SMA: Making the Budgeting Process Effortless
Sciforma was selected to implement a system of governance using project portfolio management to oversee change management. Written based on comments received from J. Baudrin, Head of the Information Systems Department (ISD) and A. Bouchki and P. Montagnier, project sponsors that are responsible for IT Research and Business Analysts (BAs) within SMA.
The SMA Group is a leading insurer for building trades, public works, and a corporate risk insurer. With a turnover of over 2.5 billion euros and over 3,000 employees, SMA insures over 200,000 clients and members (businesses, professionals, craftsmen, executives, their employees, and their families) in France for all their insurance needs.
SMA meets the needs for personal insurance (life, savings, pension, contingency, health, and social risks insurance), for liability insurance (builder's risk, civil, or professional liability), and for property insurance (car, equipment, home, and premises). Within the group, the company SMABTP specializes in property insurance and builder's risk insurance.
For a number of years now, SMABTP's ISD and BA departments have carried out project management by sharing responsibilities for it between the BA project lead and the ISD project manager. Despite the availability of management kits and standard reports, such project management was conducted in a heterogeneous manner which was detrimental to the quality control of all the projects. The forecasting and monitoring of the ISD's activities were principally managed with an annual budget plan using a specialized tool which provided for both the monitoring of commitments and the internal invoicing of ISD services.
All team managers regularly updated the data to strike an appropriate balance between the estimated cost of the resources needed for carrying out the activities and the respect of their budget in terms of workdays/manpower. The budgets were managed shrewdly: by activity, by organization (directorate, department, and service), by expense type (service, equipment, etc.), and according to other categories but with no direct link to the workflow management established using other tools. The strategic plan and the operational plan were also managed but through different processes and tools with no direct link to budget management, save for that of the work-days/manpower forecast and actuals.
At the end of 2012, the ISD, the Project Management Office (PMO), and the BA managers expressed a strong desire to bring together all these practices and to strengthen the visibility provided to the business managers. They wanted to enhance the complementarity of the three levels of management reporting by reducing efforts dedicated to budget preparation and follow-up and by increasing the efficiency of strategic management (decision-making) and operational management (astute management of projects and resources).
Without delay, the ISD tasked the PMO with initiating a project relating to the choice and subsequent introduction of a PPM-type tool incorporating the three levels of management reporting.
The challenges were considerable and the stakes high. They included: rolling out a unified project management system and management reporting method to the ISD, its different components, and all the business managers; standardizing the processing of requests from business managers; facilitating budget trade-offs and adjustments to requirements for external and internal resources for each team; supplying the tools for the production of management reporting data.
The schedule was tight:
- 2013: scoping workshops, drafting of specifications and scoring cards, invitation to tender, presentation bids, Proof of Concept (POC) and purchase
- First six months of 2014: design and setting definition workshops, User Acceptance Testing (UAT) of software, training
- September 2014: preparation of the 2015 budget for the 2015-2017 three-year plan
- January 2015: go-live with all projects managed in the new system
Approach Taken By SMA
A project mode approach was taken under the responsibility of the PMO. Two sponsors were chosen: the ISD's Head of Research and a BA manager. The initial assessment confirmed that the maturity of SMA's management allowed for the inclusion in the project's scope of all those involved in project activities with, as the core, the ISD, and the Project Management Support managers. This meant that the main management processes – demand management, macro-planning, the strategic plan, budgeting, detailed planning, workload management, production of monthly reports, and project management – would be carried out collaboratively by the ISD and BA teams with the increasingly active participation of business unit representatives.
In order to save time and benefit from expertise in choosing the most suitable solution to address the problem, the ISD and the PMO manager decided to obtain the assistance of the consultancy firm “PMO-Performance” in Christian Duchesne, a specialist consultant in the introduction of management reporting solutions and well-versed in the PPM software solutions on the market. His assistance was principally required to voice the needs of the different stakeholders, help in the choice of software, configure a multi-level management reporting model appropriate to SMA's needs, anticipate difficulties, and specify the stages to follow for the successful introduction of the system.
The first challenge was to standardize and extend project management practices, namely to depart from an approach in which each team managed its part of the project and adopt an integrated approach in which each participant sees and manages, in its entirety and to the desired level of accuracy, the same representation of each project. The work as a pair of the BA lead and the ISD project manager became more collaborative in order to coherently and synchronously modify the schedules, resources, and budget allocations of the joint project.
The second big change concerned the division of SMA's activities into about ten business portfolios. Each portfolio would be managed by a BA/Project Manager pair and governed by a budget including all necessary resources whether from business divisions, BA, or ISD. A steering committee per portfolio would discuss decision-making and be placed under the responsibility of the business manager and ISD representative concerned.
A series of workshops conducted by the external consultant, as much to develop management procedures as to obtain the support of the participants (BA and Project Manager) for common processes, led to the acceptance of significant changes:
- Continuous contribution to the action plan through a process of dealing with requests heavily involving the BA and requiring an evaluation of the importance of each request
- A mutualization of the budget allocated to the portfolio for different projects, with the possibility of deferring activities that are agreed on but not yet started
- A single plan shared for each project by all the participants, whether the projects included IT elements or were just organizational
- Multi-annual plan management (start and end dates of projects)
- The systematic allocation of generic or named resources for all new activities in order to compare the resource requirements at the portfolio level with the resource capacity for the different teams
- An estimation and a reservation of efforts as much on the BA (and even business manager) side as the ISD side
From a cultural perspective, these changes conveyed the desire for a healthy confrontation of an ‘organization'-oriented management reporting approach which was divided by business type (the portfolios) with traditional budgetary reporting for which most information came from strategic (decision-making), and operational (activities) management reporting approaches with each level of reporting being deliberately placed under a different responsibility.
The supervisor of ISD's internal management, a key individual for this project, was fully involved from the project's start and quickly understood the advantages he could gain from the new management reporting system. The solutions to his two main concerns appeared to him as a matter of course during the workshops: firstly, a reliable delegation of gathering information could be achieved thanks to a clear distribution of responsibilities between the PMO, team managers, and project stakeholders, and secondly he realized shortly afterward the tool's ability to generate the information in a suitable format.
Once all the fundamental principles had been approved by the project's steering committee (ISD, sponsors, and BA) the invitation to tender phase could get under way by only selecting the tools able to reproduce the management principles established in the general design workshops mentioned above.
Why Was Sciforma Chosen by SMA?
Apart from the obvious flexibility of configuration demonstrated by this software, the applications that stood out and led to the choice of this tool were:
- Possibility of managing the generic and named assignments at the same time in the same project
- Capacity management to be budgeted (in man days) by organization
- Budget management (in k€ and in man days) by portfolio
- Simulation of portfolio modifications, enabling the impact on the portfolio budgets, organizational budgets, and organizational capacity to be seen at the same time
The existence of an internal report generator was not critical to their choice but it is, without a doubt, a nice to have; allowing them to actively display customized screens for decision-makers to rapidly reach conclusions.
SMA's decision to gradually implement change meant that it was important to choose a tool capable of fulfilling the new principles (prioritizing management reporting by portfolio) whilst simultaneously providing a detailed overview by team (reporting by organization).
Difficulties encountered during the development of the project
Speaking a common language was the first difficulty: adopting a precise vocabulary and determining the terms to be used by all the group's stakeholders was mandatory in order to eliminate misinterpretations. The terms adopted to standardize project management, those clearly distinguishing the aims and the importance attached to each level of management reporting, constituted the essential foundations of a shared understanding.
The main difficulty was related to change management: reaching a consensus (during the workshops referred to above) for the acceptance of common rules and for an implementation plan for the different changes with the teams. The change management plan initiated by the consultant was revised several times because of an underestimation of the cumulative difficulties in the adoption of the new tool and new practices and therefore of the period for its roll-out to all the management teams.
For example, despite considerable efforts by the project team, some teams employed a dual management reporting method in the tool for several months, involving a reassuring blend of old and new practices. On the one hand, a plan established for communication purposes, and on the other, management of ‘hidden' assignments for operational use.
With the launch of the tool scheduled for autumn 2014 and relating to the 2015 budget campaign, the year 2015 started off as predicted with all the information on the budget, projects, and resources entered into the Sciforma database, namely 256 projects as of January 5th, 2015.
Assessment of the Newly Integrated Solution
The functional roll-out of the whole system took longer than predicted, in particular, because change management had been underestimated at the outset. Basically, it was not so much the introduction of Sciforma software which met with difficulties but rather getting the managers, who were most affected by the change, to take ownership operationally of the new management principles and the under-estimated organizational constraints caused by the new tool.
The project would have failed if the Project Manager and BA departments had not engaged so fully in this transition and if a PMO had not existed. Although hierarchically attached to the ISD, the PMO, in reality, worked for all the departments and contributed to the standardization of the project's management practices and activity reporting, hence improving the ISD's transparency before the business managers. In addition, the PMO was needed at the group level to synchronize certain processes such as the monthly status reports, the copying of simulation results into the actual plan, or the consolidation of business portfolios.
An operation of this scale could not be conducted without external assistance. The adoption of a new operating model by all managers (even if this model only embodied, by way of rules and processes, previously accepted principles) and the explanation and construction of detailed procedures with the operational staff were facilitated by the intervention of an independent external consultant whose expertise was well-established. The second element of external assistance related to the harmonization of the concepts and principles issuing from the workshops with the technical and functional capabilities of the Sciforma software. The software is easily adaptable and does not present any difficulties, nor does it require excessive effort to implement as long as the Sciforma consultants have a clear understanding of the target.
A year after the installation of the Sciforma software, we can confirm that the new management reporting system has brought a number of advantages, starting with a budgeting process significantly lighter in terms of effort. The same thing can be said for the almost instantaneous generation of monitoring reports, especially those destined for our financial controllers, who received all necessary reports. The standardization of the unified project management process and the management reporting methodology between the ISD, its different components, and all the business managers is continuously improving. The processing of requests from business managers and their resolution is under way which has led to a considerable reduction in the number of requests and to increased efficiency in resource needs by team.
“Before the project to implement Sciforma, our organization had been thought out according to a principle which was dear to me: the organization should be considered and put in place before or after but never during an IT project,” explained Olivier Oslizlo, ISD, SMA Group. “Regarding such organization, I can give some examples which, without being exhaustive, illustrate this principle:
- Locking down project scope prior to any IT action
- Standardization of project portfolios and their associated steering committees by distinguishing structural steering committees (according to key business functions) from the temporary steering committees created for the duration of cross-Group projects requiring them