Benefits and Value Management

What is it?

It is the definition, planning, structuring and actual realisation of the benefits of a business change or business improvement project.

Why is it necessary?

Business projects and programmes are undertaken to deliver benefits, however, they are frequently criticised for failing to achieve their objectives. Studies show that over 70% of business improvement projects fail to deliver their expected benefits, and even when they are achieved in part, often they are far from fully realised. The reasons for this are varied, but a significant element can be directly related to, for example:

• Business cases focused on target savings instead of expressing business benefits in a manner that can be understood and implemented
• Too much emphasis on deliverables, or outcomes (e.g. capabilities) which on their own do not deliver specific benefits
• No mechanisms or in particular structures to manage their realisation

Projects are often considered to be finished when their deliverables are complete. However, the benefits of a project are typically realised over time – this may leave no one responsible during the realisation phase and often no structure through which to manage this important element. For benefits realisation to work it is crucial to identify clear benefits (early in the lifecycle) that relate to unambiguous business objectives, and to assign ownership to those responsible for planning and managing their achievement.

A central goal of this process is to bring structure, accountability, clarity and discipline to the definition and delivery of the benefits inherent in business projects.

It is therefore a key aspect of programme management and relates to other business processes, such as portfolio management and must start in the earliest stages of the change / business improvement cycle (well before sign off of a full Business Case).

While investment appraisal may provide the justification for the proposition in a business case, effective realisation planning enables organisations to understand and maximise the potential benefits that can be modelled using such techniques. It must also identify and address the changes that will be required, including any resistance that may be encountered. These changes themselves may well need to be managed carefully as part of a change management programme.

What does it bring of most value?

In short, once use cases from your business have been developed, it provides a crystal clear framework for those working on business improvement projects, that provides the means to validate the actions and decisions they are making locally against the aims and objectives of improvement programmes, together with ways to model measurably what this will deliver for a business in real (not aspirational) terms. Even more importantly, once staff have seen this in practice, the productivity of the change process can rise in leaps, literally.

When implemented formally (i.e. repeatedly), it will provide a complete ‘methodology’ for defining and most importantly delivering real improvement for Business Improvement and Change programmes.

What is key to improving it?

The most obvious thing to say is that experience demonstrates that organisations do not find this task easy, as businesses are not abundant in skills or track record in its execution (in a formal way).

What are the things that typically have to improve most?

• understanding what constitutes a specific benefit (versus general outcomes or target savings for example) in any specific business and differentiating them from objectives, outcomes, and their end financial (or other) results
• the way benefits and business value are expressed and structured in business cases and their causal alignment with strategic business performance objectives in particular, this being  fundamental to success.
• The whole strategic planning and ongoing causal management of business activity or  MIS implementation process.

The Benefits Realisation Framework

It must be driven by the organisation’s strategic planning and programme management processes. To be effective, it needs to become a standard management practice throughout the business change lifecycle – especially during programme and project definition.

The first step is to establish a framework that defines how benefits should be identified, structured, planned and realised. The framework should classify types of benefits of value to your business, and reference the organisation’s current strategic goals and objectives, for example:

• service / process / quality/ productivity / improvements
• cost avoidance / reduction
• staff morale / motivation
• enhanced executive visibility  / accountability in reporting of service credits

The potential benefits identified must not simply exist as a passive list. It is important to identify dependencies to understand where the achievement of one benefit is dependent on the realisation of another. Once they have been identified, analysed and structured, the next task is to create a realisation plan. This should also enable the organisation to identify the management actions required to support and execute that plan.

Benefits Focused Business Cases

A business case in the context of a benefits / value model should set out the basis of an investment or change. Business cases must demonstrate the return or tangible value that the owning organisation will achieve by the proposition in the business case. Business cases must demonstrate how the value or return will be delivered, by identifying specific benefits that will be accrued via making the investment / change.

This is often very different from making summary statements about planned or targeted financial savings that will be achieved. Many business cases in the past went no further then identifying outcomes of potential value to stakeholders (such as capabilities), with little or no identification of planned changes. It should be of little surprise that in many of those examples, limited measurable improvement was achieved.

Any business case should not necessarily require volumes of text, but the core should be summarised succinctly against the following structure:

• goal, objectives, (and per option:) outcomes and planned benefits, risks, assumptions

Delivering Strategic Goals and Objectives

Most organisations have current strategic goals and objectives. These should be articulated and be very evident throughout benefits identification and planning. The business case needs to be evaluated thoroughly to ensure that it is focused on and maximises delivery or achievement of strategic goals. Following this, the realisation plan(s) will provide a control mechanism to provide continual feedback against strategic goals.

• Links to key processes
• Causal models
• Maintaining the Focus and measuring performance

During the life of a project it may be necessary to modify the objectives, change priorities or redefine the desired outcomes in the light of changing circumstances. It is important that structure and accountability continues through and beyond the life of the project and beyond, to ensure that the benefits of most value are realised at affordable cost and on schedule.

Ownership and Implementation of the Benefits and Value  Realisation Plan

Many ” anticipated benefits”  will  only realistically  materialise until after   a given project has been delivered and is in deployment .

It is therefore essential that the ownership of the benefits realisation plan is set out  and measured against a contextual casual model with identified key performance indicators : a value management model : these can be tangible and references to non tangible deployment project delivery through to complete benefits  and value realisation.

The use of a real value management causal framework is the key ongoing / cyclical activity  for measuring and realising a given project stated core / key benefits

Evaluation and Ongoing Measurement

Final stakeholder assessment and reporting of the programmes Benefits Management and its process must also include a post implementation review. This review activity is will structure and ” dashboard”   critical information with KPI elements. Such reviews enable visibility for executive management, and their  support,  in  order to achieve and maintain  the original assumed benefits.