Benefits Realisation Management

© Sigma (Bookham) Ltd1

Benefits Realisation Management

Gerald BradleyAnn Watts

19th March 2007

BCS – North London Branch

Ensuring IT and change adds value and delivers planned business benefits


OASIG Survey Results:

• 80-90% do not meet their performance goals• ~80% of systems delivered late or over budget• ~40% of developments fail or are abandoned• <40% fully address training and skill requirements• <25% properly integrate business and technology objectives• 10-20% meet all their success criteria

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Recent survey on Benefits from IT Projects:

•Only 25% of organisations are measuring benefits•Of these 25% only 25% are observing benefits in line with expectations

sigma’s View:

• Most companies achieve between 10% and 25% of potential benefits from their IT Investments and change programmes

Achieving the expected or potential benefits is not the norm


• Pioneer of the leading methodology for Benefit Realisation Management (BRM)

• Established 1986

• Specialist provider of Benefit Realisation Management consultancy, education and software

• Partner to many leading private and public sector organisations

Who are we (sigma)?


sigma’s clients include:

Banking and Financial Services

• Abbey National

• AXA Insurance

• Barclays Bank

• Bradford & Bingley

• Cornhill Insurance

• Friends Provident

• Hewitt Bacon & Woodrow

• Lloyds TSB

• Mellon Bank

• NatWest Bank

• UnumProvident

Healthcare and Pharmaceuticals

• Amersham Health• AstraZeneca• GlaxoSmithkline

Oil and Gas

• BP

• Canadian Natural Resources Limited

• Shell

Central Government and other Public Sector

• Department for Transport

• Foreign & Commonwealth Office

• Highways Agency

• Home Office

• MOD

• National Air Traffic Services

• Office of National Statistics

• OGC

Police

• Over 30 Police Forces

• Police IT Organisation (PITO)

• Scottish Police IS Group (SPIS)

Miscellaneous Private Sector

• Associated British Foods

• BT

• General Motors

• Lloyd's Register of Shipping

• Orange

• United Utilities


Benefits – why consider them? what are they?

Foundations for success Be serious about realising benefits Don’t neglect ‘business change’ Begin with the vision or end goal

Some proven tools and techniques Strategy Maps Benefits Maps Benefit Dependency Maps Investment Assessment Matrices

Process, roles & responsibilities, available support

Successful Benefit Realisation


Benefits – why? how? and what?

The only valid reason for investment in change is the realisation of benefits

So change should always start with benefits and end with benefits

In fact benefits should be the core of any change project – the central theme – not an afterthought

But what is a benefit – ‘an outcome of change perceived as positive by a stakeholder’

So success is the timely realisation of the expected benefits

• This is not automatic, it doesn’t just happen, it must be managed – Benefit Management


Purpose: To improve the ROI from change

Fewer wastedinvestments

Earlierbenefits

Morebenefits

Return

Time

Sustainedbenefits

What is success? - the purpose of programmes/projects


Justifying

In UK until 1990

To justify?

Justification

Measuring

Emphasis shift

To measure?

Justification

Measurement

In UK in the

1990s

To harvest?

In UK in the new

millennium

Harvesting

Achievement

Measurement

Justification

Why consider benefits?


EnablersBusiness ChangeBRM

External Drivers

Stakeholders Cultural Factors

Benefits

Objectives

Process:Focus on the real goal - Objectives & Benefits

As is

Can be


Corporate or Programme Objectives

To increase effectiveness

To Improve deployment

To speed up responses

To reduce costs

The bridges may consist of

processes or changes or

intermediate benefits

Bridging between enablers and objectives

Projects delivering Capabilities


Business change activities

Project(s)

Projects delivering Capabilities

Corporate or Programme Objectives

To increase effectiveness

To Improve deployment

To speed up responses

To reduce costs

VisionEnd Goal

Business Case

Benefit Realisation Plan

Programme level work streams

Business change activities

Project(s)

Drivers

Centralised delivery Business unit delivery

Top level control

EnablersEnablers EnablingChangesEnablingChanges

IntermediateBenefits

IntermediateBenefits

BusinessChangesBusinessChanges

EndBenefits

EndBenefits

Building a programme around its benefits


To Increase

profit

Business Objective

Benefits

Technology

Feature

Change in Working Practice

Electronic communication

Meetings Management

Co-authoring documents

Captured learning

Interactive working with

Country Mgrs.

Search facilities

Document Management

Information sharing

Electronic discussion

Shared‘best

practices’

Increased efficiency

Increased effectiveness

Increasedsales

Increasedmargin

Reducedcosts

Improved performance of Country Mgrs.

More focused selling

More focused sales force

Faster resolution of pricing

issues

Cross-fertilisation between Countries

Maximisedlaunchimpact

Improvedpricing

Improved launch

planning

Improvedsuccession

planning

An example of a ‘bridge’ which distinguishes between Features, Changes and Benefits


Strategy

Delivery

Change Process with Review Points

1. Set vision

and objectives

2. Identify

benefits and changes

3. Define

initiatives

4. Optimiseinitiatives

5. Manage

initiatives

6. Manage

performance

R6

R5

R4 R3

R2

R1

Engage stakeholders


From a representative set of stakeholders gather answers to the why question - why do we want to undertake this change?

Group these answers and determine group headings expressed as objectives

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Confirming Programme Objectives

For a programme to roll-out Benefit Realisation Management (BRM) within an organisation, clustering and linkage resulted in the following Objectives Linkage Diagram (Strategy Map). What would you choose as a set of key objectives for the programme?

To increase awareness and

understanding of benefit realisation

issues

To maximisebenefit delivery

from eachprogramme

To improve project

prioritisationand selection

To introduce a standard Benefit

ManagementMethodology

To produce better

quality businesscases

To improve stakeholder management

To improve businessstrategy

To change to a more benefit

focused culture

To improvebenefit trackingand reporting

To increase shareholder

value


Confirming Programme ObjectivesFor a programme to roll-out Benefit Realisation Management (BRM) within an organisation, clustering and linkage resulted in the following Objectives Linkage Diagram (Strategy Map). These objectives are key and bound the programme.

To increase awareness and

understanding of benefit realisation

issues

To maximisebenefit delivery

from eachprogramme

To improve project

prioritisationand selection

To introduce a standard Benefit

ManagementMethodology

To produce better

quality businesscases

To improve stakeholder management

To improve businessstrategy

To change to a more benefit

focused culture

To improvebenefit trackingand reporting

To increase shareholder

value


Creating a Benefits Map for each of the bounding objectives

To improve project

prioritisation and selection

3. Improvedawarenessof options

1. Improvedunderstanding

of requirements

2. Improvedmanagement of

investment process


3. Improvedawarenessof options

1. Improvedunderstanding

of requirements

2. Improvedmanagement of

investment process

Hope this works tom morrow





























Creating the Benefit Dependency Map from the Benefits Map

To improve project

prioritisation and selection


To reduce the number of crimes

Fewer crimes by re-offenders

Fewer crimes by first time

criminals

Creating a Benefits Map starts with the identification of ‘end benefits’ which equate to the objective





criminals

Less propensity to commit crime

Less opportunity to commit crime

Increased deterrent to

commit crime

Continuing the development of the Benefits Map


Completing the Benefits Map




criminals



Reduced criminogenics

Fewer drug users

Improved personal crime

prevention

Improved community

crime prevention


commit crime

Better offender management

Increased police

presence on streets

Increased clear-up rates of targetted

crimes

Improved detection

Improved vocational training in

prisons

Improved awareness of crime issues

Lighter streets

More community crime prevention

initiatives

Improved law enforcement

resource usage

Increased effectiveness in fighting crime

Greater awareness of drug issues amongst the community

Improved scheduling of

police

Less bureaucracy in

police

Improved skills

Greater collaboration between local

agencies

Less drug availability





criminals




Fewer drug users


prevention

Improved community

crime prevention


commit crime

Better offender management

Increased police

presence on streets

Increased clear-up rates of targetted

crimes

Improved detection

Improved vocational training in

prisons


Lighter streets


initiatives


resource usage


Greater awareness of drug issues amongst the community


police

Less bureaucracy in

police

Improved skills


agencies


65%

35%

50%

20%

50%

25%

40%

15%

35%

30%

25%

70%

30%

20%

80%

60%

60%

25%

20%

30%

45%

30%

20%

100%

50%

100%

100%

50%

40%

45%

35%

25%30%

50%

40%

A weighted Benefits Map


101 Cross border communications

National IT System

Focus resources on higher value

activities

MI on hot spots

Case & Custody

More street lighting

Community Education

Programme

Vocational Programmes

Co-ordintate agenecies (incl.

voluntary)

"Meet the victim" scheme

Review scheduling practices

Media campaigns

Prompt replacement of

bulbs

Crime Prevention Officer meetings

Recruit and train specials

Implement vocational progs.

Drug treatment progs.

O5 To reduce the number of crimes

Fewer re-offenders

Fewer first time criminals




Fewer drug users


prevention

Improved community crime

prevention


commit crime

Better offender

management

Increased police presence on

streets

Increased clear-up rates of

targetted crimes

Improved detection

Improved vocational

training in prisons


Lighter streets


initiatives


resource usage


Greater awareness of drug issues amongst the

community


police

Less bureaucracy

in police

Improved skills

Greater collaboration between local agencies


65%

35%

50%

20%

50%

25%

40%

15%

20%

30%

25%

70%

30%

20%

80%

60%

60%

25%

20%

30%

45%

30%

20%

100%

50%

100%

100%

50%

40%

45%

35%

25%

30%

50%

Survey offenders

NOMS System

ObjectiveBenefit

EnablerBusiness Change

A Benefit Dependency Map (BDM) with weighted paths


Key

101 Cross border

communications

National IT System

Focus resources on higher value

activities

MI on hot spots

Case & Custody

More street lighting

Community Education

Programme

Vocational Programmes

Co-ordintate agenecies (incl.

voluntary)

"Meet the victim" scheme

Review scheduling practices

Media campaigns

Prompt replacement of

bulbs

Crime Prevention Officer meetings

Recruit and train specials

Implement vocational

progs.

Drug treatment progs.

1,000

05 To reduce crime

650

Fewer re-offenders

350

Fewer CJ first time criminals

500


232


350


150

Fewer drug users

46


prevention

186

Improved community crime

prevention

267


commit crime

203

Better offender

management

107

Increased police presence on

streets

40

Increased clear-up rates of

targetted crimes

53

Improved detection

118

Improved vocational training

in prisons

28


37

Lighter streets

112


initiatives

153


resource usage

93


42

Greater awareness of drug issues amongst

the community

69


police

61

Less bureaucracy

in police

46

Improved skills

32


agencies

75


65%

35%

50%

20%

50%

25%

40%

15%

20%

30%

25%

70%

30%

20%

80%

60%

60%

25%

20%

30%

45%

30%

20%

100%

50%

100%

100%

50%

40%

45%

35%

25%

30%

50%

Survey offenders

NOMS System

0

Objective

0

Benefit

0

Enabler

0

Business Change

A Benefit Dependency Map (BDM) with weighted paths and scores


Benefit Classification

Benefits can be usefully classified in a number of ways.

Some frequently used classifications are:

• Beneficiary - Stakeholders who will feel they receive the benefit

• Benefit category - generic or family grouping

• Boston Grid - Business impact

• sigma Value Type - value expectation

• Change Type - degree of change required for benefit achievement

Classification frameworks may be used as an aid to benefit identification or to classify benefits already identified in order to aid analysis and the management of expectations


Key benefits and disbenefits by

stakeholder Ex

ecu

tive

Ma

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me

nt

Bu

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ess

Ma

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nt

Bu

sin

ess

Use

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IS F

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on

Pro

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Fin

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Fu

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Key Benefits More effective project portfolio

Earlier recognition of ineffective projects

More financial benefits realised

More non-financial benefits realised

Improved management of risk

Reduced IS/IT costs

Improved image of IS/IT

Key disbenefitsExtra effort by business

Slower start to programme

IS Project Targets threatened

A Programme to roll-out BM within an organisation


Value type DefinitionExample

Financial Non-financial

Tangible

Definite

Expected

Logical

Intangible

Increased sales

Quicker performance of tasks

Improved management of insurance risk

Greater customer satisfaction

Reduced costsFewer steps in a process

Improved image

sigma value types

Value may be predicted on the basis of someone else’s experience or based on historic trends

Logically a benefit may be anticipated whose value may be measured but not predicted

May be anticipated, but difficult to substantiate

Value may be predicted with confidence or certainty – not effected by external drivers


1. Fewer steps in a process

3. Improved productivity

5. More coffee breaks

6. Shorter working day

4. More time spent with customers

7. Fewer staff

10. Improved staff morale

11. Reduced salary costs

8. Increased sales revenue

9. Improved networking

2. Faster response to customers

Value benefits in the way they are described

If the benefit is “fewer steps in a process”, the measure, which is also the value of the benefit is the number of steps in the process – the baseline may be 72 and the target 55 and the value at any point is the current number of steps in the process.

It is important not to try to give this a financial value, as of itself it is not a financial benefit. It may lead to a financial benefit, which would be shown on the Benefits Map, but this depends on the intention.

Based on the above map, reduced salary costs is only one of four possible end benefits, it may occur several months after fewer steps has been achieved and additional changes (e.g. making staff redundant) may be required in order to achieve this later benefit.


Case Example Major Bank

Improved image

Customer database and

sales processing system

Fewer errors

Easier sales

processing

Fewer complaints

Increased productivity

Better information on customers and sales

profitability

Improved customer service

Improved staff

morale

More high value

customers

More quality time with

customers


More highvalue sales

Less unpaid

overtime

Benefit linkage chart for the whole investment


Four reasons for tracking all / most of the benefits in the Benefit Linkage Chart

• To know that a change in the end benefit can be attributed to the project/programme

• To know that all paths in the linkage chart are operating in order to generate the maximum improvement in the end benefit

• To satisfy the needs of different stakeholders - e.g. sales processing; customer relations; HR

• To have some interim milestones, rather then waiting two years to see whether the sales had improved


Predictive model

Value of the

measure

TimeT1 T2 T3 T4

Don’t try and be more sophisticated than this in your predictions and use months (or preferably quarters) as your minimum time interval

Baseline

Baseline

Target

Target

M1

M2


Tracking the benefits

MeasureBaseline

valueStart

PeriodEnd

PeriodTarget value

Period 1 Period 2 Period 3 Period 4

No. of errors per 100 sales 7.5 1 3 2

No. of written complaints per week 9 2 4 2

No. of phone complaints per week 2 4 5

Customer service rating (%) 55 3 6 80

No. of sales processed pp phr 8.5 2 4 12

Value of sales processed pp phr £480 2 4 £750

Total overtime worked per week (hr) 85 2 4 15

Staff morale rating (%) 68 3 6 80

Time spent with customers (hr/wk) 45 3 6 100

No. of new HV customers/period 3 4 7 10

No. of HV Customers lost/period 5 4 7 2

Lead conversion rate (%) 27 4 8 40

Value of HV Sales/period £300,000 4 9 £1m


Case Example Major Bank

Improved image

Customer database and

sales processing system

Fewer errors

Easier sales

processing

Fewer complaints

Increased productivity

Better information on customers and sales

profitability

Improved customer service

Improved staff

morale

More high value

customers

More quality time with

customers


More highvalue sales

Less unpaid

overtime

Software supports RAG Status(including on Benefit Linkage Charts)


Obtaining further help

The book gives a very full and comprehensive treatment of benefit realisation with application to projects, programmes and portfolios.

The book, published in June by Gower @ £55, is available from Sigma’s stand today @ £48.


Complete toolkit:

Methodology A consistent, comprehensive, flexible and scaleable processA circular process which can be entered at any pointA proven process tested in many different environmentsA bag of many different techniques to suit a wide variety of situations

Education Education to change mindsetWar stories from a diverse variety of organisations

Consultancy To embed the approach in the behaviours and culture of the organisationWorkshop facilitation to engage stakeholders and secure commitmentPartnership consultancy to transfer skills through whole life-cycleTo advise and mentor in unusual and complex situations

Training To introduce an extensive set of techniques.To give guidance as to their use - why? when? how?

Software To manage the data, in order to:

• Improve the quality and consistency of information• Analyse and prioritise solution options• Manage cross-programme dependencies• Monitor programme and portfolio performance


Some good news

Benefit Realisation Management (BRM)can and does make a difference

Instead of 20% of potential benefits you could be enjoying at least 80% of

potential benefits


Documents

Benefits Realisation Management