Download - 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
BUSINESS STRATEGYBusiness Decisions
Objectives & Direction
Change
IS STRATEGYBusiness Based
Demand Orientated
Application Focused
IT STRATEGYActivity Based
Supply Orientated
Technology Focused
VALUE
added here
COSTS
incurred here
Source: Cranfield University School of Management.
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The Value & Cost Debate
Source: Cranfield University School of Management.
BUSINESS STRATEGYBusiness Decisions
Objectives & Direction
Change
IS STRATEGYBusiness Based
Demand Orientated
Application Focused
IT STRATEGYActivity Based
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?
Source: Cranfield University School of Management.
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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
Source: Cranfield University School of Management.
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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
Source: Cranfield University School of Management.
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Example:
Source: Cranfield University School of Management.
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
Source: Cranfield University School of Management.
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
InvestmentObjectives
Externally facing
Internally facing
The benefits and why we want them
D
R
IV
E
R
S
Source: Cranfield University School of Management.
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and the Change Management Plan
IS/ITEnablers
EnablingChanges
BusinessChanges
BusinessBenefits
InvestmentObjectives
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.
Source: Cranfield University School of Management.
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Actually, This Is Where it Fits into Motion
IS/ITEnablers
EnablingChanges
BusinessChanges
BusinessBenefits
InvestmentObjectives
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
InvestmentObjectives
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
Source: Cranfield University School of Management.
D
R
IV
E
R
S
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An Example So Far
IS/IT
Enablers
EnablingChanges
BusinessChanges
BusinessBenefits
InvestmentObjectives
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
irrelevant customers
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
Source: Cranfield University School of Management.
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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
Source: Cranfield University School of Management.
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
structured information
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
Admin costscut 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 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
structured information
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
Admin costscut by 5% pa
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
Source: Cranfield University School of Management.
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Structuring Benefits & Measures
BENEFIT MEASURE(S) 'VALUE'
1. Reduced cost by
avoiding waste on
irrelevant customers
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
Source: Cranfield University School of Management.
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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Source: Cranfield University School of Management.
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