Getting There and Enjoying the Trip: Using Roadmaps to Turn EA into Results

David Baker
Chief Architect Diamond Management & Technology Consultants
david.baker@diamondconsultants.com

October 24, 2007

EA typically delivers a future state that is impossible to reach in a single step

Current

Future

State

?
Page 1

State

The trouble is you cannot predict the economic climate that far in advance
Some organizations immediately start implementing the future state

Usually results in questions being asked 6 to 12 months later Why are we doing this? How much longer will it take? When can I expect to get my new capabilities?
Need to do SOME economic planning Impossible to take the time to determine the exact number (and type) of resources at the time of the EA plan But SOME planning is absolutely necessary BEFORE mobilizing the troops

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Your EA plan MUST record your planning assumptions

Business priorities at the time of the plan

High level cost assumptions for the transformation

High level benefit assumptions for the transformation

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What goes into a roadmap?

Business Capabilities I need the ability to.

Business Operations by doing.

Technical Solution
...with

1H06 Capability 01 Capability 12 Capability 04 Capability 07 Capability 09 Capability 02 Capability 03 Capability 05 Capability 08
Theme 1

2H06

1H07

2H07

Business Capabilities Requiring IT Support

When each capability is delivered

Theme 2 Theme 3

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Resulting in clear answers to questions held by key stakeholders

Business wants to know

IT Managers want to know EA Roadmap

Whats possible?

When do I get it? How much does it cost / save? What are the business risks?
Technical Staff wants to know What do I build? What do I build it with? When do I build it?
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Have we done this before? How do we get it done? How do I make sure its done correctly? Whats possible?

Your EA Roadmap is NOT a project plan!

A Roadmap is a time phased set of activities but at the Program/Initiative level NOT a project level You are planning the necessary transitions for a multi-year effort NOT planning the implementation

The Roadmap defines key objectives, and a high-level, prioritized approach to reach those objectives
Roadmaps have enough detail to test the business justification but NOT detailed sourcing or budgeting detail

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EA Roadmaps are created as part of the Strategy and Planning cycle

Business Strategic Planning IT Strategic Planning Release Planning
(Portfolio Mgmt)

Project Execution
(SDLC)

Business Operations

Use enterprise and business unit direction and goals to drive IT plans

Prioritize the allocation of IT resources to achieve business strategy, in alignment with enterprise architecture
Project Project

Develop projects that support businesses annual and strategic plans

Run the business

Portfolio 1 Blueprints Enterprise Blueprints Portfolio 2 Blueprints Portfolio 3 Blueprints

Filter

Project Project Project

Multi-Year Plans (Roadmaps)

Budget Cycle (Project Plans)

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Project Cycle

Continuous

The Roadmapping process Input

Current State
(strategy, process, technology)

Identify Gaps

Business
Justification

Future State
(strategy, process, technology)

Identify Themes & Initiatives

Mitigate Risk

Lay Out Roadmap

Business
Prioritization

Sequence
Initiatives

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 Identify the gaps between the current and future states

Identify the new and modified business capabilities

Consider changes to organization, processes, information and the underlying technology

Rationalize your portfolio of applications Retire some applications Rehabilitate some applications Replace some applications Eliminate some applications

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 Bundle the changes into business themes and initiatives

Initiative Support Service Model Analytics Description Enhance program through improved strategies and data analytics Capabilities Addressed Ability to leverage any external data to perform member identification and predictive modeling Ability to leverage utilization and outcome metrics at the provider level to improve network management and help shape the network Ability to access treatment utilization and efficacy and deliver feedback to providers Ability to provide aggregate and individual information regarding utilization and ROI Ability to track and predict medical costs and to properly allocate the contribution margin of products Ability to meet currently identified market opportunities through new product offerings Ability to market to and service members with no plan sponsors

Improve Financial Reporting and Analytics Support New Products / Segments

Improve financial tracking and analytics for products and enable ROI calculations Create and support new products to serve individual and newly identified markets

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 Use the prioritized capabilities to determine priority order of

the initiatives There are many ways to prioritize the list of capabilities Prioritize them directly in a business workshop (hard) Map them to the prioritized business goals (easy) Use weights, Harvey balls,

Assign each initiative the average priority of its associated capabilities (or weight them, or . . . )
Initiative Support Service Model Analytics Priority M Capability Capability 1 Capability 2 Capability 3 Improve Financial Reporting and Analytics Support New Products / Segments H M Capability 4 Capability 5 Capability 6 Capability 7 Page 11 Priority H M L H H H L

 Create business justifications for each initiative

Element
Problem statement Project Goals Market opportunity

Description
Defines the reason for the project idea to exist in the first place

Example
Cannot provide customers with real-time information

What is the project trying to accomplish; Enhance operating costs by realmust address the problem time handling of claims information What is the total size (people, revenues) of the potential market for this project? For each target group, what is the value? Upfront investment $3M claims processed per year

Value proposition Capital costs

Provide Call Reps with real time information $10M in systems

Operating Costs
Benefits Risks / Mitigants

Ongoing investment
Increased revenues, decreased costs

$1.5M annually in labor, data analysis, maintenance

Reduce customer turnover

Will conditions change to fundamentally Data in other projects will be change the need for this project? negatively impacted
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Use scorecards to show traceability amongst EA elements

INITIATIVE DESCRIPTION
Enhance medical management programs through improved strategies and data analytics

BENEFITS DESCRIPTION
Sales: Client has been rejected for bids in the past because of an inability to leverage data from external carriers and on all services available to a member Medical Costs: Improved ability to identify members and approach them with treatment options tailored to their needs and eligibility will increase the use of highly effective, low cost services and will increase medical offset. Incorporating data, in particular, can have benefits from being be the first experience in the benefit path and may become aware of high risk members before they are known elsewhere in the company (e.g., substance abuse pregnant woman). The benefits might not accrue, but they will accrue to the company as a whole in terms of medical cost reductions

CAPABILITIES ADDRESSED
1 Ability to leverage all client and any available external experience information to perform member identification and predictive modeling 4 Ability to leverage utilization, outcome, and satisfaction metrics at the provider level to improve network management and help shape the network 5 Ability to analyze the results of integration and Care Management programs to validate medical offsets, help direct program improvements, and develop new programs 7 Ability to assess treatment utilization and efficacy and deliver feedback to providers

AFFECTED IT COMPONENTS
Enterprise Data Warehouse Financial Books of Record Compliance Systems Provider Portal

BUSINESS PRIORITY
High

DEPENDENCIES/CONSTRAINTS
Project XYZ for integration of member data and enhanced individualization (2Q06)

RANGE FOR BENEFIT, DURATION & COST

Benefit Range
$0 - $499,000

Duration
1-3 months

Cost Range
$0 - $250,000

$500,000 - $1,999,000
$2,000,000 - $4,999,000 $5,000,000 - $7,999,000 $8,000,000 +

3-6 months
6-9 months 9-12 months 12 months +

$250,000 - $499,000
$500,000 - $999,000 $1,000,000 - $4,999,000 $5,000,000 - $10,000,000

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A word about costs and benefits

There is no need to do a rigorous cost/benefit analysis at this point in the lifecycle A roadmap is NOT a budget The subsequent portfolio management phase will drive the detail to a budget level (mobilize resources and costs) The costs and benefits estimated during the roadmap phase are an additional tool for determining the overall multi-year sequence Do just enough estimation Have business subject matter experts estimate the benefit ranges Have architects use engineering estimation techniques to develop cost ranges
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 Consult your architecture models to understand and mitigate

risks Consult your EA plan to understand the type of architecture risks involved New technology - risky System replacements complex and costly Lack of skilled resources risky Foundational technologies - impact the schedule Compliance requirements schedule pressure Sequence the architecture changes into slices Account for technology dependencies Account for architecture risks

Eat the elephant one bite at a time!

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 Use your work to sequence the initiatives

Sequenced Initiatives

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You can also use any number of cash based indicators to adjust the sequence (or to rule out individual initiatives)
Definition
NPV Net Present Value Discounted sum of all cash flows for the project Invest where NPV > 0 Internal Rate of Return Discount rate that produces an NPV of zero Invest where IRR is greater than an established hurdle rate Point in time where cumulative net cash flow = 0 Amount of time required to recoup the original investment from a project The maximum negative cumulative net cash flow over the lifetime of the project Represents the total amount of money required to be put into the project Return on Investment The total returns of the project divided by the total cash outflow

Pros
Measure of value creation should lead to good (best) investment decisions Easily scaleable by investment size

Cons
Difficulty / uncertainty in choosing discount rate Does not account for amount of investment required Can lead to bad investment decisions use with care!

IRR

Payback / Breakeven

Under uncertain flight to quality stock market conditions, Payback can become the indicator Appropriate to its objective

Can often lead to bad investment decisions

Peak Funding

the nature of the funding is a whole other issue...

ROI

Allows for easy comparison across projects Page 17

Does not take into account the amount of capital needed

Initiatives can also be sequenced into stages based on business need and dependency to deliver incremental capability
Costs of achieving capabilities Portfolio Management Strategy
Non-optional level of investment Address regulatory environment, align with current projects, keep current on software releases, etc. Enable initial capabilities Establish foundation for realizing additional capabilities in stages 3 and 4

Cost
Stage 4

Illustrative

Stay in business

Stage 3

Build foundation

Stage 2

Stage 1

3
Capability 4

Delivers additional capabilities in response to pain points Improve effectiveness Dependent on stage 2 Delivers efficiency focusing on migrating capabilities to new strategic platforms Dependent on stage 2

Improve efficiency

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 Lay out the roadmap

2006 2007
4Q 1Q 2Q 3Q 4Q 1Q

2008
2Q 3Q 4Q

2009
1Q 2Q

Theme
System Foundation & Information Management High Quality Data Capture & Information Exchange Dynamic Processing & Workflow Advanced Analysis & Reporting Multi-Channel Access Integrated Organization & Communication IT Portfolio Management & Strategic Enterprise Architecture

1Q

2Q

3Q

1 2

5 3 6

Milestones
1 2 3 4 5

Interim Solution
Electronic Receipt/ Submission and Data Validation Reporting Tool Re-architecture End-to-End Solution End-to-End Workflow

6 7 8

Analytics Tools Re-architecture

Core View Training Tools Re-architecture External Constituent Integration

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Another example
2006 2007
4Q 1Q 2Q 3Q 4Q 1Q

2008
2Q 3Q 4Q

2009
1Q 2Q

THEME / INITITIVE
Define High-Level Process Flows Define Data Architecture Strategy Create Book of Record Implement Interim Solution Select Vendor Package Implement Enhanced Tool Retire Acquisition and Data Collection Apps Develop Business Information Model Define Process Flows Define Integration Strategy Implement Electronic Receipt & Submission Provide Automated Data Validation

1Q

2Q

3Q

SF & IM

Retire: Fsystem 1, System 2, System 3 Retire: System 4

Dyn Proc HQDC & & WF Info Ex.

Retire: System 5, System 7 Re-architect / Retire: System 8

Optimized Business Process (OBP) Select Technology Tools Implement WF & BR Process Improvements Define Process Flows Define DW/DM Architecture Strategy Implement DW/DM Structures & Feeds Develop New Reports Select Data Analytics Tool Implement Data Analytics Tool Retire and Re-architect Reporting/Analytics Define Process Flows Select Technology Tool Design & Implement Core Safety View Define Integration Strategy Integrate External Systems Retire Doc Mgmt Systems & Integrated Sys Define & Deploy Communication Strategy Establish Process Improvement Governance Create Acquisition Assessment Framework Institute Regulations Pipeline Management Select & Implement Training Tools Program Management Office Institute IT Investment Management Enhance SEA Competency Develop Arch. GPs, Governance, & Processes Develop Strategic Architecture Blueprints
Retire: System 9, System 10, System 11 Re-architect: Re-architect: System 12, System 13 System 14, System 15, 16

AA&R

Retire:

System 18, 19, 20, 21

MCA

ITPM & SEA

Int Org & Comm

Retire:

System 22, 23

Re-architect: Training systems Maintain: SRM Portal

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One more example

ID A 1 4 5 7 Theme / Initiative Support Service Model Analytics Leverage all Aetna and external experience data Leverage utilization, outcome, and satisfaction metrics Analyze the results of Behavioral Health integration Assess treatment utilization and efficacy 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 Q4

B Support Enhanced Service Model 2 Identify high risk, highly actionable Members 3 Monitor progress and track the adherence 10 Provide constituent-targeted service experience C Financial Reporting & Analytics 6 Provide aggregate and individual information 9 Track and predict Behavioral Health medical costs D Enhance Provider Web Experience 10 Provide constituent-targeted service experience E Enhance Member Web Experience 10 Provide constituent-targeted service experience F Enhance Plan Sponsor Experience 10 Provide constituent-targeted service experience 12 Provide a single bill (i.e. including all products) G Operational Improvements 8 Deliver flexible and customized products and services 10 Provide constituent-targeted service experience 14 Administer BH products in a cost effective manner 15 Perform cost effective pricing for targeted business H New Products / Segments 11 Meet currently identified market opportunities 13 Market to and service Individuals

TOTAL COSTS ($000)

$24,518

$3,856 $3,214 $3,983 $4,129 $2,864 $2,349 $1,696 $1,121 $880

$389

$0

$0

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Remember, the level of detail is commensurate with the lifecycle stage

Business Strategic Planning IT Strategic Planning

Portfolio 1 Blueprints Enterprise Blueprints Portfolio 2 Blueprints

Portfolio 3 Blueprints

Roadmap created here Sequenced list of initiatives

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Remember, the level of detail is commensurate with the lifecycle stage

Business Strategic Planning IT Strategic Planning Release Planning
(Portfolio Mgmt)

Portfolio 1 Blueprints Enterprise Blueprints Portfolio 2 Blueprints Filter

Project Project Project Project

Portfolio 3 Blueprints

Project

Roadmap created here Sequenced list of initiatives

Filter and refine into Projects Apply resource and financial constraints

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Remember, the level of detail is commensurate with the lifecycle stage

Business Strategic Planning IT Strategic Planning Release Planning
(Portfolio Mgmt)

Project Execution
(SDLC)

Business Operations

Portfolio 1 Blueprints Enterprise Blueprints Portfolio 2 Blueprints Filter

Project Project Project Project

Portfolio 3 Blueprints

Project

Roadmap created here Sequenced list of initiatives

Filter and refine into Projects Apply resource and financial constraints

Use prioritized initiatives and capabilities to govern project execution

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A few considerations for service orientation

The move to services means that the business capabilities will be mapped to services, not systems or applications Services will be retired, rehabilitated, rearchitected or removed Roadmaps may have to become more granular to address the impact to services Service-level roadmaps will be especially important during governance of implementation projects

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Recap: What is a roadmap?

Prioritized business capabilities

Prioritized initiatives
Initiative scorecards Cost and benefit estimates, estimated duration Risk mitigation strategies Sequence architecture time slices Sequenced initiatives Input to portfolio management

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Thank You
Questions?

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