UMTSA is of the opinion that no senior executive is likely to argue that tracking the realisation of project benefits produces no value.
In reality, however, only few organisations are taking action to address the complex issue of tracking benefits as a measure of the overall success of a project.
Little wonder, then, that research shows on average, 40% of capital investment in business and IT projects is wasted and fails to generate the expected return (The Standish Group, 2006).
Pieter Meyer, MD of UMTSA, said: "Most CEOs CIOs, COOs and CFOs do not have comprehensive information about whether their projects are delivering the benefits they proposed at inception. While 85% of organisations demand business cases for change projects, only 40% of approved projects have valid benefit statements.
"To further compound the issue, less than 10% of organisations ensure that benefits are realised once the project has been implemented, and less than 5% hold project stakeholders directly responsible for benefits attainment.
It can be a gloomy picture: the process of assessing benefits is usually inconsistent and is based on "wishful thinking" in order to get projects approved; most organisations lack the capability to track and measure the delivery of actual benefits; and finally, there is a strong reliance on the short-term memory of the organisation when it comes to linking actual benefits to promised ones, usually owing to lack of a proper governance structure.
The purpose of this opinion is to discuss the value organisations can obtain by implementing a benefit management framework, provide definitions for these benefits and discuss a step-by-step approach to implement such a framework.
UMTSA's benefit approach to support senior executives' expectations:
Our advice to accomplish any company's benefit expectation will be to define benefits in a simplistic way.
Our definition is as follows: "Positive changes to the overall performance indicators of an organisation as a result of a project or an initiative."
How we suggest keeping it simple:
A rule-of-thumb for assessing the validity of benefits is to apply what is usually known as the "SMART" test - meaning, they should be specific, measurable, achievable, relevant and time-linked. If a benefit does not comply with these parameters, there is little chance of it representing a worthwhile investment.
To keep a simplistic approach, but understood by business and IT for easier identification, benefits can be grouped into two key categories: direct and indirect.
Direct benefits
UMTSA advice to companies is to divide your direct benefits into further sub-divided financial and non-financial benefits.
* Financial benefits (examples)
* Revenue increase.
* Cost reduction
* Number and classification of clients' headcount levels
* Number of applications/systems
* Non-financial benefits (examples)
* Client retention
* Customer satisfaction
* Employee satisfaction improved controls
* Adherence to regulatory requirements
* Time to market
It is Meyer's opinion that depending on your business, each division could have their own sub-divided benefits to assist their specific measurement requirements. He further says: "please remember to keep it KISS (keep it simple and specific).
* Indirect benefits
UMTSA advice to companies is to divide and clearly identify your indirect benefits for business and IT such as: (examples)
* Business processing ownership and accountability
* Reduction of staff
* Enhance KPI measurement against company goals
* Visibility on business priorities by comparing benefits value
* Visibility on skills shortage (up and cross-skill)
* System capacity
* Scalability of systems
* Level of system security
It is again UMTSA's opinion that depending on your business, each division could have their own indirect benefits that need to be linked to the identified business drivers, goals and objectives, and we still remind companies to keep it KISS (keep it simple and specific).
UMTSA's closing statement to end this first projects benefit opinion: The benefits of tracking project are unquestionable.
Meyer further stated: "An individual project cannot justifiably exist on its own; nor should its success be measured only by efficiency measures such as delivery on-time, on-budget, and on-scope. Its effectiveness in contributing to the organisation's strategy, through the benefits it is delivering, is the most important success measurement not only for the project but also for the organisation as a whole."
UMTSA can assist you with defining your benefits and that is only the beginning. We are looking forward to taking the reasoning and definition of projects benefits to a more detail level such as:
* Identification of benefits
* Benefit analysis
* Benefit planning
* Benefit enabling (tools)
* Benefit tracking and monitoring
* Benefit ownership
* Benefit measurement and realisation against KPIs
You are welcome to contact us for any assistance or more information at pm@umtsa.co.za or info@umtsa.co.za.
Meyer leaves you with a last though and opinion by saying: "Senior executives, before you sign any business case, make sure that your staff has motivated the potential benefits they will achieve, by implementing the solution for business or IT, and that the benefits are clearly categorised into tangible and non-tangible benefits."
Regards from UMT Portfolio Management SA, and good luck with your benefit definitions until the next opinion.
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