You must understand your forecast P&L for the next 3 to 5 years, so that strategy, resource capacity and capability can be planned.
Business Need defines the demand and is used to create the vision which is linked to all the project deliverables and products. The vision can easily be defined as a “postcard from the future”, that explains your path to deliver your targets, as if you are there already. This provides a memorable communication which provides a focus across all parties (Board, Stakeholders, Project team) and tracked with earned value in the future.
Once we understand the vision we can work back through all the products along the end to end process. Organisations plan in different ways, some top-down, some bottom-up. The best method(s) deliver with control. Delivering the vision through an agreed approach keeps all parts of the overall process aligned. Otherwise precision is lost, variation creeps in, and the wrong things are delivered.
The Business demand is often driven by:
Market: We will understand the volume of your market sector and the effort to deliver your products in that sector, in terms of::
|Market||Value of your market sector||Help to focus on your context and market share.||Market size,|
Market potential over 3/5 years
|Organisations Demand||Value of all products that could be delivered with maximum available resources||Help to assess whether resource can be stretched to deliver more benefit||Number, Quality, Outline, Risk|
|Project / Programme Scope||Value of products that could be delivered with resource available in the organisation.||Portfolio prioritises, selects and allocates resource to scope, which |
Projects / programmes deliver into service.
|Products scoped for delivery to service|
KEY: 1 Market 2 Mission 3 Products 4 Business Need 5 Strategy 6 Portfolio 7 Programme / Project 8 Service
This is a focal point in this Figure of 8 process, as this Sales, Vision, Measurement of the Products and the Business Need can be communicated at this stage. The end of the Business need sets everyone up to create the Strategy.
As we move through the key demand steps (1 to 4 below) we are iteratively building and often shaping the demand that the organisation needs to define, for what we need to deliver (Strategy).
Step 1 Market: Assess Market target for organisation with unlimited resources and high level view of products.
Step 2 Mission: Helps focus on the point of the organisation, which cascades down through Strategy to Projects to Service.
Step 3 Products: The components that will be built for the customer, to the quality required.
|Revised Demand: An iterative process between finance, project team, marketing, BAU and all corners of the business to agree demand and supply, to baseline a platform to build a Strategy (which will be tweaked before getting to Portfolio).
Demand v Supply Graph. Finance will calculate the margins that the products will deliver, to provide a clear estimate of the amount of Supply resource that will be available each year.
Step 4: The Business need: this step shaves the ambitious product targets, to ensure supply matches demand ie we deliver within our capacity / capability.
The aggregation of the market, mission, and products informs the business demand and builds the information that creates buy in, so there is traction to focus against realistic targets. With this clear demand (matching supply), an understanding of Service (“as is” and “to be”) and with metrics clear across the business, we are can create a strategy linked to the P&L.
Ultimately, the financial calculations drive out the revised demand, and shape the strategy.