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Benefits management: Making it real. 22 Jan 2019
1) There is often a gap between the theory of benefits management and the practical implementation, which can lead to only 10-25% of potential benefits being realized from organizational changes. 2) Three major challenges are imagining future changes and who they could benefit, changing long-term behaviors and beliefs, and realizing benefits after a program ends. 3) Benefits planning requires early stakeholder engagement, understanding the current context, and recognizing that benefits are only realized when new ways of working are adopted, not just from a new capability being delivered.
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Benefits management: Making it real. 22 Jan 2019
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- 3. There is a gap between the theory and the practice of Benefits Management Identify Define PlanRealise Track This is thecore BM process It looks simple… …as indeed it is The problem is that implementing the process is often much harder This is the knowing/doing gap Identify and structure benefits Plan benefits realisation Implement the change Realise the benefits New opportunity Who, what, how, when? 1 2 4 5 3 0
- 4. 1. Identify: Defining “value” “A cynicis 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 ofthe 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.
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- 8. The effect of waste in potential benefits is costing all of us money Research bythe 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.
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- 10. 3. Plan: Benefits Realisation Stakeholder engagementearly 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 teamwork 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
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- 14. And there is something else It is generallyeasier 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 thescale 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
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- 17. 5: Track : Finding the right measure • The benefitscome 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 PerceptionMeasures 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
- 19. The key to change Vision Skills IncentivesResources Action Plan Skills Incentives Resources Action Plan + + ++ + + + + Vision Incentives Resources Action Plan+ + + + Vision Skills Resources Action Plan+ + + + Vision Skills Incentives Action Plan+ + + + = = = = = Change Confusion Anxiety Resistance Vision Skills Incentives+ + + + =Resources Frustration False starts
- 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!
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