Johannesburg, 30 Mar 2007
Many South African companies engage in strategic IT initiatives intended to realise higher levels of business effectiveness and process efficiency, but they are disappointed by the outcome.
But, says Allan Wattrus, business development manager at Unisys Africa, an analysis of South African IT business cases highlights two deficiencies: the methodology used to build the business case and the process used to manage the life cycle of that business case.
IT departments use project management to deliver a technology system, but there is often no process to ensure the business derives value from the project.
In addition, while the term "benefit realisation" is forever anchored in project management-speak, it falls beyond the scope of most IT projects. The business case exists before the IT-based system, and it justifies the IT system`s existence, predicts and tracks the business benefits and describes the IT system`s disposal.
Companies that properly manage the business case life cycle stand to gain improved IT project success rates and better return on investment (ROI).
Given that the key question for business, before committing to any IT-based solution, should be whether the transformation effort and associated cost can be justified relative to the perceived future value, why don`t more companies already have a process to investigate this?
Add to that some facts and figures and the mystery only deepens: Cranfield University conducted research that reveals only 22% of UK firms complete IT-enabled projects that deliver business benefits; and Gartner finds that only 20% of organisations deliver IT projects within budget.
Consider that South Africa expected 2006 IT services spend of R19.8 billion and capital outlay is expected to grow to R22.7 billion by 2009. In this light, financial impact becomes particularly significant.
The problem can be solved by overcoming one issue: organisations use the business case to justify the expense and then, once the IT system is deployed, trash it and never look at what the benefits were supposed to be. As long as the project came in on time, in budget, and delivered the stated functionality, nobody questions it. Critically, nobody measures it at a later date against the expected, pre-stated business benefits.
Revise the business case
But organisations must look deeper than that. As the project is rolled out, the business case must be continually revised. Markets are fluid and businesses change. Tomorrow`s needs are not those of yesterday or today.
The status quo sees IT hand over deployed systems to the business for sign-off, but at that point there can be no return on investment. But return on investment is a business issue, not an IT issue. In future IT must hand the project over to business with the clear understanding that benefit harvesting against a continually updated business case is the responsibility of the business. So what are the 10 keys to effective business case life cycle management?
1. Establish an early and clear understanding of the business issues and document a detailed cost and performance baseline.
2. IT should participate alongside business in defining and evaluating the proposed system. Consider technology, process and people separately.
3. Target a few critical, measurable business benefits from the system noting the five pillars of benefit realisation.
4. Build a realistic and achievable business case. Moderate expectations of, and dependence on, benefits that are peripheral, are not tangible or are only realisable in the long term.
5. The business should apply the principles of organisational change management throughout the life cycle, but with emphasis on facilitating early adoption of the solution.
6. IT remains responsible for the technology system throughout.
7. Hold project management accountable for the implementation timeline and budget management. The project office should also drive post-implementation benefit realisation assessments.
8. Business must acknowledge its responsibility for harvesting benefits.
9. Continuously revise the business case using version control to reflect the dynamics of the business environment. Benefit realisation actions should be realigned to leverage these changes.
10. Capture lessons learnt and perform a formal close out of each business case on disposal of the system. This allows for better business case life cycle management in the future.
Realising benefits from IT-related projects is much easier when the business case is built in the framework of a business case life cycle and properly managed. IT can mentor the business in the methodology of managing the business case life cycle, but must recognise that it does not harvest benefits. That`s the business`s task.
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