Achieve Success with a Compelling Business Case Anurag Goel, Asia Pacific Japan Manager, Value Engineering at Adobe Digital Marketing ROI Forum Hong Kong, 20 May, 2014
Achieve Success with a Compelling Business Case Anurag Goel, Asia Pacific Japan Manager, Value Engineering at Adobe Digital Marketing ROI Forum
Hong Kong, 20 May, 2014
Presenter
Presentation Notes
Good afternoon. Thank you for coming in today! It’s great being here with all of you. To get started, let’s do a quick show of hands. How many of us have been asked at some point to create a business case for our projects? A fair number as expected. How has the experience been so far? Easy, difficult, ok? I am sure all of us have done a great job at the business cases we have build, but would you not ike to know a bit more about the best practices that industry leaders adopt in building a business case to increase their chances of success with it so that the next time you need to build one, you can leverage some of those learnings to help achieve greater success for your projects. My name is Anurag, and this is the session where we talk about how do we put everything together from that we have heard in the afternoon around ROI from Jean-David, Siva, and Mark, and crystallize it into a tangible and compelling business case that you can take back into your organizations.
Agenda
How Does a Business Case Increase Your Chances of Success 1.
How Are Organizations Building a Business Case That the CFO Buys Into, and Acts on quickly
2.
What Can You Do To Get Started? 3.
Presenter
Presentation Notes
In the next 15 minutes, we will start by delving into the need for creating a business case (why bother?), what are some of the best practices in building a business case (is it really rocket science?), and what can you do starting now to build a business case We will have Q&A in the last 5 minutes Hopefully by the time we finish, you will not look at building a business case as something that is thrust upon you at times by your organizations demands, rather you will look to proactively build one for all your projects Let’s get started
Why a Business Case is Critical to Project Success
3
Difficulty Focusing on Business Value
1. Excessive time to value
2. Limited adoption
Difficulty Envisioning and Measuring Success
1. Gaining consensus
2. Planning a way forward
Difficulty Determining Business Impact
1. Gaining executive sponsorship
2. Gaining funding approval
Presenter
Presentation Notes
So this is why we are here today – why is a business case required, and required even more in today’s times? To start with, You believe that the new campaign automation project that you have in mind is great. But you are not sure if you will be successful with it or not because you are not sure what success will look like for the project, and how you will even measure it. Hence, you are not able to create a shared vision as Peter Senge refers to it in the Fifth Discipline to gain consensus within the organization, which makes it all the more difficult to plan a way forward to execute on the project You understand that the project is required to alleviate a daily challenge in running campaigns, but how do you convince your boss, and your boss’ boss about the need for this project unless you attach a business impact to the challenge which will resonate with them. Also, the CFO or the final approver for the budget required for the project, has not just you requesting for the limited sum of money he/she has, but there are other teams from HR, Operations, Sales etc. who are competing for the same budget. The CFO uses KPIs like the ROI on the investment to determine how to allocate the budget, and if you are not talking in their language, you are not even in the consideration for getting the approval You have gained the approval for the project, now how do you ensure that the focus remains on business value achievement. Because you know that if you don’t drive a continuous focus on the business value from the project, there is a high probability that the time required to prove success will be longer than you expected, and the adoption of the project will be lower Let’s take a look at some empirical evidence which corroborates this
Value Management Pays Off
4
Organizations that measure value are more likely to realize value on-time or early
Source: SAP Survey of 286 enterprise software projects
72%
28%
Do Not Measure Value Measure Value
73%
27%
Delay in Time to Value
On-time or Better
89%
11%
On-time or Better
Delay in Time to Value
Presenter
Presentation Notes
In a survey run by SAP, who have been a pioneers in Value Management, which is basically taking a business benefits and business case based approach to achieve project success, a startling 72% of organizations admitted that they did not measure the value of their investments. But of the 28% organizations that did measure value, 89% were able to achieve the desired value from the investment on-time or earlier, contrast that with 73% of the organizations who did not measure value had experienced a delay in realizing value. So if we agree that it’s importance to measure and manage value, let’s see how can Value Management be used to address 3 challenges?
5
Top Key Business Requirements Top Key Performance Indicators (Activities to achieve digital marketing objectives) (Metrics to measure impact of business activities)
• Acquire New & Retain Existing Customers • Convert New /Returning Customers • Reduce Marketing Effort
• Identify product and customer affinities across channels to effectively segment and target the audience
• Utilize real-time analytics integrated with the capability to create, test, target and publish content to personalize the customer experience
• Integrate online and offline customer data from various channels to provide optimized experiences to customers across the buying cycle
• Utilize streamlined workflow process for efficient content creation and management across channels
• Number of visits by new customers per month from all channels
• Average conversion rate for new and returning customers
• Number of visits by returning customers per month from all channels
• Annual digital marketing staff costs as % of annual digital marketing budget
Key Business Goals Digital Marketing Objectives (The customer’s high level business priorities) (Specific measureable methods to impact business goals)
• Increase Revenue by 5% in FY 14 • Increase Market Share by 4% in FY 14 • Increase Return on Marketing Investments
(A Value Driver is a goal related activity and the associated metric used to measure impact, i.e. KBR + KPI = Value Driver.)
Value Driver Brief XYZ Inc.
Plan for Success with a Value Driver Brief
Presenter
Presentation Notes
Challenge #1 was difficulty envisioning and measuring success, leading to difficulty gaining internal consensus and planning a way forward Let me tell you about a client who had a similar challenge, and how we helped address it. One of the largest banks in Japan. Market leaders locally, but wanted to expand internationally and head of digital marketing wanted to create a case for utilizing digital marketing to do so but knew that it was not optimized on global properties. He knew the pain, but did not know how to articulate the pain in a manner that others would be able to feel it too. We helped him create a really simple Project Win Plan called the Value Driver Brief where we started by articulating the organization’s C-level goals, which were increase revenue and market share etc., tied it to how digital marketing can help achieve them by acquiring customers, converting them etc., and the key business activities or KBRs required to execute on the goal like segmenting the audience to acquire, tied to KPIs that can be used to measure success of each activity like traffic. He used this at multiple presentations internally to create the shared vision, and plan for moving the project forward. Let’s now look at challenge #2
Challenge #2 was difficulty determining the business impact of the challenge that you are trying to mitigate with your project. The result is executive sponsorship and funding approval is hard to come by. Let me tell you about another client who we helped quite recently. Working with a leading airline from SEA, where the key sponsor for a project to optimize their web content management was not comfortable taking the project to the CFO for final approval as he did not think he had the right ammunition to drive it across the line. This is where a really compelling CFO ready business case to gain sponsorship and funding approval is required. So how did we help him build the business case? It was actually not that hard. The VE team was engaged for the project where we started with capturing the objectives and KBRs with the Value Brief slide that you saw previously. Then we went on to identify current challenges to executing KBRs through a discovery workshop, and attached a business impact to the challenges such as the revenue loss, or the increased risk to the organization, to make them resonate with executives. These challenges were corroborated by benchmarking the organization with peers in the industry using our benchmarking database which showed the key gaps and improvement potential to best in class performance. Next we dig into our best practices repository sourced from engagements with similar clients, and third parties such as Forrester and Gartner, to come up with recommendations for improvement around people, process and technology. The last piece was attaching a $$$ value to the potential improvement with the help of detailed financial models which include over 500 case studies of specific % improvements on KPIs that we have helped clients achieve. We added investment costs, and with the help of a cash flow analysis, came up with an ROI, payback period etc. Let me show you a sample of the output
$39M – 5 Year Total Benefits $5M – 5 Year Total Costs
$ 2.5
$ 3.7
$ 7.1
$ 0.4
$ 9.3
$ 0.4
$ 9.8
$ 0.4 $ 1.2 $ 0.4
Mill
ions
Net Present Value ($ millions)
NPV: $26M, ROI: 469%, IRR 600%
Mill
ions
$ 4.8
$ 12.1
$ 19.0
$ 25.6 $ 10.2
ROI: 469% Payback Period: 14 Months
Presenter
Presentation Notes
We do a conservative-likely analysis, and even for the conservative scenario, the ROI was a whopping 500% In addition, we also helped with another piece of analysis to help create a compelling event for the project to be approved
Encourage Decision Making: Cost of Delay
8
Cost of Delay: $1.8M Every 3 Months
Year 1
$25 M -
$30 M -
$35 M -
$40 M -
$45 M -
$50 M -
Cost of Delay: $1.8M Every 3 Months TOTAL DIGITAL MARKETING OPERATING PROFIT
Year 2 Year 3 Year 4 Year 5
$29.2 M $30.6 M $32.2 M
$33.8M $35.5 M
$31.5 M
$37.0 M
$40.6 M
$42.6 M $44.7 M
Including Projected Benefits
(5 Year Total $196.4 M)
Current State (5 Year Total $161.2 M)
Presenter
Presentation Notes
This was a cost of delay computation, which basically put forth the opportunity cost of not acting now, and helped change the conversation from “we could be making $X M more, to we are losing $1.8M every 3 months”, which made executives sit up and take notice The key sponsor was able to reuse the business case with the CFO to help gain approval for the project Let’s look at the last challenge now
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Question: How do we compare to our past performance?
Gain Credibility: Value Scorecard with Historical Trend of KPIs
01.02.2013
4 % -
03.05.2013 03.08.2013 02.11.2013 01.02.2014
2.5% 2.6% 2.8% 3.0% 3.2%
$161 $164
$167 $170
$185
Average Revenue per User For Returning Customers
6 % -
8 % -
10% -
12 % -
14 % -
16 % -
18 % -
20 % -
Average Revenue per User for New Customers Conversion Rate for New Customers
$140 $143 $146 $150
$160
4.4% 4.6% 4.8% 5.0% 5.5%
Conversion Rate for Returning Customers
- 20
- 40
- 160
- 0
- 180
- 200
- 60
- 100
- 120
- 140
Presenter
Presentation Notes
Challenge #3 was that after gaining project approval, how can you ensure that the organization achieves the desired value, and adoption. The answer is by regularly measuring and tracking value to maintain focus on the business improvements that the project has helped achieve. We were working with a leading Telco from Australia, where the VP Digital had implemented a solution for personalizing the customer experience, but was being questioned by the CMO “what is the value of this investment, and why should we continue putting money into this?” Do I see a few heads nodding there? We helped her by first ensuring that the conversation about the project remained focused on the tangible business results that it had made on the organization, and not get lost in the weeds with the technology enhancements etc. This was done by way of creating Value Scorecards - this first one was a trend scorecard to articulate the improvement in KPIs such as conversion rate and AOV from the project. This was a good reply to show how the KPIs have improved, but we went a step further and actually helped add a $$$ value to the improvement
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Question: What value are we getting from our past investment?
Gain Clarity and Transparency: Benefits Achieved Scorecard
4% ($ .2 M)
11% ($ .5 M)
34% ($ 1.6 M) 7% ($ .4 M)
8% ($ .4 M)
6% ($ .3 M)
6% ($ .3 M)
7% ($ .3 M)
15% ($ .7 M)
Revenue Increase – Acquire New Customers
Third Party Spend Reduction
Call Center Cost Reduction
Effort Reduction
Revenue Increase - Larger AOV for Returning Customers
Revenue Increase - Higher Conversion for Returning Customers
Revenue Increase - Retain Existing Customers
Revenue Increase - Larger AOV for New Customers
Revenue Increase - Higher Conversion Rate for New Customers
Total Benefits Achieved: $ 4.6 M
Presenter
Presentation Notes
We did that with the help of a second scorecard which estimated tangible business benefits from the improvement on those KPIs in terms of a revenue increase or a cost decrease, which totaled up to $4.6M This business justification was helpful for her not just to secure the current project, but also set the stage for her to gain approval for another project, because now she has established her credibility as being able to drive business benefits for the organization Let’s summarize what we have talked about
• Provide success metrics • Increase consensus • Offer a way forward • Promote vendor partnering • Prioritize business requirements • Make value transparent • Gain executive sponsorship • Gain budget approval • Reduce time to value • Increase adoption
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What Does This Mean to Your Organization
Presenter
Presentation Notes
We talked about the importance of the Value Management approach to your organization to help envision success and gain consensus with a Value Brief slide, gaining sponsorship and approval with a compelling business case, and ensuring ongoing business value realization with Value Scorecards I have something extra to add on to this from my personal experience
Top 5 Tips For Building a Compelling Business Case
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Get in the Game: Talk the CFO’s Language
2 Leverage Benchmarking to Create the Case for Change
3 Prefer Being Conservative with Potential Benefits
4 Cost of Delay is Crucial to Expedite Success
5 Nothing Succeeds Like Success: Prove it Once and Repeat it
1
Presenter
Presentation Notes
Having worked with multiple clients the years at Deloitte and SAP on helping them create a business case, these are the top tips on making that a success. Talk the CFO’s language, else not in the game All about moving the status quo – leverage benchmarking to do so Always better to be conservative with your benefits estimates as it helps you over achieve Cost of delay analysis is a handy tool to get the approval quickly Gain personal credibility by measuring realization of value So how can you get started, now:
Resources to Learn More:
1. “Dollarization Discipline” Buy on Amazon
2. “Challenger Sale” Watch on YouTube
3. Hong Kong Institute of Value Management
4. SAVE International
5. Directly Contact Daniel Cham from Adobe Sales ([email protected])
6. Contact Me on LinkedIn (http://www.linkedin.com/in/anuraggoel2)
Organizations Achieve Success by Focusing on Value, Implementing Best Practices, and Measuring Goal Achievement.
- Jim Collins, Built To Last
ANURAG GOEL JAPAC Manager, Value Engineering O +91.120.613.7500 M +91.987.369.0242 [email protected]
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Resources for Getting Started & Discussion
Presenter
Presentation Notes
I have listed here a few resources, such as the Dollarization Discipline, is one of my favorite books, there is an IVM in Hong Kong and across the region which is quite active, and international bodies like SAVE. Else you could simply contact Daniel if you think you need help with any of these challenges, and we will be happy to help you. Thanks again for your time. Any questions or comments please?
