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Adopted from: Case Studies in Project, Program and Organizational Project Management. John Wiley & Sons)
Lo
yMer Corporation
Lo
yMer Corporation was a leader in a specialized motor vehicle industry in North America. In the early
2000s its sales began to suffer substantially due to the recession in the U.S. economy. As a result, the
company was forced to change its primary strategic objectives to focus on cost efficiency. It needed to cut
operating costs to improve the company ’ s competitive position. Lo
yMer specializes in the design,
development, and manufacture of a complete line of technologically advanced motor vehicles. The
company has been in business for more than six decades, and now operates seven major vehicle
manufacturing plants and one parts manufacturing plant in North America. With more than 14,000
employees, its mission is to provide the highest standard of technological innovation and premium quality
to its customers. Lo
yMer remains committed to the highest degree of innovation and quality, and is
dedicated to meeting its customers ’ needs.
Saul McBarney, Lo
yMer ’s information technology (IT) program management officer, has been with the
company for 25 years. Saul is proud of the company’s history, strategy, and background. “ We are unique
in terms of listening to the customers. We find out what customers’ business needs are first, and then
develop products for them that meet their needs. ” However, 2001 was a painful year for Lo
yMer. As a
esult of economic hardship in the motor vehicle industry, the company ’ s sales and profits dropped, and
its losses exceeded $ 1 billion. In September 2002, the Refrigerated Transporter reported that depressed
used automobile prices caused many ca
iers to extend trade cycles because they owed more on their
automobiles than they could sell them for. As a response to the crisis, the company embarked on a major
cost savings initiative in late 2001, which later produced a number of cost savings programs.
Dingo Ostar, a Lo
yMer business value account manager and a member of the business advisory group,
said, “ It was about cost, cost, cost and nothing else . ” Nevertheless, Lo
yMer continued to experience
substantial business challenges in the following years. With the economy still suffering, Lo
yMer’s
automobile production in 2002 did not meet 2001 production levels, which were significantly lower than
2000. Funding for any new programs was minimal, especially during 2003. Lo
yMer needed to change in
order to survive.
John Mennon, chief information officer for Lo
yMer said, “ The business environment for all automobile
manufacturers remained depressed and was not expected to regain its historically high levels until late
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Adopted from: Case Studies in Project, Program and Organizational Project Management. John Wiley & Sons)
2004. We knew we had to make some changes to be ready to compete. ” Lo
yMer focused on reducing
costs quickly. As a result of relentless cost - cutting programs, Lo
yMer ’ s operating costs were
dramatically reduced, and
eakeven profit was achieved in 2003. “ However, we knew those changes
were tactical and not sufficient, ” John said. “ We had to make additional changes. ” Therefore, during
2005, Lo
yMer modified its strategy by focusing on five new core values: providing market leadership
and
and coverage; pursuing technological innovation; partnering with operators for maximum
productivity; focusing on the needs of its customers, employees, communities, and the environment; and
eing an advocate for their industry.
During the past several years, the IT strategy at Lo
yMer has been to maintain legacy systems. Most of
the new IT investments were dedicated to e-business websites for after-market sales, and marketing.
Dingo said, “ Eighty five percent of what we sell is a complete commodity available from thousands of
other people. So the only thing we really have to sell to increase profit is service. ” The remaining
incremental IT spending supported enhancements to keep the legacy systems compliant with government
egulations and provided some basic level of additional functions.
To improve the company ’ s competitive position, radical changes needed to take place to create an IT
environment that was better positioned to support all five of the new core values. As part of the
improvement efforts, the IT department was reorganized and made much more agile in 2005. That was
done by replacing the functional structure with a matrix organization, consisting of application (IT
application developers and service providers) and program management (program managers and
usiness system analysts) competency centers. Then, a business advisory group concept was introduced.
It consisted of value account managers who provided IT focus in business units and acted as the IT
voice of the customer, which was something Lo
yMer lacked previously. Also, a joint strategic planning
session of business units and IT was initiated in the middle of 2005. Its purpose was to determine the
usiness needs to be supported by the replacement of legacy IT systems. Saul commented, “ This was
previously unheard of. In the old system, IT goals were either left to IT or imposed on us by the company.
Now, our strategic goals and direction were determined by the end users in the joint strategic planning. ”
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Adopted from: Case Studies in Project, Program and Organizational Project Management. John Wiley & Sons)
In order to ensure IT strategy and business strategy alignment, IT activities and programs had to
complement the needs of the business. The IT team used an alignment chart tool to accomplish this (see
Figure 1 ). John explains, “ The alignment chart provides a strategic mapping of the business goals, the
usiness values (initiatives), and the IT programs. As part of the strategic changes, we were tasked by the
company to design the alignment process, part of which was accomplished by the alignment chart. A
u
le on the intersection means alignment.
Figure 1. Sample alignment chart tool
On paper, the alignment chart is straightforward, but the execution of the steps in the alignment process
is more complex. Lo
yMer has a mix of formal and informal processes for ensuring proper IT strategy and
usiness strategy alignment. The processes are internally embedded within the business strategy
formulation and throughout the program life cycle. There are six steps in the alignment process : Strategic
planning, Informal portfolio management, Envisioning, Planning, Development and Deployment
In step one, strategic planning, the strategic plan document is developed to help accomplish the goals of
IT in support of the company’s business strategies and goals for the three-year planning horizon.
According to John, “ Our challenge within IT has always been to take a look at how we treat the goals,
whether they’re well defined or not, and determine what our strategic plan is to help accomplish those
goals. Our approach is an evolutionary process. Once you know where you want to go, you take it one
step at the time, one program at a time, and each program gets you closer to the goals. ” Then, business
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Adopted from: Case Studies in Project, Program and Organizational Project Management. John Wiley & Sons)
value/activities, called strategic initiatives and programs, are formulated based on the goals of the
usiness strategy. These are done by the business advisory group and Program Management Competency
Center. Tools at the strategic level, which are used to ensure the quality of the alignment, include the
strategic plan document, roadmap charts, and alignment charts.
• Strategic plan document is a tentative capital plan that shows the snapshot of all program
summaries and types, and estimated headcount and payback. It is based on the business strategy
and goals of different business units that IT supports.
• Roadmap charts are used to define where the company wants to be in IT in the next three- year
timeframe. They address all the business goals of different business units that IT attempts to
support and their timeframes.
• Alignment charts are the mapping of the business goals, the business values, or strategic
initiatives, and the IT programs.
Step two, the informal program portfolio management process, is a significant part of Lo
y Mer’s
alignment process. Once the portfolio management process is completed, it produces information about
a set of candidate programs, their investment opportunities and program priorities. In short, the process
eveals the most viable programs and possible risks that could occur in the envisioning, planning,
development, and deployment phases of their life cycles. Saul said, “ Portfolios help to assess and monitor
programs that are the best investment. ” Cu
ently, this assessment is done in the portfolio process
through business value assessment (BVA). BVA consists of a set of questions prepared by value account
managers. The program management office (PMO) is asked to first answer the questions regarding
usiness value weighting, which is expressed on a 1- to- 10 scale, 1 being the lowest value, 10 being the
highest value. Second, it assesses business risk, also expressed on a 1- to - 10 scale, 1 being the highest
isk, 10 being the lowest risk. Programs then are evaluated based on BVA, program type, program size,
priority and business area, and are selected accordingly. Once programs are selected, they go through the
standard life cycle phases: envisioning, planning, development, and deployment. A program manager is
usually assigned at the end of the portfolio process or the beginning of the envisioning phase, which is
step three of the alignment process.
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Saul commented, “ Ideally, we like to have a program manager on board when envisioning is just ready to
egin. That allows enough time to develop a close relationship with the business system analyst, who is
esponsible for detailed planning and execution of the program. Sometimes we engage a program
manager immediately at the time the portfolio process starts. Therefore, the program manager is
esponsible, along with the value account manager, for the business value of the program, and solely
esponsible for achieving the program’s