Embedding the change #3 – Tracking the benefits
"Can you tell me exactly how much I got back for the £5 million we have spent on this project?" asked the Chief Information Officer.
There was a deadly hush around the room as the team shuffled their papers and looked at each other. The reality was that, in the mad scramble to get the project completed, measuring and tracking the benefits had not received the levels of attention they should have.
The scenario is a common one and happens on projects of all sizes.
Michael Doane discusses an insurance company which had implemented SAP in the ‘SAP Green Book’,
"The CIO kept saying that she knew the business processes were much, much better than before … but there was no measure of ‘before SAP’ and ‘after SAP’ so the argument centered on subjective perceptions and not hard data."
Doanes conclusion is that,
"Without measurement, business leaders have little evidence to present to their colleagues … other than the notion that things are better” and that best practice means “extracting measurable benefits from the implementation."
This bears little resemblance to what generally happens. For example, Gartner estimates that around 15% of companies have good processes in place to measure the benefits of their initiatives. Most IT projects are judged on price paid and performance, with a lower regard for business outcomes.
We discussed the kinds of business benefits in our last blog; Change management: defining the benefits. In that blog we note that whatever the type of benefit, every effort should be made to put a value on it. This process is easier if there are ‘hard’ benefits such as cost savings, sales volumes or increased cash collection but more difficult for qualitative benefits; such as increased customer satisfaction or improved risk avoidance.
In any event, the Project Manager, Sponsor and Business Stakeholder should work to understand how the qualitative benefits impact the hard numbers and agree specific values for the proposed results.
Once the value of benefits is agreed, there are some key steps to tracking their realisation throughout the project:
- There needs to be business buy-in. Someone in the organisation has to have a line in their business plan that takes account of the cost saving, headcount reduction or revenue increase and be held responsible for it. This may mean working closely with Finance to ensure correct phasing and reporting. Taking this step is also useful to stop over-estimation of project benefits just to get the business case through.
- The starting point for the benefit should be measured and recorded.
- A benefits tracking framework should be introduced. The amount of effort put into this will depend on the size of the project. For smaller projects some organisations use a spreadsheet showing each benefit, their recipient, owner, starting and target measures. However for larger projects, the framework should be more comprehensive. For example, a tracking sheet for each project benefit can be developed that includes:
- Full description of the benefit.
- Benefit owner.
- Stakeholder beneficiaries.
- Description of how the benefit is measured.
- IT enablers needed to realise the benefit.
- Changes to the way of working needed to realise the benefit.
- Any risks or constraints on achieving the benefit.
- Any further assumptions made to realise the benefit.
- Starting and target measures together with mapping of realised values as the project progresses.
- There needs to be governance in place. Again for smaller projects, the position with the benefits may be reviewed at the end of each phase. However, for larger projects, benefits should be reviewed as part of the formal project governance processes; particularly if a benefit is at risk of not being achieved. This gives the advantage that, if the benefits are at risk or have been wrongly estimated, senior level assistance can be drawn upon to put things on track.
Accountability and measurement are critical to realising the benefits of all projects. Putting this into practice may be hard at first and involve effort in communication and training. However the long-term results, in terms of impact to the bottom line are well worth it.