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photo credit: Yellow Snow Photography

Guest Post by Jim Quick

With all the time and money organizations spend on creating strategies, crafting up initiatives and programs, calculating ROIs and benefit cases, and managing demand processes, it is startling that so many of these organizations have minimal or no benefit realization activities.

In our personal lives, this is similar to never opening financial statements to see how your investments are turning out, how you can adjust them to maximize returns, and how you can save enough for retirement. Don’t get me wrong, companies routinely focus on benefits (even applying ROI, NPV, and IRR concepts), but mostly as a formality to approving projects and initiatives before they are even started. Also, there is often little governance around how benefits are calculated.

With companies spending fortunes on training programs for project managers, business analysts, and technologists in their attempts to execute better, why do so many companies then pay little attention to benefits achieved after projects are “finished”? The question becomes even more surprising with business cases that have longer-term targeted benefits? Is it like finding a needle in a haystack to pinpoint results in multi-million-dollar budgets? Or has the execution focus just not traveled that far down the development life cycle yet?

Is Benefit Tracking Just Too Hard?

Tracking benefits can be difficult, especially in complex operating environments that have multifaceted business and technical initiatives that result in crisscrossing achievements. Consider some of the issues companies face:

Environments Change

The business environment can change dramatically over the course of an initiative’s multi-year timeline, and it becomes hard to clearly distinguish the impact of a specific business investment. For example, one insurance company invested in customer experience initiatives to increase its retention rate, but with its industry upended by the recession, it became difficult to assess the initiatives’ achievements.

Organizations Change

Many companies undergo significant organizational changes during the period of the investment. One client made an offer for early retirement to all staff right in the middle of a significant initiative that was focused on employee cost savings and efficiencies, resulting in a significant change in the workforce. In this instance, are you able to say that the investment helped make the voluntary offer happen or did the large numbers of employees leaving nullify the original business case?

Some Benefit Cases Are Complex

Business cases are often loaded with so many complex assumptions, models, and scenarios that it seems it might take a rocket scientist to decipher what the benefits were intended. Other times, the benefits were originally crafted with a previous leadership regime but then passed along to a new one, who has a hard time (any maybe less motivation) understanding the details of the benefits while being held accountable to the macro benefits.

What Should You Do?

Common sense suggests you need to do something in terms of tracking and measuring returns on investments. An executive’s reputation might hinge on proving results, or a business unit might need to ensure specific cost savings are achieved, or a corporate-wide loyalty or customer satisfaction benchmark might have to be reached. What can an organization do?

1. Validate and Re-Validate the Business Case

   Pull the business case down from the proverbial “shelf” at multiple checkpoints during a project to validate assumptions, ensure that the scope and direction of the investment is on track, and discuss variations with business and IT owners.  Consideration should be given to utilizing an unbiased party (someone from finance, audit, etc?) to conduct the checkpoints in conjunction with the project sponsor.

2. Create a Benefit Realization Accountability

   An explicit role of the project sponsor should be to “own” the business case and be on the hook to achieve the benefit. Make it part of their performance objectives. A company has a much higher chance of accomplishing benefits if a) a benefit achievement plan is created during the investment itself, and b) a person or group is assigned the accountability to make it happen and/or report on the progress.

3. Create a Benefit Realization Workplan for Each Project

   Many investments have longer-tailed benefits, such as shutting down old server infrastructure or combining applications that require a “waiting period,” such as insurance policy renewal.  These actions must be taken at the appropriate time for a company to fully achieve that hard dollar benefit that, if not addressed, will be found years later in a new cost-cutting assessment.

4. Track Multi-Year Benefit Requirements

   Particularly with companies that have sophisticated TMOs (Technology Management Offices) or PMOs (Program Management Offices), all the significant benefits within a company’s portfolio should be tracked using project management software, in the same way the company charts multiple initiatives within a program.

5. Create a Benefits Dashboard

   Promote transparency and accountability across the whole leadership team  Foster a culture of joint accountability through benefit and business case transparency. Develop a joint business case scorecard to ensure business unit and IT leaders both have a “stake in the game”.

Benefits have a much higher chance of being “pursued” when there is a concerted focus on them and leaders can be held more accountable to investment results, especially in the case of multi-million dollar pursuits - both important in days of increased scrutiny.  So, when considering the rigor that you might pursue in assessing and executing on investments, give some thoughts to implementing a benefit realization program too.

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