business value and benefit assesment

8/12/2019 Business Value and Benefit Assesment

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Business Value and Benefit Assessment

A Peep into Benefit Management and a Business Value Toolkit


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Roger Hordley, Business Value Engagement Manager,

Outsourcing Support Team, Microsoft EMEA

Relative cost reductions shown reflect actual costs per seat, as reported by various Microsoft deployment partners. Individual customer experiences may vary depending on level ofautomation and testing.

Costs experiencedin priorupgrade of Microsoft Office

Previous Upgrade

Costs for current upgradeanticipatedto be the same

Significantdrop inactualcosts

Office 2003

Costsp

erDesktop

Actualcurrent cost ofautomatedupgrade

Actual currentcost of manual

upgrade

manualupgrade

CostCenter

Uncoordinated, manual

infrastructure

Moreefficient Cost

Center

Managed IT

Infrastructure

with limited

automation

Managed and

consolidated IT

Infrastructure

with maximum

automation

Fully automatedmanagement,

dynamicresource

Usage ,business

linked SLAs

BusinessEnabler

StrategicAsset

BUSINESS STRATEGY

IS STRATEGY

IT STRATEGY


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Objectives

To provide an insight into how you could develop a strengthenedcapability to engage with your senior business and IT decisionmakers in business terms

To indicate how you could make the connection between solutions(i.e. product, technologies and services) and achieving improvedbusiness results

To show how this could contribute to improving implementations

and accelerating deployments.


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Agenda

Business, IS and IT strategy

Benefits management

Benefit Dependency Network and structuring benefits

Structuring benefits and measures

Summary


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Business, IS and IT Strategy

BUSINESS STRATEGY

IS STRATEGY

IT STRATEGY


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The Relationship Between Business, IS & IT Strategies

BUSINESS STRATEGYBusiness Decisions

Objectives & Direction

Change

IS STRATEGYBusiness Based

Demand Orientated

Application Focused

IT STRATEGYActivity Based

Supply Orientated

Technology Focused

Whereis the

business going

and Why

Whatis required

Howit can

be delivered

Infrastructureand services

Needs andpriorities

Supportsbusiness

Direction forbusiness


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The Value & Cost Debate



Change


Demand Orientated

Application Focused


Supply Orientated

Technology Focused

VALUE

added here

COSTS

incurred here

Source: Cranfield University School of Management.


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The Value & Cost Debate




Change


Demand Orientated

Application Focused


Supply Orientated

Technology Focused

VALUE

added here

COSTS

incurred here


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So What do We Mean by a Strategy?

An integrated set of actions that will over the long term

provide benefits to enterprise stakeholders

Therefore strategy is about two questions:

What benefits do we wish to provide to whom?

How are we going to deliver them?


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Benefits Management

'Good work but I think we needjust a little more detail right here'

Then a

miracleoccu rs

IN

OUT


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The process of organising and managingsuch that the potential benefits arising from

the use of IT are actually realised

What Is Benefit Management?


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There is a Bit of a Problem

'83% of IT directors admit that the cost/benefit analysis

supporting proposals to invest in IT are a fiction.'

'A conspiracy of lies' which leads to . . . ?


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Effectiveness of Investment Appraisal Processes

Do you ensure all available benefits from an investment are identified? (21%)

Do you adequately quantify the relevant benefits? (19%)

Do you overstate the benefits in order to get investment approval? (45%)

Do you conduct post-implementation reviews to determine whether

benefits have been achieved (26%)

So, is there scope for improvement in the process

for managing IS/IT benefits? (76%)


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Benefits Management - The Value of the Process

BenefitCost BenefitCostPossibility oflower IT costs

Management

Cost

Without BenefitsManagement Process

With BenefitsManagement Process


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Stages of Benefit Management

STAGE ACTIVITIES1. Identify and

StructureBenefits

- Analyse the Drivers to determine the Objectives for the investment

- Determine the types of Benefits that will result by achieving the

Objectives and how they will be measured

- Establish Ownership of the benefits

- Identify Changes required and Stakeholder implications

2. Plan BenefitsRealisation

- Determine the Change Actions that will produce the improvements

- with accountable stakeholders

3. ExecutePlan

- Manage the Change Programmes - pursuing benefit delivery as well

as technical implementation

4. Evaluate andReview

- Formally assess whether the Investment Objectives and Benefits wereachieved

-Initiate Action to gain outstanding benefits still achievable

5. Potential forFurther Benefit

- Use the project team and other key stakeholders to identify any new

Benefits and initiate action to realise them

- Develop outline Investment Case

- Finalise measurements of benefits and changes

- Submit Investment Case for funding

- Identify lessons for other projects


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The Dimensions of Benefit Management

Why do we want

improvement?

What improvement do

we want/could we get?

Where will it occur?Can it be

measured?

Can it be

quantified?Can a financial

value be put on it?

Who is responsible

for its delivery?

What changes are

needed?

Who will be affected?

How & when can

changes be made? BENEFIT DELIVERY PLAN

Drivers & Objectives

Benefit Identification and Location

Basis for the Investment Proposal

Stakeholder Management

Benefits Achieved? More Benefits Possible? Further Actions?



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Benefits Management - Some Essential Principles

Ownership

Every benefit stream must have a benefit owner

MeasurementUnless a benefit can at least be observed it does not exist

Improvement

Performance only improves when peopledo things differently


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Benefit Dependency Network


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Benefits Dependency Network

IS/IT

Enablers

Enabling

Changes

Business

Changes

Business

BenefitsInvestment

Objectives

Externally facing

Internally facing

D

R

IV

E

R

S



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Definitions

Business Driver

A view held by senior manager(s) about what is important in the

business over a given timescale - such that changes must occur.

Investment Objective

Organisational target for achievement agreed for the project in relation to

the drivers and envisaged changes.

Benefit

'An advantage on behalf of ...' an individual stakeholder or stakeholder

group.


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Business Driver Analysis

Aims at finding out:

The rationale behind the desired changes and the degree ofdissatisfaction with the current situation

The strength and nature of ownership of the change initiative

At a high level what will constitute success, who will determinesuccess, and how it will be measured

The output:

Agreed objectives for the project which clearly define what theorganisation intends to achieve.


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So a Driver is ...

A Driver is a view held by senior management as towhat is important for the business - in some given

timescale - such that changes must occur

Incremental, Targeted Improvement

Innovation/Radical Change

Stop Something - Remove a Problem


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Establishing Drivers and Objectives

Organisational

Issues (if any) Investment ObjectivesBusiness Drivers

ExternalExternal

Internal Internal



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Example:


OrganisationalIssues (if any)

Investment ObjectivesBusiness Drivers

ExternalExternal

Internal Internal

a) Lack of co-ordination

between A&P campaigns

and sales activity.

b) Existing customer

segmentation structure

does not reflect the

market place.

c) New Account

Management Structure/

targeting required

etc.

To improve effectiveness

of Advertising and Promotion

(A&P) spend.

To obtain better information

about customer/market

trends and buying patterns.

To increase/sustain demand

from existing customers by

improved loyalty rewards.

To increase sales value and

volume from new customers

- by better targeting its

sales activity.

Customer retention and

increase market share

in high value market

segments.

Maintain brand

leadership despite

increased marketing

by competitors.

Increase actual sales/

promotion expenditureratio in key markets.


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Objectives to Benefits

IS/IT

Enablers

EnablingChanges

BusinessChanges

BusinessBenefits

InvestmentObjectives

Reduced cost by

avoiding waste on

irrelevant customersTo improve

effectiveness of

of A&P spend

Increased response

rate from A&P

campaigns

Increased rate

of follow-up

of leads

Increased

conversion rate

to sales


To increasesales volume from

new customers

D

R

I

V

E

R

S


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The Basis of the Business Case

IS/ITEnablers

EnablingChanges

BusinessChanges

BusinessBenefits


Externally facing

Internally facing

The benefits and why we want them

D

R

IV

E

R

S



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and the Change Management Plan

IS/ITEnablers

EnablingChanges

BusinessChanges

BusinessBenefits


Externally facing

Internally

facing

D

R

I

VE

R

S

How new ways of working can deliver the

benefits - and how to make that happen.



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Actually, This Is Where it Fits into Motion

IS/ITEnablers

EnablingChanges

BusinessChanges

BusinessBenefits


InvestmentProject New ways of

working

Externally facing

Internally facing

BenefitsEnabling

changes

D

R

I

V

E

R

S

Change management plan: How new ways of workingcan deliver the benefits - and how to make that happen.

Business case: What needs to be delivered andwhy

DELIVERY....INVESTMENT

IS

asas

tra

teg

icasse

t

Runn

ing

IS

as

bus

iness

Motion


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How to Get the Benefits

IS/ITEnablers

EnablingChanges

BusinessChanges

BusinessBenefits


Project

Managemt

Package

Customer/Prospect

DB

Campaign

ResponseTracking

IntroduceProj.Mgmt

for A&PCampaigns

Redefine

Customer

Segments

ReduceMarketing

time on

Admin

Measure outcome

of campaigns

re objectives

Use database to

improve targeting

in segments

Reduced cost by

avoiding waste on

irrelevant customers


D

R

IV

E

R

S


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An Example So Far

IS/IT

Enablers

EnablingChanges

BusinessChanges

BusinessBenefits


CampaignPlanning &

ManagementSystem

CustomerProspectDatabase

ContactManagement

System

EnquiryQuotation &ResponseTrackingSystem

PortablePCs forSalesStaff

Releasesales timefrom post

sales activityto pre sales

Introducenew accountmanagement

processes

Redefinecustomersegments

Reducemarketing

staff time onadmin

activities

Introduceproject

managementfor all A&Pcampaigns

Measure outcomeof campaignsre objectives

Use database toimprove targeting

in segments

Realign salesactivity with new

customer segments

New salesstaff

incentives

Use system totarget sales

activity/contact

time

Increase salestime with

customers

Allocate salestime to potentialhigh value leads

Co-ordinate salesand marketing activity

in follow-up

Identify mostappropriate

communication mediumfor target customers

Reduced cost byavoiding waste on


Increased responserate from A&P

campaigns

Increased rateof follow-up

of leads

Increased conversionrate of leads

to orders

effectiveness of

promotion (A&P)

To improve the

advertising &

spend

To increase salesvalue and volume

from newcustomers



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Measures & Responsibilities

Enablers

ChangesChanges Benefits

Objectives

IS/IT

EnablingBusiness Business

Investment

EC: In use

on all new

campaignsR: Br Mgrs

EC: New

structureR: Mktg

Director

BC: New process on all

new campaignsO: Brand Managers

BC:DBin use and Dataclean up complete

O: Asst MarketingDirector

M : Reduced costs ofcampaign mailings

: Maintain responserate

BO:Brand Managers

EC: Measureby timesheetsR:Asst Mkg

Director


D

R

IV

E

R

S


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More efficient use ofPeoples time

To improvecollaboration

between people,

teams ,deptsand orgs

To improve/streamline

businessadministration

processes

To improveuse, sharing and

interchange ofinformation and

documents

Speedier completionof business andadmin processes

Improved staffsatisfaction

People working

effectively acrossorg. boundaries

Poorcollaborationacross theorganisation

Inappropriatebusinessadminprocesses

Need to improveperformance worksmarter not harder

Poor accessto, and poor ability tocreate documents &information

Providefacilities for

people to workmore effectively

with lesseffort

Access to alldocuments

and informationrequired by role

Cut administrationcosts

Treatinformation asa valuableproduct

Provide accessto documentsand informationon a 24x7 basis

Commerciallyexploitintellectual

capital andinformationproducts

Reduce adminsupport costs

Increase 3rd

stream income

Admin costscut by 5% pa

3rd stream revenueincreased to 30%

Reduction in onlinedocument storage

costs

Improved, speedierdecision making

Poor sharing ofknowledge and bestpracticeImproved organisational

knowledge andbest practices

The Benefits and Why We Want Them


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Develop robust security,

authorisation, and

access procedures

Develop culture to

work across

organisationalboundaries

Develop

information sharing

culture

Delegation of approval

processes

Introduce

Document management

and sharing facilities

Develop a consolidated

structured information

store

Introduce easy to use/

change web basedadmin applications

DBMS

Document

repositories

Manage informationas a valuable resource

Office

Automation

tools

Web

Based

Applications

More efficient use of

peoples time

Speedier completion

of business and

admin processes

Improved staff

satisfaction

People working

effectively across

org. boundaries

Access to all

documents

and information

required by role

Admin costs

cut by 5% pa

3rd stream revenue

increased to 30%

Reduction in online

document storage

costs

Improved, speedier

decision making

Use intellectual capital

commercially

Adopt a self-service

pull approach, ratherthan push approach,

to the use of

documents and

information

Develop a document

sharing, rather than adocument copying,

culture

Develop anInfrastructure

Architecture

Develop a Data

and Information

Architecture

Develop Portal

functionality for

information/document

access

Develop a strategy and

plans to manage the growth ofstructured information

Introduce UKU widedocument workflow management

facilities

Develop a knowledge and intellectual

capital management strategy and

architecture

Document

Workflow/Rights

management

Portal

Development

Functions

Improved organisational

knowledge and

best practices

Develop a self-service

personal admin

culture

How to Make the Benefits Happen


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Develop robust security,

authorisation, and

access procedures

Develop culture to

work across

organisational

boundaries

Develop

information sharing

culture

Delegation of approval

processes

Introduce

Document management

and sharing facilities

Develop a consolidated


store

Introduce easy to use/

change web based

admin applications

DBMS

Document

repositories

Manage information

as a valuable resource

Office

Automation

tools

Web

BasedApplications

More efficient use of

peoples time

Speedier completion

of business and

admin processes

Improved staff

satisfaction

People workingeffectively across

org. boundaries

Access to all

documents

and information

required by role


3rd stream revenue

increased to 30%

Reduction in online

document storage

costs

Improved, speedier

decision making

Use intellectual capital

commercially

Adopt a self-service

pull

approach, ratherthan push approach,

to the use of

documents and

information

Develop a document

sharing, rather than a

document copying,

culture

Develop an

Infrastructure

Architecture

Develop a Data

and Information

Architecture

Develop Portal

functionality for

information/document

access

Develop a strategy and

plans to manage the growth of


Introduce UKU wide

document workflow management

facilities

Develop a knowledge and intellectual

capital management strategy and

architecture

Document

Workflow/Rights

management

Portal

DevelopmentFunctions

Improved organisational

knowledge and

best practices

Develop a self-service

personal adminculture

More efficient use ofpeoples time

To improvecollaboration

between people,teams ,depts.

and orgs

To improve/streamline

businessadministration

processes

To improve

use, sharing andinterchange ofinformation and

documents

Speedier completion

of business and

admin processes

Improved staff

satisfaction

People workingeffectively across

org. boundaries

Poor

collaboration

across the

organisation

Inappropriate

business

admin

processes

Need to improve

performance work

smarter not harder

Poor access

to, and poor ability to

create documents &

information

Providefacilities for

people to workmore effectively

with lesseffort

Access to all

documents

and information

required by role

Cut administrationcosts

Treat

information as

a valuable

product

Provide access

to documentsand information

on a 24x7 basis

Commercially

exploit

intellectual

capital and

information

products

Reduce admin

support costs

Increase 3rd

stream income


3rdstream revenue

increased to 30%

Reduction in online

document storage

costs

Improved, speedier

decision making

Poor sharing of

knowledge and best

practiceImproved organisational

knowledge and

best practices

The Picture Linking Business Drivers and IS/IT Projects


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Structuring Benefits & Measures

Degree of

Explicitness

Do New

Things

Do Things

Better

Stop Doing

Things

Financial

Quantifiable

Measurable

Observable


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Structuring Benefits

Degree ofExplicitness

Do NewThings

Do ThingsBetter

Stop DoingThings

Financial

Quantifiable

Measurable

Observable



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Structuring Benefits & Measures

BENEFIT MEASURE(S) 'VALUE'

1. Reduced cost by

avoiding waste on


2. Increased response

rate from campaigns

(by better targeting)

3. Increased rate offollow up of leads

4. Increased conversion

rate to sales

a) less mailings per campaign

b) response rates maintained overall

a) responses from defined

primary target group

b) earlier responses from target group

Four categories to measure:a) Enquiry & Quotations

b) Mailings (via Merchants)

c) Samples

d) Specifications

(% of leads followed up in first nweeks)

(Based on sampling of new process)

a) Enquiry & Quotations

b) Mailings (via Merchants)

c) Samples

d) Specifications

a) Reduce cost by 250k p.a.

New (p.a.) (Old)2000 (500)

15000 (


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The Investment Proposal

1 Drivers for change giving rise to

2 Investment Objectives which result in3 Benefits by

4 Costs

Development

One-off

Infrastructure

Business Change

On-going

DoingNew

Things

DoingThingsBetter

StopDoingThings

and incur


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The Stakeholders

Commitment (Current&Required)

Anti None Allow itto happen

Help ithappen

Make ithappen

StakeholderGroup

PerceivedBenefits

(Disbenefi ts)

ChangesNeeded

PerceivedResistance


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- To identify stakeholders whose commitment/action is needed to achieve

each benefit

- To determine the view/perspective each stakeholder (or stakeholdergroup) has -'Whats in it for them' and possibledisbenefits

- To align the necessary change activities to particular stakeholders andunderstand their motivation to achieve or resist the changes

- To understand the action required to gain the requiredinvolvement/commitment of all stakeholders

- To develop action plansto deliver the appropriate level of involvementof the stakeholders

Purpose of Stakeholder Analysis


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Stakeholder Analysis


Commitment (Current & Required )Anti None Allow it

to happen

Help ithappen

Make ithappen

StakeholderGroup

PerceivedBenefits(Disbenefits)

ChangesNeeded

PerceivedResistance

(after Benjamin & Levinson)


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Stakeholder Analysis

Based on a project to implement an expert system for Product Configuration

Commitment (Current & Required)

Anti None Allow itto happen

Help ithappen

Make ithappen

StakeholderGroup

Perceived

Benefits(Disbenefits)

ChangesNeeded PerceivedResistance

Customers Configurationtailored exactly toneeds - no testing/ reject

None None

Sales &MarketingManagers

Improvedcustomer serviceand product

quality image

New incentivesto get Sales Repsto use system

with customers

Reluctance tochange Repsreward systems

Sales Reps (Extra work inpreparingrequirementsand quotes)

To use systemand improvequality/accuracyof quotes

No timeavailable to use/learn system.Loss of autonomy

Manufacturing/ Logistics

Removes need forconfigurationchecking. Lessreturns/queries

Stop currentchecks to putonus on Repsto get it right

Do not trustSales Repsaccuracy inrequirements/quote

IT Developers New advancedsystem - removeold difficult tomaintain system

Skills in ExpertSystemDevelopment

None

Act ionrequired?

Act ionrequired?

Act ionrequired?


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Summary


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Identify &Structure

Benefits

Plan

Benefits

Realisation

Why

Measures

WhatWhere

Do

NEWThings

Do Things

BETTER

STOP

DoingThings

Financial

Quantifiable

Measurable

Observable

Who

Accountabilities

STAKEHOLDER ANALYSISCommitment C urrent & Required)

Allowit to

happen

Helpit

happen

Makeit

happenAnti None

Perceived

Benefits(Disbenefi ts)

Changes

Needed

Stakeholder

GroupPerceived

Resistance

Driving the Debate


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and the Key Messages?

Bus iness Value from IT

demands a management processfocused on valuedelivery

IT by itself has no value

performance only improves when peopledo things differently

business value and benefit assesment

Documents