4. 1. Identify: Defining “value”
“A cynic is a man who knows the price of everything and the value of
nothing.” (Oscar Wilde, Lady Windemere’s Fan)
But how is price different from value?
Value has been defined as “The maximum amount a person is prepared
to give up” for the thing in question*
– This is quantifiable
– Expressed in terms of sacrifice
– It is subjective
– It is about potential
Benefits is about realising value for stakeholders and must be measurable
So, what is the relationship between value and benefits management?
5. The BM lifecycle is about maximising value
PMI “Pulse of the profession” survey in 2016
suggested that organisations with high benefits
realisation maturity waste 67% less money
than those that don’t
There are three major challenges:
1. To imagine a future change and who it
could benefit
2. That people must make long term
changes in behaviour and belief and
3. That change is likely to take place after
the programme closes.
8. The effect of waste in potential
benefits is costing all of us money
Research by the University of Sheffield, Royal Academy of Engineering and British
Computer Society suggests that only 10-25% of potential benefits are realised from
investments in change. This is estimated to cost the UK >£50bn per annum
One particular challenge is the ready-made solution looking for problems to solve.
Confirmation bias then adds to the problem as we seek confirming evidence
In many public, and private sector projects, this is a political reality. However, it is
worthwhile to consider what is the over-riding objective and what are the sub-
objectives which will quality a solution in or out?
This is exacerbated when the solution is really an enabler, such as a building or IT
system or facility. These have no intrinsic value but can produce benefits from the
way they are used as part of a change programme.
10. 3. Plan: Benefits Realisation
Stakeholder engagement early on is essential. If you have defined the
objectives for the change then only stakeholders can help in
understanding the context of the current way of working and the reasons
that it works as it does. They know the problems and may have already
made their own attempts to resolve them
It is relatively easy to profile potential benefits using activity based cost
savings (number of activities per period minus potential saving/cost of
activity) over the lifetime of the change. This is a non-cash benefit shown
as an efficiency gain. However, this is misleading because:
– It does not include the cost of the change
– It does not show that any beneficial use of saved time will take place
– It does not prove that this change alone can produce any benefits
– It may not be permanent
Unless the users are motivated to change and this solves their problem, it
is likely to face resistance and so be diluted by reduced confidence
weighting in the business case
11. How does benefits realisation really work?
The project team work hard to deliver a new capability
The new capability has the potential to make transformational change
It is delivered to users
So far, this is
just a cost
and
represents
an enabling
capability
Users need to plan and implement
the change and embrace the
opportunity
This takes time to become
part of “how we do things
here”Benefits start to be
realised here when
things are done in a
new way, but may
also show dis-
benefits and new
emergent benefits
This is an opportunity for the
project team to learn from
the real experience of users
and improve the next
iteration
14. And there is something else
It is generally easier to change people that are
younger than those who are older
It is generally easier to change how people do
something they have never done than
something they already do
It is always easier to change people when
they see someone else making the change or
the change fits an established pattern
Change imposed is not like change by
choice but benefits always depend on
change
15. Why it is hard to imagine and then realise the
benefits of digital transformation?
Underestimating the scale of the disruption caused by digitization in terms of:
behaviour, access to information and ways of getting work done. This is a massive
disruptive force
Not really understanding what digital means. (By 2025 there will be 20 billion devices
connected around the world- three for every person on earth!) e.g. consider the
impact of telematics for the car insurance industry
Mis-understanding the economics. For example, digital technologies move value
from providers to consumers and removes many of the needs for intermediaries.
Overlooking how ecosystems work. Platforms bring new groups of providers together
and improbably combinations (largest choice, lowest cost, fastest delivery, greatest
customer experience)
Missing the duality of digital. This means doing the core functions better and creating
something new at the same time. Many organisations will struggle to do both quickly*
McKinsey, Jan 2018
17. 5: Track : Finding the right measure
• The benefits come from the change in behaviour, way of doing
something or new forms of value
• If this change is in the behaviour of complex systems, such as the work
of GPs, Pilots or the public, we are likely to use proxy measures
• A proxy measure is something we can see as an indicator that positive
change has taken place. In the case of pilots, this can be the time to
train to fly new aircraft types as a proxy for fleet flexibility in an airline.
Boeing 747-400 Airbus A350-900
18. Measuring benefits realisation
Quality Benefits
Proxy Measures
Perception Measures
Case Studies
Deployment Measures
Research in healthcare
indicates that quality
(Societal) benefits are often
the precursor of efficiency
benefits and other financial
benefits
Beware of the illusion of
small numbers in
statistics. Or
comparison with a
mental model
e.g. How many
times a unique
user has viewed
a website for
how much it
changes the
way people buy
20. Conclusion
Benefits should be the reason we take the risk of investment in change and the
reason that Sponsors back projects
However, some projects are really “missions” and the solution comes first
In these cases it is worth getting the objective
clear and any conditions which are essential
Stakeholder engagement is essential to really
understand their point of view – note that this is not to suggest that you take
their definition of the problem. They may only be able to imagine today+
Most of the things that we traditionally consider “soft” benefits or quality
benefits are the pre‐requisites of financial or efficiency benefits, an example of
this is trust.
Outcomes phrased in benefits are more powerful that outputs in motivating,
uniting and finding the creativity in your team and your customers – use them!