Module 2: Conducting Project Research

" Guidelines for Defining Project Metrics " Practice: Using Business Drivers to Determine Design Criteria ***************************** ILLEGAL FOR NON - TRAINER USE ********************

Contents

Overview 1

Review 21

Module 2: Conducting Project Research

Information in this document, including URL and other Internet Web site references, is subject to change without notice Unless otherwise noted, the example companies, organizations, products, domain names, e-mail addresses, logos, people, places, and events depicted herein are fictitious, and no association with any real company, organization, product, domain name, e-mail address, logo, person, place or event is intended or should be inferred Complying with all applicable copyright laws is the responsibility of the user Without limiting the rights under copyright, no part

of this document may be reproduced, stored in or introduced into a retrieval system, or transmitted

in any form or by any means (electronic, mechanical, photocopying, recording, or otherwise), or for any purpose, without the express written permission of Microsoft Corporation

Microsoft may have patents, patent applications, trademarks, copyrights, or other intellectual property rights covering subject matter in this document Except as expressly provided in any written license agreement from Microsoft, the furnishing of this document does not give you any license to these patents, trademarks, copyrights, or other intellectual property

 2001 Microsoft Corporation All rights reserved

Microsoft, Windows, BackOffice, BizTalk, FrontPage, Hotmail, PowerPoint, Visual Basic, Visual C++, Visual Studio, and Windows Media are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries

The names of actual companies and products mentioned herein may be the trademarks of their respective owners

Instructor Notes

This module introduces students to the business drivers that may move their organization to a business-to-business (B2B) integration solution Students will identify the project vision and scope, team members, and project risks, and then explore the lab scenario used throughout the course

After completing this module, students will be able to:

! Analyze the business drivers that determine their design criteria

! Create a project design plan

To teach this module, you need Microsoft® PowerPoint® file 2420A_02.ppt

To prepare for this module:

! Read all of the materials for this module

! Read the Microsoft e-procurement case study

! Read all of the Microsoft Supplier Enablement case studies under

Additional Reading on the Web page on the Student Materials compact

disc

! Read the white paper, Microsoft Solution for Supplier Enablement

Introduction, under Additional Reading

! Watch the online seminar, Building a Business Case for IT Investments

Using REJ, on the Microsoft Seminar Web site,

How to Teach This Module

This section contains information that will help you teach this module

Lesson: Determining Design Criteria

This lesson introduces students to the importance of doing research before they create a project design A successful project design requires that students research their organization’s needs and the potential benefits of B2B integration For some students, the information in this module will be review material However, the importance of examining business drivers and defining clear project metrics may be new to students that have a technical background Avoid teaching this lesson from a theoretical perspective The best approach to teaching this lesson is to provide examples and to draw from your experience and that of your students

The following information is specific to individual pages in this lesson

Although this course provides generic examples on the modules page, this page presents an excellent opportunity to provide real-world examples from your own experience or from recent news

Many of your students must justify the expense of a B2B integration solution Emphasize the Microsoft e-procurement case study mentioned on this page and

the additional case studies under Additional Reading

The real goal of this discussion is to identify how students plan to use the materials in the subsequent modules This information will help you tailor the course to meet the needs of each student If you teach this course to students from one company, clarify their specific business drivers and identify any inconsistencies or missing information If you teach this course to students from multiple companies and they are hesitant to discuss details, be prepared to discuss examples from your own experience

It may be helpful to write the business drivers that students mention on the whiteboard and then discuss them in more depth later in the course, when you cover the design decisions that are related to these business drivers

Lesson: Creating a Design Plan

This lesson introduces the process of organizing and documenting a B2B design plan The design plan includes the vision and scope of the project, the roles of the planning team, and the risks that are associated with the implementation of the solution

The following information is specific to individual pages in this lesson

This topic may generate interesting discussions about the specific roles of students in their project planning teams Emphasize the functional roles rather than the job titles that are covered in the topic Discuss the differences between how students describe their responsibilities

If this material is new to students, provide another real-world set of risks and then ask students to calculate the relative exposure to each risk

This page highlights the final deliverable for this course, the B2B design plan Modules 3 through 8 describe the individual stages of the design process You will complete the B2B design plan in Module 9

The proposed answer is only one of many possible variations For example, the risk document may have different owners Or, in some projects, the business architect and the solutions architect may be the same person

Lab A: Conducting Project Research

In this first of six design labs, students will study the business and technical requirements of Adventure Works and its main trading partners The level of student involvement in this lab sets the tone for the remaining labs Therefore, it

is essential that students are motivated to participate in the discussion The design lab is scheduled for 45 minutes Divide students into pairs or small teams, and ask them to spend 20 minutes reading and discussing the scenario Then, have each pair or team present its answers to the class

Students will examine Adventure Works’s business drivers and motivations for engaging in B2B e-commerce and for using a marketplace Although the lab scenario provides a clear path to certain design decisions, it contains enough ambiguity to encourage student discussion and debate Students may disagree with the answers that are provided in the Instructor Manual and the Student Materials compact disc Disagreement is acceptable if students can provide adequate business or technical justification To increase student involvement, ask a representative of each team to present the team’s answers to the class and then defend the design

Customization Information

This section identifies the lab setup requirements for a module and the configuration changes that occur on student computers during the labs This information is provided to assist you in replicating or customizing Microsoft Official Curriculum (MOC) courseware

This module contains a single paper-based design lab There are no hands-on labs in this module, and as a result, there are no lab setup requirements or configuration changes that affect replication or customization

The B2B Design Plan

Practice

Timing

Discussion

Overview

! Determining Design Criteria

! Creating a Design Plan

***************************** ILLEGAL FOR NON - TRAINER USE ******************************

To design a business-to-business (B2B) integration solution for your organization, you must identify, quantify, and document your primary business drivers These drivers make up the foundation of your design criteria for a B2B integration solution

You develop design criteria that identify the project vision and scope, team members, and project risks Your project vision will serve as a guide throughout the design and implementation of your B2B integration solution

After completing this module, you will be able to:

! Analyze the business drivers that determine your design criteria

! Create a project design plan

Introduction

Objectives

Lesson: Determining Design Criteria

" What Business Problems Will Your Design Solve?

" How Suppliers Determine Design Criteria

" How Buyers Influence Design Criteria

" What Are Project Metrics?

" Guidelines for Defining Project Metrics

" Practice: Using Business Drivers to Determine Design Criteria

***************************** ILLEGAL FOR NON - TRAINER USE ******************************

Implementing B2B e-commerce can open large markets to suppliers of any size For that reason, the choice to implement an e-commerce solution may seem obvious However, a successful design requires research about your organization’s needs and the potential benefits of B2B integration To be successful, you must identify the business problems that you want to solve, the business drivers of your organization, and the business drivers of your trading partners

Finally, define how you will recognize and measure the success of your project Based on the business drivers and project metrics, you can determine the criteria that you will use to create your B2B integration solution

After completing this lesson, you will be able to:

! Identify the business problems that your design will solve

! Identify the B2B business drivers of your suppliers

! Identify the B2B business drivers of your buyers

! Describe financial and nonfinancial project metrics

! Create project metrics that measure the success of your project

Introduction

Lesson objective

What Business Problems Will Your Design Solve?

Your B2B design provides the technical solution to your

organization’s central business problem.

Examples of business problems include:

A buyer mandating that you implement e-commerce

An upward trend in customer defection The high cost of sales

A lack of control over the supply chain

***************************** ILLEGAL FOR NON - TRAINER USE ******************************

To make informed design decisions, research the central business problem that your B2B integration solution will solve Before you begin your design, the executive management and business decision makers will identify the central business problem As a designer or solutions architect, you are responsible for delivering the technical solution to this business problem

The central business problem is the most important design criterion for your B2B integration solution A problem statement summarizes the challenge that the central business problem creates for your organization A problem statement

is typically included in vision documents and Request For Proposals (RFPs) For example, the executive management and business decision makers in your organization have recently concluded that your organization is losing sales because of trading partner defection, which they assume is a result of your company not providing B2B e-commerce Your proposed design must directly relate to the business problem: stopping trading partner defection In this situation, you must work with your organization’s business analysts, decision makers, and sales team to identify the source of the defections You can then develop informed design recommendations for a technical solution

Examples of common business problems include:

! A large buyer mandating that you implement B2B e-commerce

! An upward trend in trading partner defection

! The high cost of sales

! A lack of control over the supply chain

Introduction

Identify business

problems

Examples

How Suppliers Determine Design Criteria

Create a competitive advantage over the Internet

Create a competitive advantage over the Internet

"Satisfy existing trading partners

"Gain new trading partners

"Increase sales

"Reduce response time to market demand

"Satisfy existing trading partners

"Gain new trading partners

"Increase sales

"Reduce response time to market demand

Reduce transaction costs

Reduce transaction costs ""Reduce the cost of salesReduce the cost of order fulfillment

"Reduce the cost of sales

"Reduce the cost of order fulfillment

Increase order processing efficiency

Increase order processing efficiency

"Automate order fulfillment

"Enhance order processing

"Manage the supply chain

"Automate order fulfillment

"Enhance order processing

"Manage the supply chain

***************************** ILLEGAL FOR NON - TRAINER USE ******************************

As a designer, you combine your business drivers and those of your trading partners to determine your high-level design criteria If, for example, your organization’s primary business driver is to lower the cost of sales without reducing trading partner satisfaction, and your largest buyer’s primary business driver is to cut inventories by streamlining its manufacturing and procurement cycles, you must build your design criteria around both sets of business drivers

A common business driver is to gain a competitive advantage over other suppliers in your industry By implementing B2B e-commerce, for example, your organization can offer compelling value by meeting the business needs of buyers in a way that other suppliers do not Creating a competitive advantage could include the following design criteria:

! Satisfy existing trading partners For example, your largest buyer recently

added a $100 surcharge to all nonelectronic purchase orders You must be able to submit purchase orders electronically if you want to compete effectively with other suppliers

! Gain new trading partners If, for example, you discover that your

organization is reaching a small portion of its potential trading partners, your design will include methods for reaching new locations and markets

! Increase sales If your organization sells a product with many accessories,

your design could automatically target buyers of the product to promote cross-sales opportunities For example, a supplier of handheld computers could notify buyers that it also offers cases, cables, and other accessories

! Reduce response time to market demand If you learn that your organization

can gain a key competitive advantage over your competitors by guaranteeing shipment within 24 hours, your design should include steps that fulfill this promise

Introduction

Create a competitive

advantage

Another business driver may be to reduce the cost of sales so that you increase profitability For example, if your organization processes 400,000 orders annually and reduces its transaction cost by $20 per order, it saves $8 million annually Reducing costs could include the following design criteria:

! Reduce the cost of sales If, for example, your organization receives orders

by telephone, fax, and e-mail and then enters orders in an order process system, your design can reduce the cost of sales by automating the reception and entry of orders

! Reduce the cost of order fulfillment Suppose, for example, that your

organization uses several heterogeneous business systems, including Enterprise Resource Planning (ERP), Material Resource Planning (MRP), and an inventory database that is stored on a mainframe If these systems require manual entry or human interaction, your design can reduce order fulfillment costs by automating the workflow between these business systems

Increasing order processing efficiency is another potential business driver If you increase the efficiency of order processing, your organization can dedicate more resources to meeting core business objectives Increasing efficiency could include the following design criteria:

! Automate order fulfillment If your organization enters shipping information

in its ERP system manually, your design could automate manual data retrieval and entry between heterogeneous business systems

! Enhance order processing Suppose, for example, that your organization

estimates shipping and handling information when the sale occurs and then issues quarterly variances to your trading partners based on the actual shipping and handling cost In this situation, your design can enhance the order process workflow by including components that compute the shipping and handling cost automatically

! Manage the supply chain Your organization may depend on downstream

suppliers to manufacture goods To respond to order requests, your design must manage your work-in-progress inventories

Reduce costs

Increase efficiency

How Buyers Influence Design Criteria

Reduce transaction costs

Reduce transaction costs ""Reduce the cost of procurementReduce the number of returns

"Reduce the cost of procurement

"Reduce the number of returns

Increase procurement efficiency

Increase procurement efficiency

"Automate procurement

"Enhance the procurement process

"Manage the supply chain

"Automate procurement

"Enhance the procurement process

"Manage the supply chain

Reduce manufacturing lead time

Reduce manufacturing lead time ""Strengthen inventory controlsDevelop JIT manufacturing schedules

"Strengthen inventory controls

"Develop JIT manufacturing schedules

***************************** ILLEGAL FOR NON - TRAINER USE ******************************

The more your B2B integration solution aligns with the business drivers of your buyers, the more likely it will be successful Several of your buyers’ drivers may overlap with your drivers

The most common business driver for buyers is to reduce the costs of transactions Reducing transaction costs could include the following design criteria:

! Reduce the cost of procurement For example, prior to implementing

e-procurement, Microsoft’s average transaction cost for purchases was about $65 After implementing e-procurement, Microsoft’s transaction cost decreased to $5-$10 per transaction The total first-year savings exceeded

$7.3 million

! Reduce the number of returns Providing more accurate and timely product

information to buyers will reduce the number of returns, thereby reducing the total cost of transactions

For more information about the Microsoft e-procurement case study, see

the white paper, Microsoft Market Case Study, under Additional Reading on

the Web page on the Student Materials compact disc

Introduction

Reduce transaction

costs

Note

Increasing the efficiency of procurement is a common business driver for buyers You can increase procurement efficiency by improving and automating processes E-procurement can also be an important step toward a complete supply chain management solution Increasing procurement efficiency could include the following design criteria:

! Automate procurement If your buyer’s key business driver is to increase

procurement efficiency, consider including procurement automation in your design as a way to assist the buyer For example, if the buyer uses an ERP application that supports online procurement, your design can accommodate the buyer’s application You can supply the necessary infrastructure for the buyer to connect its electronic purchasing application to your B2B

integration solution

! Enhance the procurement process If your buyer’s business driver is to

increase procurement efficiency, consider including functionality that enhances its procurement process For example, if your buyer receives special pricing when its purchases total more than $100,000 per month, your design must enable automatic price reductions when the buyer reaches that level

! Manage the supply chain If your buyer’s key business driver is to increase

procurement efficiency, include in your design ways to help the buyer manage its supply chain better For example, if a buyer purchases goods for

a manufacturing process and wants to automate its procurement based on orders from its own customers, your design must include plans for responding to that buyer’s need

Another business driver for buyers may be to reduce the lead time in manufacturing, thereby reducing work-in-progress inventories Buyers may also

be driven to reduce lead time as part of Just In Time (JIT) manufacturing schedules Reducing lead time could include the following design criteria:

! Strengthen inventory controls If your buyer’s business driver is to reduce

manufacturing lead time, consider including plans in your design to integrate your inventory system with supply chain management systems of your buyer Suppose, for example, that a buyer’s supply chain management solution automatically orders goods from your organization when its inventory levels fall below a predefined threshold Your design can include provisions for alerting the buyer when your organization cannot fulfill the order

! Develop JIT manufacturing schedules If you integrate your systems with

those of a buyer that uses JIT manufacturing schedules, consider supporting the buyer’s system For example, if the buyer’s automated procurement system orders parts from your organization when one of its customers places

an order, your design should accommodate the rapid response that is necessary to meet the buyer’s JIT manufacturing schedule

Increase procurement

efficiency

Reduced lead time

What Are Project Metrics?

Project metrics are:

Any set of criteria that you use to measure the effectiveness of your design.

Any set of criteria that you use to measure the effectiveness of your design.

Project metrics can be:

Financial Nonfinancial

***************************** ILLEGAL FOR NON - TRAINER USE ******************************

Perhaps the most overlooked design consideration is how your organization defines and measures the success of your design Project metrics are any set of defined criteria that you use to measure the effectiveness of your design Work with your organization’s executive team members to define their expectations for your design

You can use two types of metrics to measure the success of a project: financial and nonfinancial Financial metrics directly affect economic earnings

Examples of financial metrics include:

! Reduce average sales transaction costs to $10 per transaction within six

months

! Increase sales to B2B trading partners by 15 percent within one year Nonfinancial metrics affect economic earnings indirectly Examples of nonfinancial metrics include:

! Reduce order processing errors in properly formatted purchase orders from B2B trading partners by 90 percent within three months

! Decrease customer service calls about purchase orders from B2B trading partners by 50 percent within six months

Introduction

Financial and

nonfinancial metrics

Guidelines for Defining Project Metrics

Specific Specific …for sales to B2B trading partners,

Attributable Attributable by reducing processing errors

***************************** ILLEGAL FOR NON - TRAINER USE ******************************

As a designer, you have a vested interest in defining the project metrics by which members of your organization will evaluate your design Your design will be evaluated by how well it meets or exceeds these project metrics

To determine whether your design is successful, define project metrics that are measurable, specific, timed, and attributable

! Measurable Define metrics that you can measure objectively For example,

“Decrease telephone and e-mail complaints to customer service by 20 percent in the next year.” That description is preferable to “Increase trading partner satisfaction.” The first example describes the level of improvement that you want to achieve

! Specific Define metrics that describe exactly what the project will

accomplish For example, “Increase sales to B2B trading partners by 10 percent” is more specific than “Increase sales by 10 percent.” The first example is better because it specifies which trading partners the project affects

Introduction

Attributes of project

metrics

! Timed Define metrics with time constraints For example, “Decrease errors

in order processing by 75 percent within six months of implementation” is preferable to “Decrease errors in order processing by 75 percent.” By not specifying a time, the second example is open to interpretation

! Attributable Define metrics that you can assign to discrete variables to

establish cause-and-effect relationships For example, “Decrease transaction costs by $20 per transaction within 90 days by automating order processing”

is preferable to “Decrease transaction costs by $20 per transaction within 90 days.” The first example specifies how you will lower the transaction cost

For more information about establishing project metrics, see the Rapid

Economic Justification seminar under Additional Reading on the Web page on

the Student Materials compact disc

Note