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The IT Economic Cycle

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Terry Ye

on 2 April 2015

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Transcript of The IT Economic Cycle

IT Value & Economics
The IT Economic Model
Budgeting and Prioritization
Sue Clark, IT Business Manager:
"We determined that we need to allocate $2 million for the next budget cycle for the Predictive Sales Modeling program, as established from our business case."
Operations and Value Realization
Investment and Operations Planning
Strategy and Planning
Target 2015 Roadmapping Session
MMD Target 2015 Strategy:
To be the most trusted and competitive supplier of pharmaceuticals, animal health and consumer healthcare products, vaccines and biologics.
IT Program Investments for Target 2015
ADG Active Data Governance
World Class Supplier; MMD enables Emerging Markets Revenue

Reduction in cycle times for Master Data creation, update and changes

Improved compliance and accuracy of Master Data within the Material Master
Increased effectiveness of IT on Business Outcomes ranging from manufacturing to the supply chai
MES Manufacturing Execution Strategy
Implementation of Werum PAS-X software supporting standard business processes and linked to ERP and automation systems as appropriate in line with the Manfacturing Systems
GPS Global Product Serialization IT
Ensure compliance with global requirements for serialization
PMC Plant Maintenance and Calibration
Product impact of equipment failure minimized
Predictive Sales Modeling Program

Sue Clark, IT Business Manager:
"The Predictive Sales Modeling program is in our Target 2015 portfolio. In order to receive funding for this program, we need to develop a compelling business case to prove its business value."
Program Management and Execution
Nathan Bone, Program Manager:
"I used the business case as my starting point to plan the execution for the Predictive Sales Modeling program.

As we plan, build, test, train, and deploy our solution, we'll report our progress to the governance teams."
James Smith, IT Account Manager:
"Once the solution was implemented and adopted by users, Sam Johnson's business team and I worked together to test whether the solution had measurable results. We did this by using the value realization metrics listed in our business case.

I'll also continue to track operation costs to ensure that these costs do not outweigh the benefits."
"Let's identify top capabilities to enhance to meet our Target 2015 goals."
Sam Johnson, Business Lead:
Diana Metz, Business Architect:
James Smith, IT Account Manager:
Sam Johnson, Business Lead:
"We want to ensure our top customer shelves are stocked for busy weekends, for products like Dr. Scholl's. In the past we noticed too many recurring stockouts."
Pain Points
James Smith, IT Account Manager:
"Sam, our business sponsor, and I worked together to develop a business case that shows we can reduce weekend stockouts by 75% and increase annual revenue by $50 million from our top 5 customers."
Sam Johnson, Business Lead:
James Smith, IT Account Manager:
"We scored our program using the IT Prioritization Framework and determined that our Predictive Sales Modeling Program is our highest priority within our portfolio."
Predictive Sales Modeling Program
Sam Johnson, Business Lead:
"We've gone to one of our top customers, Target, and piloted the solution identified in our business case.

Our results show:
Reduction in stockouts of Dr. Scholl's
Positive impact on sales

With these great results, we executed our second project where we expanded the pilot to our other top 50 customers."

Predictive Sales Modeling Program
Projects to Improve
Predictive Sales Modeling Capability:

Dr. Scholl's POC: Investigate root cause and proof of concept for top 3 customers

Full Adoption and Expansion: Apply to other top 50 customers and other consumer products
AUT Automation
INO Innovation
GPS Global Product
PMC Plant Maintenance
and Calibration

INO Innovation
To increase sales and better satisfy top customers, MMD and GHH Business and IT teams must collaborate to improve Merck's capability in predictive sales modeling.

The Business & IT team:

Sam Johnson: Business Lead
Diana Metz: Business Architect
James Smith: IT Account Manager
Sue Clark: IT Business Manager
Nathan Bone: Program Manager
Sally Perkins: Finance Lead

Following the IT Economic Cycle, this team:
created a strategy
made the business case
implemented & adopted the solution
measured the benefits realized

Let's walk through how they collaborated successfully using the IT Economic Cycle!

Sally Perkins, Finance:
"I've worked with our business sponsors and verified that we have indeed met our two targets:

Stockouts have been minimized by 77%
Annual sales in the first year of adoption have increased by $56 million.

We'll continue to annually measure these two metrics through our five-year investment time horizon."
Exiting the Strategy and Planning Phase, the team now has a Roadmap which identifies the "Predictive Sales Modeling" Program and other key initiatives for Target 2015.
Based on funding availability and the IT Prioritization Framework scores, the Predictive Sales Modeling program was approved and funded.
The business and IT implementation teams delivered the solution to improve predictive modeling capability for the top 50 customers.
After receiving the governance team's approval of the business cases, the team has a proposed portfolio.
The teams continue to operate the solution and measure results from an improved predictive sales modeling capability. They use this feedback at the next iteration of the strategy and roadmapping meeting.
IT Economic Cycle

The IT Economic Cycle is based on the IT Economic Model. To learn more about the IT Economic Model, please watch this video on Sync:

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Full transcript