B The ITO model.

Objective: To assemble a theoretical model of work in

business.
Focus questions: What is the underlying nature of work?
In what way does project work differ from “non-project”
work?
How are outputs & outcomes distinguished and related to
work?
ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 1

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ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 2

Establishing a rationale
• Using whatever meanings you attach to the
words:
– Output.
– Outcome.
• For a specific project, give an example of each.
• Why might it be useful to separate them?
• Why is separating them often difficult?
• Do “non-projects” have outcomes?
ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 3

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 Coverage.
• Work and processes in business.
• Projects versus operational work.
• Augmenting the classical IPO model to account
for outcomes.
• The ITO model.
• Some implied roles and responsibilities.

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 4

The two models.

• IPO = “Input-Process-Output”.
– How resources get processed into outputs.
• ITO = “Input-Transform-Outcome”.
– How resources get transformed into target
outcomes.

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 5

Readings
• Three papers on John Smyrk’s ITO model. See
MFBP course notes file B2 Ito papers.zip:
– Smyrk, J 1995, ‘The ITO Model: A framework for developing
and classifying performance indicators’, Australasian
Evaluation Society International Conference Sydney.
– Smyrk, J 1999, ‘Project “Solutions”: Who is accountable?’,
1999 National Conference of the Australian Institute of
Project Management, Brisbane.
– Smyrk, J 2002, ‘Why most “IT projects” are really I.T. without
the project’, 3rd World Project Management Conference,
Gold Coast.

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 6

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 Why are outcomes important?
– Frame an answer to the question “Why are we
undertaking this project?”.
– Offer a reliable approach to scoping a project.
– Provide the foundation for success measurement.
– Central to benefit cost analysis.

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 7

Some discussion
– The link between “Why?” and an objective.
– What is scoping? How is it to be defined?
– The flaw in the conventional view of project
success.
– What data is needed to do cost-benefit analysis?

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 8

What is a process?
• A process is a “block of work” that:
– Consumes resources.
– Produces an output.
• A process is structured work.
• May or may not have its own outcomes.

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 9

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 The IPO model of a process.

IPO = “Input-Process-Output”
Resources (only) Structured work Products

I
N
P
U PROCESS OUTPUTS
T
S

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 10

Management philosophies.

Good management practice

Good operational practice

Good project practice

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 11

How are we to approach the

conduct of any work?
• Two issues must be decided before we
undertake any business process:
– What is an appropriate management model?
• As an operational process.
• As a business project.
– How formal should I make my model?
• Ad hoc.
• Completely structured.

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 The work parameters.
• An appropriate model • The formality of the
is determined by the model is determined by
degree of repetition: the magnitude of the
– Frequency. process:
– Similarity. – Amount of effort.
– Complexity.

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 13

Degree of repetition/novelty.

Operational processes
Amount of “planning”

Amount of “replay”

Novel Repeated

Projects

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 14

Magnitude of the process.

Amount of “planned” work
Amount of “ad hoc” work

Structured approach

Small Large

Ad hocery

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 The two parameters together.
Repeated
Business process models
degree of repetition/novelty.

Ad hocery

magnitude of the process

Lo Hi

Business projects
Novel

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 16

What is a project?
• A project is a process that we have elected to manage
using the suite of techniques collectively identified as
“project management practice”.
• A process becomes a candidate for the application of
“accepted project management practice” if it has two
characteristics:
– It is “large”.
– It is novel.
• Some synonyms for “project”: Initiative, exercise,
program (loose), endeavour, undertaking, campaign,
operation (not to be confused with operations) and
mission.

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 17

The IPO model of a project.

IPO = “Input-Process-Output”
Project -
special
class of
I process
N
P
U PROJECT OUTPUTS
T
S

Resources (only) Structured work Products

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 18

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 The IPO model: project inputs.
• Inputs to projects are of two types:
– Information - which is not used up through use.
– Resources - which are used up:
• Acquired inputs & products.
• Internal labour.
• Resources lie at the focus of project
management attention.

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 19

Resources and their measures.

Acquired resources $

PROJECT PROJECT

Internal labour Hrs

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 20

The IPO model: project outputs.

• Outputs are project’s products.
• Outputs are of two types:
– Deliverables - new things.
– Alterants - fixed things.
• Outputs can also divided into:
– Intermediate.
– Final.
• Final outputs are our primary focus.
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 Fitness-for-purpose.
• Critical features of outputs—reflected in a
specification.
• Foundation for (eventual) specifications.
• Ex ante versus ex post fitness for purpose.

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 22

A project’s outcomes.
• Outcomes:
– Make a project’s objectives measurable.
– Targets - not lottery results.
• Benefits:
– A benefit arises when a target outcome gives rise to
a flow of value to project stakeholder (called a
beneficiary).
Beware of benefit trawling to justify projects!

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 23

Types of outcomes.

All outcomes for project

Target outcomes Undesirable outcomes

Ï Benefits Fortuitous outcomes Ð Disbenefits

: Lotto results
These are not managed
These are managed
ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 24

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 Project objectives vs constraints.
• Outcomes define the project’s objective.
• Time and cost targets are constraints - not
objectives.
• We can influence, but can’t control outcomes.

• Now - how are projects & outcomes linked?

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 25

Business outcomes: a new model.

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 26

The results of a project.

• All projects have desired results:
– Outputs - the things we produce, build or fix.
– Outcomes - the objectives we want to realise.
• Issues:
– How are they connected?
– What are the differences?
– Why are they important?

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 How do we get to outcomes?

Time delays
O
I U
N T

?
P C
U PROJECT OUTPUTS
O
T M
S E
S

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 28

Outputs are utilised to get outcomes.

As project manager you do
this work …
... to produce this output O
I U
N T
P UTILISATION C
U PROJECT OUTPUTS OR
O
CONSUMPTION
T M
S Your customer utilises your E
output …
S
… to generate this outcome

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 29

Project outcomes & outputs.

• Outputs:
– Tangible artifacts
– Appear automatically when the process is executed.
– Cannot appear unless the process is executed.
• Outcomes:
– Intangible, measurable end effects.
– May not appear when the process is executed.
– Can appear even if the process is not executed.
NB: Only those outcomes that we target are relevant to a project.

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 Expressing outcomes & outputs.
• Outputs:
– Deliverables are always “things” (artifacts).
– Alterants involve things.
– Always expressed as nouns—perhaps with an adjective:
• Land use policy statement.
• New organisation structure.
• Outcomes:
– Changes in measurable characteristics of the world.
– Usually expressed as nouns —often qualified by an “–ed”
word.
• Increased efficiency.
• Improved access.

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 31

Outputs are supplied and consumed.

ITO = “Input-Transform-Outcome”.
O
I U
N T
P UTILISATION OR C
PROJECT OUTPUTS CONSUMPTION
U O
T M
S E
S
SUPPLY CONSUMPTION

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 32

Projects vs programs
• This has degenerated into a fairly silly semantic
debate in which “programmes are good” and “projects
are bad”.
• Any large, novel block of work that is describable by
an ITO model qualifies as a project.
• There appear to be three useful definitions of a
program (programme):
– A collection of projects that contribute to shared target
outcomes.
– A collection of projects that are serially dependent.
– A collection of projects that are interdependent.

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 Stakeholders in a project.
• A stakeholder:
– Is any entity that has an interest in the project.
– We define stakeholders more rigorously later.
• Consider these stakeholders:
– Who is accountable for delivery of outputs?
– Who is accountable for realisation of target outcomes?
– Who is going to fund?
– Who is going to utilise outputs?
– Who is going to receive a flow of value from realisation of
target outcomes?

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 34

Discussion topics
• To have a useable ITO model of a project, what
information/data must be available?
• Assume you are the prospective funder of a
project—for which an ITO model is available.
How will you decide whether or not to fund?
• Does this demand information that goes beyond
an ITO model? Such as?

ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 35

Three factors determine outcomes.

• The quality (“fitness-for-purpose”) of
our outputs.
• The predisposition of our customers.
• External influences.

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 Managing the Outcome factors.
• The “fitness-for-purpose” issue:
– A quality program. Control
• The customer “predisposition” issue:
– Marketing program. Influence
– Management of change programs.
• The “external influences” issue:
– Risk mitigation programs. Mitigation

Management
strategies
ANU CBE MMIB MFBP 2007/S1 John Smyrk Topic #B: The ITO model of business processes. 37

Questions/issues raised by this topic

• Can utilisation and the work of a project be
formally modelled—and can those models be
used in project management?
– The Customer Map is a model of utilisation. This is
used to scope a project (Topic #H).
– The Work Breakdown Structure (WBS) is model of
a project’s work. This is used to establish a plan
(Topics #C, #I & #J).

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Summary
• The ITO model explains how work, outputs and
outcomes are linked.
• A large, novel block of work is best managed as
a project.
• The ITO model gives us the foundations of
structure to a project.
• Closing discussion.

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