Maximising Value thro bus change

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Maximising Value through Effective Business Change
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Executive Summary
This paper seeks to highlight the reasons why, all too often, public sector investment in IS/IT
fails to deliver the expected value. This paper explains that this is largely because the delivery
of benefits through business change is wholly or partially ignored. Furthermore, the paper
highlights evidence that a significant number of business change investments are made
without a clear appreciation of the full range of business benefits that have the potential to be
realised.
Whilst some improvements have been seen in recent years in business change project and
programme management the key objective for all such initiatives, delivering lasting
maximum value to the sponsoring organisation has remained elusive. The majority of
business change projects and programmes are failing to deliver the potential business benefits.
In the current economic climate this cannot be allowed to continue.
There are examples where business change projects do deliver significant and long term
benefits to an organization, for example with the DVLA Delivering Operational Change
through Benefits initiative. This paper seeks to learn the key lessons from those successes and
set out the steps that are needed to increase the chances of seeing similar levels of success in
all government business change investment.
The paper seeks to build on the positive changes that have been achieved to date by the
Cabinet Office, in particular the appointment of the first Chief Procurement Officer for
Government, and the establishment of the Major Projects Authority.
The paper suggests a number of improvements to existing business change project and
programme management processes that are intended to ensure:
• That the SRO of programmes holds personal responsibility for benefits realisation
• The programme portfolio is aligned to the Departmental strategically financial
objectives
• The creation of benefits delivery business plans
• The role of stakeholders is to deliver benefits
• The governance of projects focused on benefits delivery
• External assurance of benefits delivery is designed into projects
Business change project and programme management is now reasonably mature within the
public sector. However, the essential realisation of maximum value these initiatives fall
well short of our expectations and needs. Government business change investment needs to
drive further improvements in best practice and combine this with a much clearer focus on
the robust identification and delivery of business benefits, in order maximise the delivery
of value from these investments.

• Programmes leverage maximum value from suppliers
• Programmes are provided with appropriately skilled project resources.

Introduction
The pressure on public finances in the UK is acute, yet the need for change in public services
has never been greater. But delivering change usually requires investment. The fundamental
premise of this paper is that investment in business change must be treated like any other
investment and subject to rigorous investment appraisal and delivery management. Proposed
investments should demonstrate business value that exceeds the level of investment.
Appendix 2 of this paper, A Short History of the Pursuit of Value, contains an assessment of
the progress that has been made in improving the chances of delivering value over the last
decade, and points to further improvements that still remain to be delivered. The purpose of
this paper is to set out proposed improvements to the way in which current business change
projects (including those that are enabled by investment in new or changed IS/IT) are initiated
and delivered so that the chances of failure to realise the full business benefits are minimised.
As we end the 2010/11 financial year the economic pressures across the whole of the UK are
immense. The need to deliver maximum value from every pound spent by the UK
government has never been higher. And yet major public sector business change investment
projects including major business change services contracts continue to fall short of achieving
the full range of business benefits, and overrun on time and budget.
Building on Firm Foundations
Significant improvements have already been made across government in improving the
project and programme management delivery, and the subsequent delivery of business
benefit. The work of the Cabinet Office Efficiency and Reform Group (ERG) has been
substantial in the last 12 months, and its effectiveness in helping achieve government budget
reductions during this period is evidenced:
• Estimated reduction of running costs of government property estate of £50 million,
• Renegotiating contracts with major suppliers to save an expected £800 million in
2010/2011,
• Saving an estimated £133 million in first six months of 2010/11 by freezing non-
essential advertising and marketing spend.1
The Public Accounts Committee hearing on the Efficiency Reform Landscape Review on 28
June 2011 also noted that ERG had contributed over £3bn in savings towards achieving
Government budget reductions.
There are also recent examples within government of success in delivering significant levels
of benefit, notably in the DVLA. In 2007 DVLA transitioned ownership of change and2
benefits to operational business enabling ‘Business Led Change’ (See Appendix n for further
details).
DVLA now has a single business area with oversight of benefits realisation. Identified
business benefit owners understand the impact of change on:

• the performance of their business areas,
• their ability to deliver against their operational targets,
• the impact on accuracy, efficiency and customer service,
• the ability to focus effort where it is most needed,
• positive investment decisions can be made based on signed off benefit commitments
that are underpinned by realistic benefit realisation plans,
• Benefit delivery issues can be identified and resolved during the development
lifecycle, not after go-live.
Where are we today?
The experience of introducing ‘Business Led Change’ in DVLA (referred to above) also
highlighted a number of key lessons learned that it is worth noting:
• Executive Board sponsorship is essential,
• Those impacted by the new approach need to understand the implications on them and
be committed to the new approach,
• Appropriate change and benefits management skills need to be focused in key areas to
deliver significant benefits through change,
• Benefits reporting need to provide a ‘real-time’ view of the impact of change activity
on organizational performance,
• All benefits must have an identified senior owner in the operational business who
signs of on the benefits identified and associated business change plans,
• Benefits Management must become an inherent part of operational management
through development of the organisational capability to effectively deliver benefits,
and aligning achievement of individual benefits to the personal objectives of those
responsible for delivery.
Despite the improvements in the planning of benefits to be delivered there is still a significant
gap (one survey in 2009 indicated that as few as 1 in 5 initiatives achieved the benefits that
were planned ) between the desire to deliver benefits and the actual delivery of the anticipated3
value.
The generality of these points is emphasised by the 2011 report by the NAO on the role of
ERG which states “For the Government’s overall strategy to have more success than the4
previous attempts it will need:
• arrangements to ensure compliance with the agreed strategies;
• detailed planning by departments for how efficiencies and economies are to be
realised, whilst minimising the impact on services;
• milestones and accountabilities for tracking improvements.”
The NAO also highlighted the need to address the following:
• sufficient staff with the appropriate commercial skills to support project delivery in
both the Major Projects Authority and departments;
• securing provision of objective and quantified information to support effective
decision making;

• effective intervention in poorly performing projects, whilst retaining accountability
and responsibility with departments;
• improving process management by improving performance in making the case for
change and proving the benefits to be gained, creating an environment where staff
have the obligation, desire and skills to improve business performance, and understand
what the customer wants and implementing a planned response to changes in demand;
• improving the link between process improvement initiatives and the overall costs of
the organisation so that there is clarity about how process improvements are
contributing to planned reductions in costs through much better measurement of
benefits.
And as recently as June 2011 Lord Browne of Madingley (Lead non-Executive Director,5
Efficiency and Reform Group in the Cabinet Office) highlighted to the UK Public Accounts
Committee the need to:
• build on the success to date of the Efficiency and Reform Group by making them
sustainable. I applaud the formation of a Major Projects Academy (but this prompts
enquiry about where the necessary experience, knowledge and skills will be drawn
from and how the required investment will be justified);
• understand that government needs a high level of professional skill for distributed
procurement as well as centralized procurement, in order to underpin successful
project delivery, and I also support Lord Browne in highlighting the need to ensure
they secure the right commercial experience);
• to educate those in managerial and leadership positions to balance policy development
with an appreciation of the tools, techniques and understanding needed for
implementation with limited resources.
At the same Committee meeting Ian Watmore (Chief Operating Officer of the Efficiency and
Reform Group) recognised that suitably qualified and experienced programme were in very
short supply in government, and highlighted the need to build “a really strong cadre of people
who do programme director roles, week in week out, for one programme after another”.

Action Plan
In order to meet these demands we recommend implementation of types of Business Led
Change processes as have been implemented successfully at DVLA, including embedding
Benefits Management processes within an overall Portfolio Management framework. The
key actions required are outlined in the following bullet points and explored in more detail in
Appendix 2 – The ‘Value Improvement Framework’:
• SRO of projects holds personal responsibility for benefits realisation
• Ensure projects portfolio is aligned to the Departmental strategically financial
objectives
• Creation of benefits delivery business plans
• Ensure role of stakeholders is to deliver benefits
• Governance of projects focused on benefits delivery
• Leverage maximum value from suppliers
• Provide skilled project resources
Delivery of the Action Plan is underpinned by the following principles:
• Government investment in business change has to be supported through the business
benefits that have been demonstrated as being likely to be realised;
• The SRO carries personal responsibility for delivering the identified benefits;
• The delivery of benefits is enabled through the use of appropriately skilled project and
programme resources;
• The expertise in delivery of business benefits that exists already across Government
Department’s is leveraged in support of all business change initiatives. 

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This time it’s different - Implementing the ‘Framework’
The key question that the author has been asked during the development of this paper is “Why
will your framework be any different?” In other words, why will this attempt to improve the
level of business benefits that are achieved from projects and programmes be any different to
the previous attempts by governments across the world and major corporations?
Given that we have been aware of the problem for the best part of a couple of decades, and
academia has been producing approaches, tools and methods for at least 10 years, why have
we not seen significant improvement in the business benefit that is derived from the
investment that is made in these projects and programmes.
In response we suggest that the political climate is much more favorable, that the more
holistic top-down approach will drive change from the top, and that the governmental
structures are now in place to drive implementation:
• The economic pressures on Government have never been greater for decades past;
• The political imperative to deliver increased levels of value from public expenditure is
irresistible;
• Under these proposals SROs will be personally accountable for identification and
delivery of business benefits, assured by externals experts and answerable to
Permanent Secretaries;
• Permanent Secretaries will report progress to Ministers and Cabinet Office on benefits
achievement on a monthly basis;
• The role of the ERG will be expanded as necessary to enforce adherence to the
Framework and be answerable to the Cabinet Office Secretary for the effective
implementation of these proposals.
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Appendix 1 – A Short History of the Pursuit of Value
And then there Were Projects ...
During the latter 20th Century the level of expenditure on business change services within the
UK, particularly in the UK public sector had risen dramatically in response to increasing
demands from government to automate business processes.
During the 1980s government departments adopted PRINCE as the standard project
methodology and in the 1990s I saw the widespread emergence of the 'Professional Project
Manager' within government departments through recognition by organisations such as the
Association for Project Management (APM).
As the paper explores later, these developments led to significant improvements in the
successful delivery of business change projects, but the business value arising from the
investments remained focused on assurance that the particular business initiative would be
supported. In a number of instances the success or otherwise of the business change
implementation was judged according to the damage inflicted on the business and how long it
took to recover!
The Second Push – Projects get better, but ...
In April 2001 the OGC published a brief but insightful account of the most common causes of
project failure, and the assurances that those responsible for the approval of business change
projects should seek. The publication, in the form of a pamphlet, was entitled 'Why business
change Projects Fail'.
Whilst a wide range of factors that contribute to project failure are identified, failure to
recognise the impact on the business was only a single item. This reflected a predominant
focus on business change delivery over achievement of business benefit. As will be seen later,
whilst some progress in improving the delivery of business benefit has been achieved in the
decade since 2001, much more can and should be achieved.
Projects get surrounded … the systemic issues
During the first decade of the 21st Century, along with the improvement in project delivery
capability, government departments introduced comprehensive governance arrangements
around their projects and programmes in the form of the Gateway Review process.
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Whilst throughout the gateway Review process the planning and realisation of benefits is
acknowledged, identification and achievement of benefits from the considerable investment
that business change required is definitely not placed ‘centre stage’. There is minimal
guidance provided to SROs with regard to the approach, methodology, complexities and
challenges associated with benefits realisation.
The objective of the Gateway Review process is to help those responsible for projects to
improve the chances of success by ensuring:
the best available skills and experience are deployed on the programme or project;
all the stakeholders covered by the programme/project fully understand the
programme/project status and the issues involved;
there is assurance that the programme/project can progress to the next stage of
development or implementation and that any procurement is Ill managed in order to
provide value for money on a whole life basis;
achievement of more realistic time and cost targets for programmes and projects;
improvement of knowledge and skills among government staff through participation
in Reviews;
provision of advice and guidance to programme and project teams by fellow
practitioners.
Whilst throughout the gateway Review process the planning and realisation of benefits is
acknowledged, identification and achievement of benefits from the considerable investment
that is required is definitely not placed ‘centre stage’. There is minimal guidance provided to
SROs with regard to the approach, methodology, complexities and challenges associated with
benefits realisation. It is tantamount to asking the SRO to assure the technical architecture
with nothing more than a rudimentary knowledge of IT. What is different, however, is that the
CIO can take responsibility of the technical architecture. The business has to deliver the
benefits.
More worryingly when the detailed guidance is examined there is no clear recognition of
either the value or need to undertake formal and rigorous benefits management. For example,
for Gateway Review 1 (Business Justification) the only recognition of benefits realisation is
“Ensure that the desired benefits have been clearly identified at a high level, together with
measures of success and a measurement approach”. This is the only reference amongst 15
other purposes of the review. This is despite a clear statement that
“The Review focuses on the project’s business justification. It provides assurance to the
Project Board that the proposed approach to meeting the business requirement has been
adequately researched and can be delivered. It also confirms that the benefits to be
delivered from the project have been identified at a high level, and that their achievement
will be tracked using a defined measurement approach.”
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So, the importance of benefits identification as a key factor in business justification is clearly
recognised at a high level, but there is an almost complete lack of explanation of the way in
which the success of the initiative must be measured through the achievement of the business
benefits (as opposed to the delivery of the business change components of the business
solution). The complexity and challenge involved in undertaking the successful delivery of all
the benefits is not sufficiently recognised and addressed.
It is a similar story for Gateway Review 5 (Operations Review and Benefits Realisation).
Again, only 1 of 12 purposes for the review is related to benefits management; “Assess
whether the benefits anticipated at this stage are actually being delivered”. Furthermore, and
quite startlingly, the guidance recognises that responsibility for the realisation of benefits
passes from the SRO to the operational business owner up to 12 months after the start of the
operational service.
This is compounded by the lack of take-up of this review activity by government. The
National Audit Office has reported that only 20% of government use it.
And finally, throughout all the guidance, the achievement of benefits and the business case are
treated as separate entities.
To compound these issues most major government departments have followed the OGC
Gateway approach to structure and deliver their own internal business change investment
governance arrangements. The weaknesses that originated at the centre have been
promulgated across government. The consequence of mixing this with cultural and structural
deficiencies has far too often created a devastating, and at times lethal, cocktail for projects
and programmes to take.
Projects get surrounded … the cultural issues
There is an increasing sense amongst central government business change projects and
programmes that a number of government department’s governance arrangements are less
effective than they could and should be. A number of factors are often sited as the cause of
this including lack of external challenge, refusal to engage in realistic risk assessment, and
lack of relevant experience amongst governance board members.
Governance Boards are populated (frequently selected by the SRO and programme/project
manager) by colleagues who are known to be either ‘safe’ or sympathetic. Too infrequently
are experienced stakeholders external to the SRO line, let alone department, are co-opted onto
governance boards.
All too often departments’ innate refusal to acknowledge and deal with serious risk of failure
is one of the most likely causes of lack of delivery of business benefit or, at worst, failure of
the investment programme or project.
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Projects get surrounded … the structural issues
The vast majority of business change project governance is conducted ‘in house’ by
Departments themselves. Whilst the assumptions around this are admirable (all departments
are full of ‘honourable women and men’) the reality is sadly that this is not true. The OGC
Gateway reviews accept this and insist on using ‘independent’ reviewers to conduct their
reviews.
The OGC model does, however, have one fundamental flaw. The ‘independent’ reviewers are
frequently individual contractor/consultants and are paid by the Departments themselves, and
they frequently rely heavily on the review ‘business’ from that department. Independent?
Their have been different approaches used in the past where, for example, highly experienced
project professionals with responsibility into the centre of government Ire co-opted onto
projects to provide truly independent assurance to governance bodies that Ire also truly
independent of the SRO. These arrangements proved particularly effective in assuring that
risks Ire recognised and managed, and desired outcomes Ire achieved.
Similarly, SROs are by their very nature, senior. It is all too common for the SRO to be the
senior member of the governance board and, therefore, less likely to be directly challenged.
Projects get surrounded … the ‘support industry’
From the emergence of the earliest business change projects within government the
consultancy service sector has successfully sold its services into those projects. The rationale
for use of such services has varied from “I haven’t got the skills” to “I haven’t got the
numbers of resources I need to deliver” to “They have a special relationship with us”. All of
which may have been true to a greater or lesser extent.
There have been a number of extremely successful projects that simply could not have been
delivered without the support of one or other of the major management consultancies. Of
recent years, however close examination of some of the major government business change
investment failures took place despite 10’s and sometimes 100’s of millions of pounds being
spent with one or other of the ‘Big 5’ consultancies. In some of the more shocking examples,
projects have used more than one of the ‘Big 5’ either in series or parallel in order to solve
their delivery problems usually to little or no effect.
Something is clearly going amiss here, either in the consultancy that is being sought, in the
way in which the consultancy is used, or in the consultancy that is being deployed. Again the
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author come back to the overall theme of this paper, have the benefits of the investment in
consultancy been comprehensively identified, matched to the overall objectives of the
initiative, encompassed in a robust business case, and then a senior manager been given
responsibility for ensuring that the benefits are delivered.
This might indicate to the need for a radical review of the approach to delivery of external
support to business change investment projects and programmes.
Progress since 2001 – What improvements have been delivered?
A number of major studies since 2001 indicate that whilst some progress in recognising the
importance of benefits delivery, progress in actually delivering benefits has been much less
successful.
The National Audit Office reported on the Common Causes of project failure in 2003. They
cited the following as some of the causes:
Lack of links between the project and organisation key strategic priorities, including
agreed measures of success;
Lack of effective stakeholder engagement;
Lack of focus on securing business benefits;
Inadequate measures and skills to deliver the total delivery portfolio.
However, I do acknowledge the fact that a number of business change enabled business
changes have been successful, and recognise the valuable lessons that can be learned from
their success. In 2006 the National Audit Office (NAO) identified three key themes that arose
in studying 24 examples of successful business change enabled business change:
The level of engagement by the organisations senior decision makers;
The organisations understanding of their role as the ‘intelligent client’;
The importance of determining at the outset what the expected benefits are, and how
the programmes and projects delivering the benefits will be managed to ensure
delivery.
A survey of over 100 organisations (13% of which were public sector) undertaken in 20066
identified significant levels of disappointment in the levels of benefit achieved by their
business change investments. Only 45% of the organisations had 50% or more of their
projects delivering business benefits at the levels expected. 75% of the organisations believed
that they required significant improvements in their approach to managing benefit delivery,
and only 43% of executives of these organisations Ire confident of getting value from their
business change investments. Only 59% of organisations had adopted structured approaches
to business change investment appraisal, whilst only 25% had adopted structured approaches
to benefits management.
The study identified the following factors (in order of positive impact) that differentiate
organisations that successfully deliver business benefit from those that do not:
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Transfer of lessons learned from the successful projects to the ‘next generation’;
Quantification of benefits;
Identification of all benefits;
Organisational change evaluation and review;
Not overstating the benefits to obtain funding approval;
Benefits delivery and planning;
Organisational change planning;
Benefits delivery evaluation and review;
Use of reference sites to identify and structure benefits;
Use of external benchmarking to identify and structure benefits.
In 2007, the European Services Strategy Unit, reporting on Cost Overruns, Delays and
Terminations in 105 outsourced public sector business change contracts, recognised that7
successful project delivery was not just about securing the business benefit. Amongst the
findings of the Unit a number of drivers that can cause cost escalation and potential failure
are:
Projects being over ambitious, complex, lengthy and difficult resulting in them being
overtaken by new technology, and changes in legislation and public policy;
Private sector suppliers believing their own hype (“world class services”) resulting in
over-commitment of capability and underestimation of costs;
Client-side is often under resourced, and suffers lack of relevant skills and experience
which in turn can result in;
Service needs inaccurately or inadequately represented,
Proscribed evaluation leading to inappropriate supplier choice,
Limited contract monitoring, and
A conclusion that contract termination may be more costly than performance
failure.
The procurement process is all too often high-risk and subject to uncontrollable
market forces, and the subject of inadequate commercial risk management. As a result,
suppliers can suffer from inadequate margins that may result in inappropriate (but
necessary) cost reduction strategies that damage performance or even cause supplier
failure.
More recent surveys are no more encouraging. The 2009 survey into The Benefits of
Organisational Change (amongst middle, executive and board level members of a wide8
variety of industries, including financial, professional services, health, and local and central
government) concluded that:
Failure to deliver the planned benefits from change programmes is widespread;
Whilst there is a general recognition of the need to use Benefits Realisation
Management (BRM), there is a gap with the organisation’s ability to deliver resulting
in a widespread desire to improve use of BRM tools and techniques.
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In 2009 Stephen Jenner undertook a study into the maturity of Benefits Realisation
Management. From the responses to his study Stephen highlighted ten main barriers to9
benefits realisation:
Project focus –creating the business case to get the budget approved; benefits
identification is treated as a mechanism to get funding, no effort in the realisation of
these benefits; While benefits are often identified at the project level, they are usually
forgotten once a project has closed; we stop short of delivering benefits other than to
install new capability.
Process & Compliance – lack of a consistent recognised process; We have good
ownership of benefits, but our follow-up does not yet have sufficient rigour. Best
practice approaches are not always adhered to; we develop the plan, analyse what
benefits could be realised but don’t track their actual realisation.
Political dimension - projects/programmes are started in response to a political
commitment and so the task becomes one of finding sufficient benefits to justify the
chosen solution; If anything, benefits forecasts are minimised to avoid financial
savings being taken against them prior to realisation.
Leadership - the main barrier is constant change of senior leadership so
accountability is lost; lack of understanding (and hence commitment) at senior
management level; strategic commitment to a systematic use of benefits management;
It is key to ensure that accountable executives (Sponsors) recognise their role, and
commit the same time and energy to benefits for delivery and costs; The lead business
manager (sponsor) is not incentivised / penalised on the outcome.
Business Focus and change management - improved commitment to, and
compliance with standards; insufficient pressure to recognise and measure the
benefits; absence of real buy in from those likely to realise the benefits; Need more
work on realisation through effective change management.
Organisational change – Tendency to do large programs rather than shorter modular
project elements.
Locus of Responsibility – failure of business areas to perceive responsibility for
benefits realisation; increased ownership from business leaders; roles and
responsibilities not clear and BRPs often end up owned by the project team.
Cultural issues –no pressure to change or to hold people to account for realisation of
planned benefits; unless Benefits Realisation becomes mandatory they feel they
should not be realising them; robust challenge at the planning stage; No
consequences for non-adoption.
Technical issues - Lack of a link between project/programme benefits and strategic
targets; difficulty of measuring long-term benefits and attributing them to a specific
initiative; lack of benefits realisation tools integrated in to project methodologies,
tools etc; lack of granularity and prioritisation of Strategic requirements against
which to situate benefits.
Awareness –Lack of understanding including the need for business change to exploit
the capability provided by project delivery; no clear understanding of how to quantify
and therefore measure benefits; No desire to link change activity to benefit
achievement, paying lip service to benefits.
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Stephen Jenner suggested the following areas for greatest improvement:
Improve evidence based forecasting,
Greater use independent checks on benefits claimed,
Use of Post Implementation Reviews to assess benefits realisation against forecast,
identify ways of increasing benefits, and lessons learned are fed back into the benefits
management process,
Focus post implementation efforts on driving out additional value through further
exploitation of additional capability and capacity, the aim being to exceed expected
benefits.
Stephen’s report also highlighted that respondents to his study found the following tools and
techniques to be of value:
Workshops, particularly if attended by the SRO,
MSP based tools and techniques,
Benefits Dependency Networks, Benefits Maps, Results Chains,
Business Cases, Profiles, Registers and Benefits Realisation Plans.
A further report by Stephen Jenner in March 2010 noted that a number of improvements10
were underway across government including:
Development of a cross government strategy on benefits realisation by the OGC,
The development of ‘Value Management’ guidance by OGC,
Revisions to MSP and PPM to reflect greater emphasis on benefits management,
An initiative to increase take up of Gateway 5’s, and training of gateway review teams
to be more benefits aware,
HM Treasury revised guidance on business case development, including evaluation.
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Appendix 2 – The ‘Value Improvement Framework’
The Action Plan on page 5 of this paper set out a number of suggested actions that are
required to underpin the ‘Value Improvement Framework’:
• SRO of projects holds personal responsibility for benefits realisation
• Ensure projects portfolio is aligned to the Departmental strategically financial
objectives
• Creation of benefits delivery business plans
• Ensure role of stakeholders is to deliver benefits
• Governance of projects focused on benefits delivery
• Leverage maximum value from suppliers
• Provide skilled project resources.
To add a little more detail before getting to the detail of the ‘Framework’:
• Government needs to understand how value for money can be measured in major IT
enabled business change projects (eg through benchmarking against ‘best of breed’
application developers, ensuring that commercial arrangements with suppliers drives
improved value for money);
•
Clear strategies and targets are developed by the centre and rolled out to departments
that clearly set targets for Permanent Secretaries to diffuse to their SROs on the
benefits that each of their major change initiatives has to deliver;
• Forging links between delivery of benefits arising from business change to the
corporate performance regime at both the individual and corporate level, underpinned
by the provision of management information that enables effective monitoring of
benefits delivery;
• Permanent Secretaries respond to the benefits targets with viable business change
plans that will deliver the benefits together with details of the individual SROs and
Programme Directors who carry personal responsibility for achievement of the
benefits;
• A more robust approach to business case production and approvals a fuller range of
benefits can be identified in financial terms, and unrealistic benefit claims be
challenged and rejected;
• The Major Projects Authority provides intense on-going assurance throughout the
lifecycle against the business change plans working closely with all high risk projects,
and being physically embedded on a full-time basis with the top projects;
• A clear focus on the recognition and adoption of proven methods and approaches to
benefits planning and realisation, achievement of significantly greater levels of
business value can be achieved;
• External independent assurance of the project delivery capability needs to be
improved so that the chances of successful delivery of the planned business benefits
can be increased significantly. In particular the effectiveness of the current Gateway
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process needs to be examined to ensure that the most appropriate tests of the most
relevant aspects of project performance are being applied consistently, particularly
around realism of plans and robustness of the risk assessment of planning assumptions
and technical risks;
• The potential for business change service suppliers to play a key role in enabling
delivery of business benefits needs to be fully exploited through more mature
department/supplier relationships, and more appropriate contractual and commercial
arrangements.
• All the above needs to be underpinned by the recruitment of, in the short term, highly
skilled and experienced practitioners who can deliver the necessary step change in
skills levels that are recognised as being required.
Value Improvement Framework Elements
The proposed Value Improvement Framework consists of the following seven elements:
1. Benefits Realisation Management
2. Building Better Business Cases
3. External Assurance of Plans
4. External Assurance of Delivery
5. Better Exploitation of Supplier Capability
6. Driving Value from Stakeholder Engagement
7. Strengthen Governance.
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Benefits Realisation Management
Benefits Realisation Management has been widely recognised as a cohesive and
understandable method for the identification and realisation of business benefit arising from
business change. A number of organisations, both academic and commercial, have proposed
effective approaches to resolving the issue of benefits realisation.
This paper seeks to bring together the best of a number of approaches, primarily those from:
Cranfield University School of Management; and11
Stephen Jenner, Cabinet Office. 12
Against this backdrop Ward & Daniel articulate a five step approach to benefits realisation as
illustrated at Figure 1 below.
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Effective delivery of business benefit is built from these principles:
IT has no inherent value; the benefit arises from the effective use of the asset
Benefits arise when IT enables people to do new things, do things differently, or stop doing
the wrong things
Only business managers and users can release business benefits
All IT projects have outcomes, but not all outcomes are benefits
Benefits must be actively managed for.
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Identify and Structure Benefits:
Involves creating the business case. A more rigorous approach to business case
development is outlined in section 3.3 below;
Agreeing the investment objectives and how they link with the organisation’s
strategy;
Identifying the potential benefits and the changes needed to realise each of them;
Securing key stakeholders commitment to achieving the benefits, and
Stakeholders ability and willingness to undertake the changes needed to achieve the
benefits;
Assign ownership of each benefit and change to an appropriate business manager;
I recommend the use of Investment Logic Mapping .13
Plan Benefits Realisation:
Identify the specific actions needed to achieve each benefit;
Ensure that technology delivery is synchronised with the organisations ability to
exploit it successfully (not simply to cope with the impacts!);
Assurance needs to be gained at this point that the scale of benefits identified in the
business case are achievable against the identified measures;
Assess the accompanying costs (both technical and non-technical) required to realise
the benefits;
I recommend the development of Benefits Dependency Networks in support of14
benefits realisation planning.
Execute Benefits Plan:
Implement the Benefits Realisation Plan as an integral part of the project and, if
appropriate, Programme Plan.
Review and Evaluate Results:
Assess the value delivered (this stage can extend beyond the life of the technical
delivery stream of the project or programme);
Identify and transfer lessons learned in the achievement of benefits.
Potential for Further Benefits:
Define actions and responsibilities for recovery of any missed benefits;
Identification of further potential benefits that could now be achieved.
Professor Donald A Marchand of the IMD Business School emphasised that information,15
knowledge and IT resources can and will be used to impact business performance because:
Benefits realisation and change management are inextricably linked.
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• Knowledge resides primarily with people. Business managers need to provide the
motivation;
• Information Management practices depend how people use right information at the
right time for decision making and problem solving. IT job is to provide the right
information at right time;
• Most value of effective IT practices comes from their use by people in business
processes, and how people use these in conducting the activities of the business.
In order to be successful, this type of approach to benefits realisation has to be enabled by an
integrated approach to change management, risk management, project management, system
development, investment appraisal, portfolio management and programme management.
Building Better Business Cases for business change Investments;
improving benefits realisation planning
Business case development and approval has typically only partially exploited the full
potential of a comprehensive approach to the realisation of business benefits. Recent OGC
guidance recognises a number of key aspects of benefits management, but fails to recognise
the value of explicitly placing benefits management at the heart of the business case.
The fundamental purpose of the business case remains to secure approval for funding the
financial expenditure of the project/programme, but this no longer sufficient for today’s
investment decisions.
Ward, Daniel and Peppard (2007) highlighted that the business case must also:16
• Enable priorities to be set amongst different demands for investment of funds and
resources;
• Identify how the combination of business change and business change will deliver
each of the identified benefits;
• Ensure that the commitment of business managers to achievement of the benefits is
enshrined in the business case;
• Create a solid basis for the assurance of benefit achievement.
The development, content and approvals of business change project and programme business
cases needs to be robust. Ward, Daniel and Peppard (2007) also recognised that there is a need
for a rigorous and systematic exploration of the benefits of the business change investment
by:
• Recognising the different types of benefit and cost (beyond simply financial and non-
financial) within the business case;
• Measuring all identified benefits either subjectively, qualitatively or quantitatively;
• Identifying an owner for each benefit;
• Seeking strong evidence for the benefits claimed;
• Explicitly linking the benefit to both the business change and business change
required to deliver the benefit;
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• Identifying owners for the business change.
Implementation of a small number of enhancements to the current approach to business case
development and approvals processes could improve effectiveness. One major department has
adopted the ‘Five Case Model’:
• The Strategic case;
• The Economic case;
• The Financial case;
• The Commercial case;
• The Project Management case.
Use of this model enables a more comprehensive approach to business case development.
However when the detail underpinning the approach is examined weaknesses appear. In this
department's Business Case Tool only 8 out of 62 areas to be covered in a business case relate
directly to the identification and realisation of business benefits, and these only at a high
level. Without significant levels of training and direction it is unlikely that benefits
management would be successful.
Whilst many departments have adopted the ‘Five Case Model’ it is recommended that its use
is enhanced to give much greater focus to the identification and realisation of benefits.
External Assurance of Plans, Risks, Assumptions and Budgets;
improving execution of the benefits realisation plan
The Government recognises that all investment in public sector services needs robust
scrutiny; this is no less true of business change investments. Major business change delivery
involves a high level of complexity and relatively high risk. The formation of the Major
Projects Authority is a key step in improving assurance of plans, risks and assumptions of all
major projects and programmes through independent expert review. Progress through the
design, development, and implementation stages will similarly depend on successful external
assurance. This assurance activity will be integrated with the governance arrangements and
form a key part of a revised Gateway process.
Cost control is a also vital to successful delivery and this must begin with realistic estimates
of budgets, including adequate budgetary contingency. Budgets are typically set at 100% of
the estimated cost. During discussions with suppliers this figure becomes both parties
expectation of the budget and thus no budgetary contingency is recognised or included.
Consequently the budget is at risk at the very outset of the project. This is often compounded
because rarely is change control exercised over the financial elements of the budget.
I propose a more realistic approach to the creation of budgets where a 'contingency pot' of
funding would be created that could be used under change control to ensure that the project
has the necessary additional funding capacity should it be needed. Downward pressure on the
budget would still be maintained on the non-contingency element of the budget, and this
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could be done by a number of mechanisms. For example, if the department commissioned
90% of the estimated effort and at the same time both department and supplier sought to
deliver within the commissioned budget this would create an automatic productivity 'stretch'
target of 10%. Delivery within the original 100% budget is more likely in these circumstances
and, if achieved, the commercial mechanisms can be put in place to 'gain-share' the savings.
External Assurance of Delivery Capability; improving the
delivery of benefits
The delivery capability that will be required, in terms of programme and project management
is an important factor in the successful achievement of benefits. However, as Stephen Jenner
has highlighted, project and programme management reflect the means rather than the
objectives of a change programme. Whilst many departments have made significant17
progress in developing project and programme management capability and professionalism,
many still fall short of being able to adequately manage the full change portfolio. In
particular, the business change aspect lags significantly behind management of technical
delivery.
There is a further factor that needs consideration both at the centre of government and within
departments; why despite the significant improvement in the qualifications and professional
recognition of large numbers of project and programme managers do large numbers of the
projects and programmes still fail to achieve expectations? One likely cause is what has been
referred to as the 'Knowing-Doing Gap'. The recognition that failure to perform up to or18
beyond expectation is largely due to management processes rather than quality of people has
been recognised for over a decade now, but many organisations are failing to act on this. I
recommend that all departments are assessed regarding their maturity in terms of benefits
management and appropriate improvement in management processes identified and
implemented so that the knowing-doing gap can be closed.
Change initiatives also need to be supported by appropriate BRM tools and techniques that
are integrated into the overall delivery toolset. External assurance is required to ensure that
tools and techniques are available, understood and used effectively.
Exploiting Supplier Capability; maximising the benefits that are
achievable
All departments are now heavily reliant on external private sector suppliers for delivery of
business change related services. I believe that there are other issues arising from both the
nature of the contracts that have been, and continue to be, developed between departments
and there is/IT service suppliers.
In summary:
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• The lack of contractual flexibility and commercial incentivisation that would foster a
relationship with suppliers that could enable maximum value to be derived from these
relationships;
• The absence of a desire for ‘win-win’ outcomes from negotiations and resulting
contracts;
• The lack of a shared vision for a contractual relationship;
• All too often the absence of mutual understanding of the legitimate interests and
desires of each party to the contract;
• Absence of a positive commercial environment that fosters trust, openness,
professionalism and commitment to a cohesive mutually beneficial outcome.
Their also needs to be a drive to ensure that contracts reflect the need to drive the delivery of
benefits through the use of appropriate commercial levers. Contracts need to provide
incentives for suppliers to ensure that their technical solutions deliver value through business
change rather than simply be rewarded for delivering the IS solution.
Effective Stakeholder Engagement; maximising effectiveness of
benefits management
There needs to be a concerted awareness drive across government departments, particularly
through the SRO community, to emphasise the important role that BRM needs to play in the
delivery of major projects and programmes.
I wish to move the discussion around project and programme stakeholders away from
Management and towards Engagement. I believe that positive and meaningful engagement
with Stakeholders (and a clear understanding of what the word means) is fundamentally
important to project and programme success. I propose that a fresh approach is taken to
engagement with stakeholders that it characterised by:
• Engaging with as wide as possible range of stakeholders including those external to
the department;
• Embracing those stakeholders as being fundamental to the successful delivery of the
project or programme;
• Understanding the crucial role that the stakeholders will have in the achievement of
the benefits that will arise;
• Ensuring that the Stakeholder Engagement activities are integrated with governance
arrangements;
• Ensuring that Stakeholders are engaged from start to finish of the project and/
programme;
• Engage with Stakeholders at the detailed level (for example in benefits realisation
planning) where appropriate;
• Make the Stakeholders accountable within the Benefits Management process.
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I also see the SRO as playing a crucial role in stakeholder engagement, ensuring that end user
expectations are managed effectively. The SROs need to ensure that the vision, expectations
and outcomes expected from the business change solution are communicated and understood
the the end user community. This is especially true where the business change development is
following agile approaches which are becoming increasingly the case.
Governance; ensuring the improvements are implemented
I am aware that the governance of projects and programmes has improved dramatically since
the introduction of the OGC Gateway Review process and the adoption of complimentary
processes within individual departments. That said I believe that there are further
improvements that can be made to these processes to give further strength and ensure more
positive outcomes in a greater proportion of business change investment initiatives.
The role of the SRO is crucial in driving project and programme success, and in particular the
achievement of business benefit. The role of the SRO needs to encompass not only delivery of
the business change elements of the project or programme, but also successful delivery of the
business change needed to deliver the business benefits. All too often SROs become almost
exclusively focused on business change delivery, and management of suppliers against a
contract (which frequently creates a commercial environment that inhibits maximising
benefit). Moreover this needs to be underpinned by a clear understanding of the correlation
between benefits objectives for projects and programmes and the organisation's strategic
objectives.
In the recent NAO report on assurance for high risk projects whilst recognizing that control19
of high risk projects had improved (through Gateway, Major Projects Review Group, Starting
Gate, and assurance of action plans), there remains a number of further priority actions:
• Implement an approach and develop the capability and capacity to perform continuous
assurance and deploy on priority projects;
• Develop the capacity to embed continuous assurance in the most high risk projects;
• The staff involved should be independent of the project and have the authority to;
investigate any issues raised,
routinely report to the project director, SRO or externally,
• Agree and issue a mandate for assurance of high risk projects including
accountabilities and objectives for OGC, HM Treasury, Cabinet Office and
departments. This should include governance arrangements around escalation and
intervention;
• Develop, agree and implement an approach to manage, integrate and continuously
improve assurance activity for high risk projects.
This indicates a clear need to institutionalize on-going continuous external assurance on all
high risk projects, but how this is done is a key question. As part of the Framework proposed
in this paper I would recommend:
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• The primary focus of governance should be on ensuring the chances of successful
realisation of benefits are maximised and the risks that work against this are mitigated;
• Governance should fully integrate with Stakeholder Engagement;
• Governance should encompass a series of ‘Go/No Go’ decision points, similar to the
current Gateway Reviews but with greater external stakeholder involvement and much
sharper focus on risks to achievement of benefits. Above all the ‘GO’ decision must be
based on irrefutable evidence that sufficient benefit is going to be achieved to warrant
the on-going investment and that any risks are adequately mitigated, both externally
assured.
The proposed improvements in business case development need to be driven by challenge
during robust investment appraisal activities that are embedded within project and programme
governance arrangements.
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National Audit Office, (25 March 2010), Cabinet Office, The Efficiency and Reform Group’s role in1
improving public sector value for money
Office of Government Commerce, DVLA – Delivering Operational Change through Benefits2
Moorhouse Consulting Ltd (2009), The Benefits of Organisational Change3
National Audit Office, (25 March 2010), Cabinet Office, The Efficiency and Reform Group’s role in4
improving public sector value for money
Public Accounts Committee, (28 June 2011), Efficiency Reform Landscape Review5
Ward, J. De Hertogh, S. Viaene, S.(2006), Understanding the key practices for achieving6
business benefits from business change Investments: an empirical investigation
Whitfield, D. European Services Strategy Unit (2007), Cost overruns, delays and7
terminations: 105 outsourced public sector ICT projects
Moorhouse Consulting Ltd (2009), The Benefits of Organisational Change8
Jenner, S. (September 2009), Active Benefits Realisation Management – Research Survey of9
perceptions of maturity
Jenner, S. (March 2010), Active Benefits Realisation Management in Government – Phase 2 Report10
Ward J, Daniel E (2006), Benefits Management: delivering value from IS & IT investments, John11
Wiley & Sons Ltd, UK
Jenner, S. (2010) Transforming Government and Public Services: Realising Benefits through Project12
Portfolio Management, Gower Publishing Ltd, UK
Jenner, S. (2010) Transforming Government and Public Services: Realising Benefits through13
Project Portfolio Management, Gower Publishing Ltd, UK
Ward J, Daniel E (2006), Benefits Management: delivering value from IS & IT investments,14
John Wiley & Sons Ltd, UK
Donald A. Marchand (May 2007), Realizing IT Value: A Shared responsibility between Senior15
Managers and the CIO
Ward, J. Daniel, E. Peppard, J. (2007), Building Better Business Cases for business change16
Investments
Jenner, S. (2010) Transforming Government and Public Services: Realising Benefits through17
Project Portfolio Management, GoIr Publishing Ltd, UK
Pfeffer, J., Sutton, RI. (1999) Knowing-Doing Gap: How Smart Companies Turn Knowledge18
Into Action, Harvard Business Press, USA
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