risk should be addressed in any business case, but risk is perhaps the most difficult area to analyze. Risk should be viewed as "an undesirable implication of uncertainty." Risk can be quantified in terms of odds (probabilities) or remain non-quantified (uncertainty). In situations involving (what we commonly call) risk, probabilities of various outcomes are known. Under uncertainty, there is no knowledge of the probability distribution of possible outcomes. We can classify different categories of risk: Business Risks, Process Risks, Technical Risks, and Organizational Risks. Risk to the organization can be an influence from other organizations that formed alliances because of the alternative (i.e., outsourcing).


8.1.5.16  Comparison of Alternatives - Functional
Describe the TO-BE activity models for each alternative and describe how they address performance measures vis-à-vis the AS-IS activity model. These TO-BE models should represent a different future state in line with each alternative. This should also point out why the alternative would achieve a distinctly different manner of doing business, rather than continuing with the AS-IS, or baseline. Annotate differences between each TO-BE diagram and the AS-IS diagram, and among TO-BE diagrams. These diagram comments can depict organizational and other resource volumes as well as volumes represented by the flow arrows. Tying initiatives to both AS-IS and TO-BE activities illustrates intended changes and helps visualize necessary project work.


8.1.5.17  Comparison of Alternatives - Performance
Use various charting techniques to show expected performance improvement in line with realizing changes put into place by various initiatives. Another technique arrays over a timeline the expected performance level ranges for each measure and all alternatives in a table that is highlighted in red, yellow, or green. Regardless of the approach, provide the decision-maker with a straightforward picture of expected performance. Guidance in using the software application Turbo BPR Version 2.5 for business case development is available on the Internet.


8.1.5.18  Comparison of Alternatives - Costs
As stated earlier, the organizing backbone of the business case is a time line extending across months or years, as the figure suggests. A graph of total investment and operational costs for the baseline and each alternative should be provided, as well as any other presentation helpful to the decision-maker. Increasing or accelerating gains, or reducing costs may effect changes in cash flow.



8.1.5.19  Comparison of Alternatives - Investment Costs

Value-added Must Be Considered

Value-added must be considered over costs alone. The business case must consider the cost of the initiatives, but even more so, it must identify the value-added to the organization. Reducing services just to reduce costs will more than likely not accomplish the organization's strategic goals and objectives. Although one initiative can show greater cost savings, the initiative may compromise value. This should be clearly stated within the business case. Other alternatives that generate greater value, but at a greater cost, may present justification more consistent with NATO goals and objectives. Both tangible and intangible benefits and costs should be recognized.

Cost measures gauge the number of investment dollars needed to achieve a particular milestone or activity level. For example, a performance measure can be the dollars necessary to move an effort through one phase. The granularity of a performance result is not as important as tying the investment of dollars to the achievement of some result. This task is decidedly different from measuring whether budgeted dollars were spent in a particular fiscal year. Schedule measures gauge the amount of time necessary to obtain a particular performance result. As stated above, a performance measure can be the amount of time needed to move an effort through a phase or the amount of time to do part of a phase. What is important is that the schedule measure is tied to the same performance result as the cost measure. Investment project baselines should contain major events that impact the effort. Achieving these events on time may demonstrate satisfactory progress. For each effort, establish a target date that is based upon contractual requirements or the need to complete an event before another can start. Thresholds for these events can be set by policy (e.g., 90 days beyond target) or by absolute need when there is no slack in the schedule.


8.1.5.20  Comparison of Alternatives - Operational Cost Savings
Exploit Activity Based Costing capabilities in the business case by assigning projected costs to various activities affected by each initiative. The change in activities from the AS-IS activity model to the TO-BE activity model should make up cost savings realized by that initiative. The TO-BE activity model should always represent increased value-added to the organization.


8.1.5.21  Conclusions, Recommendations, and Issues
This section should be prepared at the end of the business case development and may include a sensitivity analysis. Make an initial conclusion and recommendation to the decision-maker based on the findings. Conclusions, recommendations, and issues should be documented as an amendment to the business case as provided by the decision-maker.


8.2  CALS Techniques


8.2.1  Approach to Implementation - Change Management


8.2.1.1  General


8.2.1.1.1  CALS
CALS and/or its organization must be seen as an enabler of the Change Process. CALS is the strategy to implement an overarching management framework to combine technology insertion and change management.


8.2.1.1.2  PMview
This document is written for the Manager in Charge of the overall organization's change process.(in some organizations this might be called the CALS-office). The document's goal is to set a general methodology to ENABLE the Change.

We must warn you that this document is only gathering some good advises found through different sources. The document is not written out of personal experience.


8.2.1.1.3  Techniques
This is a warning. Indeed, a number of techniques exist to facilitate the Change Process. We site, the different implementations of Business Reengineering, Benchmarking, Continuous Process Improvement, Performance Based Change Management, of which some of these overlap. The techniques must be carefully chosen in function of an overall strategic goal. The prime concern of the Change Manager should be to carefully integrate, Process Change, Technology Insertion, and Organizational Change.


8.2.1.2  Step 1 - Motivate to Change
This is the first step in creating an environment in which Improvement is encouraged and nourished. Its aim is barrier reduction and general goal setting. Management must have a clear vision of what it wants to accomplish and where it wants to go.


8.2.1.2.1  Top Level Management
Top managers' recognition of the need for significant change and their willingness to learn more is the first step toward effective change planning. It is probably not possible to overstate the importance of the role of top management. Leadership is essential during every phase of the change process. In fact, indifference and lack of continuous involvement by top management are frequently cited as the principal reasons for the failure of Improvement Programs. To be successful, you will not only need the vision, planning and active involved leadership of top management, but also such practical support as providing resources for implementation - the necessary time, money, and personnel. Delegation and rhetoric are insufficient. Without top management assuming an active role as champions of the Improvement Program, you will not obtain the full scope of benefits available.

One of the first tasks of the Management will be to draft a Vision Statement


8.2.1.2.1.1  Vision Statement
A key step in the Change Process is the creation of a common understanding among top managers about what they want the organization to look like in the future and what principles will guide the actions they take to achieve the Modernization. his strategy will become the basis for formal statements of the new organization's vision and values.

The Change Vision should be a clear, positive, forceful statement of where the organization wants to be. It should be expressed in simple, specific terms. The vision must be powerful enough to excite people and show them the potential of what can be done. A well-crafted vision statement supported by action can be a powerful tool for focusing the organization toward a common goal.

Whatever forms the vision and guiding principles take, it is important that they be communicated throughout the organization frequently and with conviction. It is important that the vision be followed soon by a concrete plan of action to avoid its being dismissed as a hollow slogan.

Key ideas in the new vision can be (not limited list):


8.2.1.2.1.2  Understanding
To obtain top-management commitment, you need to begin to educate senior managers regarding the impact of possible business modernization. This can be done through Workshops, Briefings, Management Guides, and White Papers.


8.2.1.2.2  Why Change
In considering a Business Modernization initiative, the first and possibly the most important success criteria is to make sure that the rationale for initiating the project is sufficient for justifying the effort and expense of the project.


8.2.1.2.2.1  Current Environment
Analyses of the current environment with a report on the lessons learned will most of the time make clear why and where changes are necessary.


8.2.1.2.2.2  Change Drivers


8.2.1.2.2.2.1  Fear of Failure
There needs to be sufficient motivation for the enterprise to make significant changes for improvement. In the business environment, this motivation is often driven by actual or perceived failures in performance. This actual or perceived failure can apply to how the enterprise measures up against the competition in terms of production, distribution, customer service, price, etc.


8.2.1.2.2.2.2  Critical Assumption Analysis
Under CAA, stakeholders in the enterprise identify the assumptions under which their business is conducted. They then attempt to isolate those assumptions, which, if violated, would cause the enterprise to cease to exist as it is today (e.g., the assumption that "quality watches must be precision machines" or that "the cold war will always be with us," etc). All assumptions, but particularly the ones in the critical category, are candidates around which to build a case for action.


8.2.1.2.2.2.3  Need for Structural Evolution
A second commonly used rationale is the need for structural changes in the organization. The structure of our Defense Organizations has always been vertical. That is, a top-to-bottom management structure - with decision-makers at the top and soldiers at the bottom - has characterized the typical army. This generally has meant that strategic planning for our Defense enterprise occurs at a high level and is delegated down to divisions, departments, and individual job performers in the form of policies, procedures, and directives. In response, performance appraisals - which can take the form of periodic formal performance reviews or weekly status reports, sales figures, etc. - are reported back up the chain of command. This paradigm operates in a strict up-and-down the chain of command communication manner.

The emerging paradigm, however, has enterprises relying more on concurrent, cross-functional teams (i.e., teams that cross organization boundaries) composed of knowledge workers organized in a horizontal fashion. The goal of these cross-functional teams is to produce the enterprise's products most effectively by focusing on the product processes, not the organization of the enterprise itself. Customer success relies on these cross-functional business processes to build and support the product. Under this paradigm, in fact, the quality of a product consists of both that product and its associated processes in designing, building, and maintaining it over its useful product life.

Structural organization evolution, however, does not come easy to an enterprise. While processes can be changed overnight, people and organizations typically cannot. Therefore, part of this structural evolution is not only an increasing corporate awareness but also a change management plan that plans for the orderly, evolving transition of the organization and the job performers within that organization from a vertical, structure to one that is more horizontal. This change management plan must include processes for facilitating information flow and communication across organizational boundaries.

What occurs between management's setting strategic goals and workers on the line reporting their progress and all the layers in between? What occurs is a business process-a series of time-ordered individual activities performed as discrete events in a larger scenario that is guided by a strategic vision that must be implemented in stages, at the tactical level, to achieve the overall strategic objective. To use a literary analogy, one can think of the business process as a stage play: the play is written and directed (by management) to achieve an artistic (corporate) effect; the actors (employees) play their roles to enable this achievement; each scene (discrete event) contributes to an overall plot (process) that unfolds sequentially, uniformly, and deliberately; and all is held together by the motifs and themes (policies and procedures) that manifest themselves as each scene unfolds.

With this business process paradigm, however, there are often communication breakdowns (or disconnects) between various groups and/or departments that inhibit process performance. Many enterprises recognize that such breakdowns pose significant challenges to process improvement initiatives. In fact, the success of a Change effort largely depends upon discovering and analyzing these disconnects.


8.2.1.2.2.2.4  Agility
A third principle or rationale is the need to align an enterprise's strategic goals with the objectives of its departments and employees, as well as with the tactical processes that are intended to achieve the overall strategic goals. It is generally recognized today that success in a rapidly changing environment is closely tied to how the enterprise proactively manages and evolves its business practices as part of an efficient implementation of its overall strategic plan; and how quickly and effectively the enterprise leverages new opportunities. We have, in fact, entered the age of agility.

Of concern to any enterprise today is the increasing rate of change in the socio-economic environment. The rate at which we must adapt our enterprise to the "current" business environment is changing exponentially as information and computer technologies seem to change and improve on an almost daily basis.

Today's challenge is determining how to effectively respond to, and manage, change. Every manager-in fact, every job performer (or employee)-is faced with the fact that the current situation is, or will shortly become, unfavorable. More importantly, radical change will often be required. Critical business issues intricately tied to change include affordability, responsiveness, quality assurance, resource scarcity, and assurance of total customer success.


8.2.1.3  Step 2 - Develop Change Plan
Once a Vision Statement has been drafted by top management you can start to develop the Strategy for the Change. This will include, (start) setting up an organizational structure, the identification of the "customer" needs, the selection of organizations who will be involved by the Change Process, and the determination of needed/available resources.

However, be aware that there is no one right way to implement the Change Process in your organization, no guaranteed recipe for success. What followed is only offered as a guide in developing strategies and associated plans to carry out these strategies. It is important to take a flexible approach to capitalize on an organization's strong points so that energy is focused on key improvement opportunities.


8.2.1.3.1  Develop an Organizational Structure
Developing an organization structure that will institute, sustain, and facilitate expansion of your improvement effort is an essential element for success. This "phantom" structure can be called CALS-organization or office; however, it might be a good idea to give a more forceful name, which has a specific relationship to the Vision. The following is a proposed organizational structure. This structure will grow as the Change Process evolves. Important is the integrated nature of the structure: high involvement of top management and of the employees from the departments.

In the early stages of the Change Process, a team of top managers should form an Executive Steering Committee (ESC). This ESC will be chaired by the Organization Head or Deputy. By establishing the ESC, top management provides identity, structure, and legitimacy to the Modernization Process; it is the first concrete indication that top management has recognized the need to improve the process, and has begun to change the way the organization conducts business. The first task of the ESC is to publish its vision, guiding principles, and mission statement.

The ESC is at the top of the Change Structure. The committee members provide leadership and direction for the Change Process. Below the ESC, Change Managers (CM) work on the organization's key change areas. There can be one or more CM-teams depending on the extent of the goals set for the organization.

To ensure good communication between ESC and CM-teams members of the ESC act as sponsors and linchpins on each CM-team.

Below the CM, teams are Change Development (CD) Teams that work on specific problems assigned by the ESC.

In turn, the CD-teams can designate Tiger Teams (see Step 6) to carry out one task. When the task is completed, the Tiger Team is disbanded. Members from CM and CD-teams will as sponsors and linchpins in the same manner as the ESC-members


8.2.1.3.2  Identify Customer Needs
To make the change process work you must focus on meeting your customers' expectations (=needs and wants). Customers can be either coworkers (=internal customers) or end users (external customers) of your services or products.


8.2.1.3.2.1.1  Customer - Things We Know


8.2.1.3.2.1.2  What is a Customer?


8.2.1.3.2.1.3  Select Organizations
At the outset of the Change Program, you must choose to implement it either widely or with one or more product or process development pilots. A partial implementation will allow focusing the resources on specific projects. Selecting the change targets involves identifying the potential opportunities, setting priorities, and choosing the effort that offers the most significant opportunity for business improvement.

It is also possible to tailor a combination of the two approaches to fit particular circumstances. In any case, the decision is one that each organization must make after realistically assessing a number of factors, including:


8.2.1.3.2.1.4  Determine Resources
The Change Plan must disclose how much it will cost to implement the Change, the level of effort to be funded, where the required time will come from and how it is to be accounted for, who will provide what personnel, and what facilities will be used. Obviously, these resource decisions must be coordinated with all those affected by the decisions. This part of the plan may the hardest to develop because Change Management will now be competing with other requirements for organization resources. In addition, it may be the first test of the management's commitment to the Change Process. Milestones for providing the identified resources should be included in the plan.

One must be aware the new way of doing things are to become a way of life in the organization, and that in reality Change Management is not competing for resources because it will be integral part of the future corporate mission.


8.2.1.4  Step 3 - Conduct Training
Training and/or retraining are essential to the success of the Change Project. Training programs will create the kernel of an organizational culture, which will create a favorable climate for the change program.

It is important to note that during the early stages of implementation of the effort, attention should be given to developing a detailed plan for training executives, managers, engineers, and all team members. This includes:

Besides learning the necessary technical skills to use the tools, each team-member must be encouraged to learn the basic philosophy, principles, and practices involved in making the new strategy one that focuses on "Why do we do what we do at all." You need to provide the freedom for your team members to raise questions regarding problems that are thought of as business-as-usual practices. All employees must better understand their jobs and their roles in the organization, and how their jobs will change. Such understanding goes beyond the instruction given in manuals and job descriptions. Employees need to know where their work fits into the larger context: how their work is influenced by workers who precede them and how their work influences workers who follow.

To prevent surprises and delays in implementation, the training plan must include reasonably accurate estimates of the schedule and required resources.


8.2.1.5  Step 4 - Identify Goals and Performance Measures
Once the Change targets for improvement have been set, the team should define the change efforts as clearly and completely as possible.

The principal benefit of this step is that Change Development teams begin their work with a clear understanding of their mission and an idea of what successful performance will look like. Their efforts are properly focused on how they will achieve the process vision and performance objectives set in place by senior management, not wasted on trying to determine what their objectives should be.


8.2.1.5.1  Business Case Analysis
It is critically important for the for a successful Change Process to have a clear understanding of the business case justification. You must include a strategic planning, business issue identification, business opportunity identification, critical process identification, strategic goals, and top-level cost performance analysis. This is not as difficult as people think. Most enterprises have some picture of their performance, as well as some idea about how much they want or need to change or improve over a given time frame. The difference between where they currently are and where they want/need to go is the driving motivation for the Change Process. The difference must be translated into a set of goals, initiatives, and top-level initiatives that form the roadmap or strategic plan for improvement. This plan can then be used to further expand definitions or critical business issues or opportunities, as well as to identify the core (or critical) business processes that support those business issues.

By identifying critical business issues, processes, and goals, this process produces the primary inputs to the Change efforts. A business case based on these goals, initiatives, measures, and estimated costs needs to be developed to reassure management that the enterprise is headed in the desired direction and that the fundamental question of affordability (or return on investment for the effort) is identified early on. The specific benefits to be gained also need to be identified at this point. This initial business justification or forecast will be used to benchmark progress throughout the change effort when preliminary or intermediate results will be compared against the business case to ensure that the options being chosen or evaluated are consistent with the business case.

The business case should focus primarily on what it takes to help a customer to be very successful. That is, the ultimate goals of a business from the customer's perspective (and, therefore, the business case itself) need to demonstrate how the business goals, such as revenue, profitability, improvements in other socio-economic factors, growth of interest to the business, etc., are also supported.


8.2.1.5.2  Performance Measures
An important-and often overlooked-component of an effective Change Initiative is the yardsticks to use to measure and gauge progress and performance. If the Change Team knows from the outset their goals and targets in a measurable form, the probability of success is greatly increased. There needs to be meaningful metrics, and the means to measure for that metrics.

The Change Development teams should set in place a means of measuring performance to ensure that the improvement benefits are realized.

The measurement process needs to be viewed as a process for obtained vital insight into the progress, products, and/or processes of the change project. This insight will help the decision maker to make more informed decisions, identifying deviations from plans earlier, thus allowing mid-course corrective actions when it is least expensive to make them. Measurement should not be viewed as a set of predefined measures that never change throughout the program. Instead, the measures used need to address the current issues at hand, which may change with time. The measurement process includes the activities for selecting and specifying the measures, establishing a measurement plan, planning and executing the data collection and storage, analyzing the data, reporting the results, and most importantly, taking action.

The measures chosen must provide insight into the identified objectives, constraints, risks, and issues. As this change, the measures in use need to be re-evaluated for adequacy in providing the necessary insight and changed, if necessary. The measure remains active only if it has a valid, justifiable purpose.

Generally peaking, when selecting the Performance Measures five major factors should be considered. Cycle Time, Cost, Quality, Asset Utilization, and Revenue generated.


8.2.1.5.2.1.1  Cycle Time
The first of which is cycle time. Cycle time can be measured as the how responsive an enterprise is to the customer's needs (i.e., the ability to get a product to the marketplace in a timely fashion). The term can also refer to the ability to increase or modify capacity to produce a product or service in response to market needs, as well as the ability to respond more quickly to changes in the marketplace or business environment.


8.2.1.5.2.1.2  Cost
The second major factor to consider when making the business case is cost. The business needs to have affordable systems or methods of productions for goods and services.


8.2.1.5.2.1.3  Quality
The third factor is quality. Quality does not simply refer to meeting product specifications (or standards of excellence), but also includes non-quantifiable attributes of business, such as whether customers are satisfied that the business is providing them with every means to achieve their own success. Quality is also measured in terms of the robustness and reliability of the systems provided. The bottom line of quality is that the customer feels that the system is always available to provide what the customer needs.


8.2.1.5.2.1.4  Asset Utilization
The fourth factor for consideration is asset utilization. In the case of manufacturing, asset utilization involves the availability of equipment and other assets to produce a product. In a larger sense, asset utilization is also about the ability of the enterprise to be creative, flexible, and adaptive. One of the issues the business community faces today is a critical shortage of skilled personnel resources. Ineffective business processes will quickly waste the few resources that are available.


8.2.1.5.2.1.5  Revenue Generated
The fifth factor for consideration is revenue generated (or the value of the output product). Clearly, revenue is not the only measure of output in, for example, a government organization where output may be the number of missions successfully flown, the form of currency, or the measure of productivity, for the U.S. Air Force. Any parameter for measuring what an industry produces can therefore, serve as its revenue. Revenue, then not only considers the costs associated with producing something, but also the benefits gained by the customer receiving the product. In the case of the Air Force example above, the customer might be the public.


8.2.1.5.3  Goal Prioritization
Critical business issues must be discovered and identified to drive the Change project for the enterprise.


8.2.1.6  Step 5 - Document, Plan, and Sell
Document your Change Plan. Create a living plan that reflects the continuous improvement of your operations and change efforts. Make this plan available to all of your managers and teams to ensure that goals and approach are communicated throughout your organization.

You must sell your program by:


8.2.1.7  Step 6 - Create Tiger Teams
A fundamental element of the Change Development is the broad use of multifunctional teams to rapidly develop new products. These working teams are created from representatives of all the functional organizations involved in the Change Project.

For meaningful, long-lasting results to be achieved for the Change effort, leadership, ownership, and participation by cross-functional teams is imperative. These teams can be successful only if their Change efforts:

The Change Development leader must remember that the key to success is communication. Therefore, the number of organization levels must be reduced. Teams must be very democratic, with participation from all members. The teams must have as much decision-making power as possible.

More suggestions to improve on success of the teams are:


8.2.1.8  Step 7 - Implement
No single correct formula or "canned" solution can be used to achieve the change implementation. Your implementation will be unique in its details, but in general, it should move your organization towards satisfying the six criteria listed below:

While implementing the changes, one should have a constant eye on the five layers for change: People, the Business, the Processes, the Information, and the Physical (Technology) layer. While each change or change element will target one of the layers, it will have influences on the others.


8.2.1.8.1  People
At the top people, characterized by:


8.2.1.8.2  Business
The business itself is characterized by:


8.2.1.8.3  Processes
The processes are at the center of the organization and are characterized by:


8.2.1.8.4  Information
At the heart of the processes is the need for information, characterized by:


8.2.1.8.5  Technology
At the lowest level, we find the Physical Layer that will enable the changes:


8.2.1.9  Step 8 - Monitor
After the changes have been implemented, the Development team should document the improved performance and the change process. That documentation allows others to benefit from the lessons the team has learned, brings recognition for the team's efforts, and provides a road map for replicating successful techniques.

Recommending follow-up actions or subsequent improvement efforts is also appropriate.


8.2.1.9.1  Evaluate Results
Identifying the existing culture and management style of the organization helps to identify those vital processes to be targeted for change and provides a baseline measurement for judging progress. Assessments can take a variety of forms and frequently involve identifying and surveying the organization's internal and external customers, managers, and employees. The following key considerations are often probed:


8.2.1.9.2  Recognize Success
The success of Change is determined, in large part, by the degree of importance the organization places on it. Recognition is one of the most important ways to reinforce a proactive, positive change in behavior as it relates to the new processes. Recognition is given for the successful application of reengineering principles and practices.

The goal is to create an environment in which change in the customer's interest is encouraged, and then celebrated when it does occur.

Recognition is a means to demonstrate respect and appreciation for all employees, whether design guru or janitor, and the value they add to your business.

Recognition and reward are not the same things. Recognition means noticing ("recognizing") a person or team doing a good job. A manager may notice the good job at any point along its progress - not only when it is completed. Recognition usually takes the form of praise, either spoken or written. It may be as simple as a word of approval about the way an employee ran a team meeting, or as formal as a letter of commendation with copies sent to management.

Recognition provides both motivation and support for employees; people clearly work better when they know their efforts are valued. Research has shown that such reinforcement can also have a real and measurable impact on productivity. To provide effective reinforcement, recognition should:

Reward is given at the completion of a job. It is tangible, and usually comes in the form of mementos, merchandise, travel, stock, or cash. Rewards range from a simple plaque to a profit-sharing program. Rewards say, "You deserve to share in the tangible assets of your work," and as such can be powerful motivators.

Change Development is bolstered by the effective use of recognition and reward. All managers, at all levels, should continually identify those teams doing a good job - and then create ways to tell them so.

Recognition and reward should be woven into the very fabric of Change Development. People who assume responsibility for continuous growth in meeting customer requirements are in turn motivated to further growth by honest recognition of the large role their efforts play.


8.2.1.9.3  Adjust
Your Change Development planning and implementation efforts must not be locked in concrete. As you learn more about your company's strengths and weaknesses, change your Change efforts to reflect the feedback, and if the results are not as expected, then reexamine the problem and reengineer the effort, based on what was learned.


8.2.1.10  Change Tools
This Section is not meant to give ALL the tools needed to start the Modernization Program. It only gives overview of the tools that you probably will need during the first phases of your Modernization Project.


8.2.1.10.1  Success Stories
To motivate management and co-workers a file of success stories, in- and outside the organization, might be very useful.


8.2.1.10.2  Compendium - Business Technologies
To ensure that every speaks the same language it is advised to edit a "Management Guide to Business Technologies"


8.2.1.10.3  Total Cost of Ownership-Models
They will allow you to make the cost trade-offs.


8.2.1.10.4  Business Process Modeling Tools
During the Change Process there is a strong need for means that enable better documentation, communication, understanding, and learning, especially with regard to development processes and the inherent process know-how. Business Process Modeling (BPM) tools will help doing so.

Which BPM-tool(s) to choose will depend on your ultimate goals. We identify four distinct set of user requirements for these tools: business diagramming, business analysis, IT requirements, and IT process analysis.


8.2.1.10.4.1.1  To-Be Business Models
Those models (Business Diagrams) might be of particular interest to create a common understanding between all stakeholders of the new ways to do business.

A process model helps people to get an overview, to understand what part they play in the game, and to see who is doing what and when. This is even more necessary when processes are changing very often (e.g., due to reengineering efforts).


8.2.1.10.4.1.2  Why?


8.2.2  Guide for Developing a NATO/Government CALS Concept of Operation


8.2.2.1  Section Summary

The concept of operation is your strategy for the creation, use and management of digital data.

The CALS strategy will require different approaches to planning and contracting for the acquisition of defense systems. The information developed by contractors in management, design, build, and support functions for defense systems may migrate to a paperless, digital data delivery and access system. The planning process for implementing various CALS initiatives needs to include the development of a strategy for the creation, management, and use of this digital data.

To provide potential bidders with an understanding of specific user needs for technical information throughout all life-cycle activities, a NATO/Government CALS Concept of Operation (NCoO) should be developed.


8.2.2.1.1  Purpose/Scope
The planning process for acquiring any defense system needs to include the development of an information strategy aimed at taking advantage of automation and integration capabilities.

This strategy would employ a computer-based environment for generating and storing unique data elements only once and yet provide multiple accesses to multiple applications. This strategy, depicted in the form of an NCoO, identifies typical users' needs for technical data throughout all life-cycle activities of defense systems management, design, manufacture, and support functions.


8.2.2.1.2  How to Use This Section
This section is intended to be used as a guide for creating an NCoO. A structural approach to implementing CALS requirements is provided. Some examples of the statements to be used in the Acquisition Plan (AP) are included in this section in the next paragraph `CALS Implementation strategy'. Figure 8-1 shows the relationships of the NCoO to the contracting process. Figure 8-2 diagrams the process required to determine how CALS should be applied to the contract deliverables. Further paragraphs provide the general requirements and considerations for the process described in figure 8-2, including the specific process for defining the data types and deliverables, data users, data utilization, user infrastructure, data format, applicable specifications and standards, and data delivery media.


8.2.2.2  CALS Implementation Strategy
Before developing a NATO/Government CALS Concept of Operation (NCoO), the Acquisition Plan (AP) should show a clear signal of commitment to the NATO CALS strategy. For this purpose, the AP should include the following statements:


8.2.2.3  Relationship of the NCoO to Contracting Process
The NCoO generated utilizing this guide will provide potential bidders an understanding of specific NATO needs for technical information throughout all relevant life-cycle activities of the defense system. The relationship of the NCoO to the various contracting steps is shown in Figure 8.2.2.3-1.

 


Figure 8.2.2.3-1  The CALS NCoO in the Contracting Process



8.2.2.3.1  Pre-Request For Proposal/Request For Quotation Activities and RFP/RFQ Release
The NCoO planning process should start as early in the acquisition process as possible. The NCoO is a document that is prepared during the acquisition planning and requirements determination activity for each procurement. It is used to provide information to potential offerors about NATO's or the NATO nations' infrastructure and CALS implementation strategy for defense systems. The process for gathering the NCoO information should simply be part of the overall data call conducted during the pre-RFP/RFQ activities. An NCoO survey should be distributed to the functional organizations to gather the information.

Development of a NCoO will help ensure that NATO/NATO nations, referred to, from now on, as the CUSTOMER, receives the correct version and formats of digital data products needed to acquire and support a defense system. The NCoO can assist the project manager in determining:

A flow diagram of the entire process is shown in Figure 8-2.


8.2.2.3.2  Contractor Proposal
Referencing the NCoO, potential bidders should be required to develop a Contractor's Approach to CALS (CAC) in their prepared responses to the RFP. The CAC is a description of the contractor's approach, experiences, and successes in the creation, management, use, and exchange of digital information identifying capability in the area of CALS. The customer during the source selection process can then evaluate the CAC. If CITIS requirements are included in the RFP, the contractor should address the approach to CITIS within the CAC.

The contractor should state, in the CAC document, its experience