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Benefits management – the essential ingredient for organisational change.

Author: Matt Williams

Managing Director - Connexion Systems

Executive summary

It is easy to lose sight of what you set out to achieve when implementing organisational change. 

Research shows many companies do not properly track their initiatives and fail to realise benefits as a result. 

Monitoring and measuring the performance of organisational change is vital to the realisation of the intended benefits of any initiative. Thorough analysis of how the initiatives are performing against their objectives can also provide early warning of problems in achieving the expected business value, such as cost savings or increased sales.

To be successful, benefits planning must begin early, in conjunction with the building of a business case, and measurement must run until project completion and beyond.

Early creation of a benefits measurement plan will help ensure targets set out in the business case are achievable and stakeholders are engaged while the initiative is still in its infancy.

A benefits measurement regime that is flexible and dynamic enough to cope with unplanned changes to the initiative is also vital during the period between project launch and completion to safeguard against value destruction caused by a range of variables such as cost blowouts and time delays.

But it doesn’t end there. Continuous monitoring beyond project completion can also help to ensure that the expected business improvements are successfully integrated into business operations, as well as providing valuable insights to assist with the planning of future initiatives.

Change is inevitable in a constantly evolving business world. But success is far from guaranteed.

Setting clear goals for your initiative, developing a sound business case, engaging stakeholders and implementing the changes are all key ingredients for realising forecast business value from any initiative. But how do we ensure that these objectives are achieved once the delivery team has set the wheels of change in motion? Is there an effective way we can significantly improve our chances of reaching our forecast goals even before the business case is approved? 

According to PricewaterhouseCoopers 2014 Global Portfolio and Programme Management Survey, only half of Project Managers agree that appropriate baselines are in place to measure program benefits. Of those, only half say progress is measured regularly and accurately. This could mean only about a quarter of progress is being adequately tracked. It is of little surprise the survey also found that less than half of the expected benefits were realised.

PwC’s maturity assessment went on to discover that only one in five of the initiatives it assessed had robust benefit management processes in place.  Similarly, change management expert John Kotter says up to 70 per cent of initiatives fail to deliver forecast benefits.

Begin measuring benefits from the outset

Research shows that many problems with achieving investment value are due to unrealistic or inflated forecasts in the business case, indicating the need to implement robust benefit quantification techniques  – both before they are launched and during execution.

In his article Benefits Realisation, published in the PM World Journal in 2012, Project Portfolio and Benefits Realisation expert Stephen Jenner says early implementation of robust frameworks to track performance through to benefits realisation provide a greater incentive to forecasters to ensure their goals are achievable. Too often, organisations begin measuring benefits after the change is launched. However, Jenner argues that this is too late because benefits cannot be managed effectively if they are not clear from the outset.

Jenner says effective accountability frameworks that track performance through to benefits realization will also provide forecasters with greater incentive to ensure their goals are realistic.

Developing a benefit measurement strategy when the business case is being developed is crucial to increasing the likelihood of achieving projected outcomes and will help the change management team articulate benefits. The business case must be structured in a way to ensure the initiative’s business value can be measured when delivered. 

Technology can be used to facilitate the creation of a comprehensive benefit map being established that clearly defines responsibility for each aspect of the initiative from delivery to benefit realisation.

From project output to business outcome

The business value of any change initiative is most vulnerable in the period between project completion and business adoption. During project delivery, decisions are often made or endorsed by project boards which change scope in an attempt to rein in costs without properly considering the impact on the expected benefits. Delays to delivery can also contribute to value destruction because these delays feed into delayed benefit realisation, exacerbated by the time-value of money (such as discount rates).

In his book The Information Paradox, John Thorp says benefits rarely pan out according to plan. He says while a benefits forecast to support the business case is important, it is just an early estimate. Constant monitoring and dynamic adjustments are required to stay on the path from investment to benefits realisation 3. Thorp also says using a benefits realisation approach provides a new basis for using information technology to deliver business results more consistently and predictably.

Continuous measuring of organisational change can also provide early warning of problems in achieving a project’s expected business value.

Tracking tools to monitor project performance during this crucial delivery phase through to benefit realisation need to be dynamic and robust, allowing the flexibility to recalibrate costs, timelines and market fluctuations and measure the impact on business value.

Accurate and regular measurement can also indicate the level of stakeholder adoption, determine the wider business impact and flag unforeseen pitfalls before they become initiative-killing flaws. Successful benefit measurement at this stage also promotes accountability and clearly defines responsibilities to help ensure project’s effectiveness remains on track with its initial objectives in the face of variables such as staff turnover, fluctuating markets and other factors.

PwC’s 2014 Global Portfolio and Programme Management Survey concludes that organisations should regularly “stop and reflect” during delivery to allow time to regroup, refocus effort and set a new baseline, when necessary, to ensure benefits are still achievable.

The PwC study also says accurate measurement of progress can provide insights into when to end an initiative, potentially saving wasted long-term investment. 

Continue to measure and evaluate once change is complete

Too often the business focus moves to the next initiative once the previous one has been completed, leaving insufficient resources to monitor the organisational performance of the new capability.

The realisation of benefits will be ongoing long after an initiative has been completed, making it crucial to continue measuring in order to extract maximum business value. 

The failure to properly transition the full value of the new capabilities into business operations is a common mistake at the end of an initiative. To maximise value beyond project completion, measurements must continue to be taken and compared to the benefits plan.   By doing this, unforeseen changes can continue to be identified and responded to before they result in irreversible value decay.

An Executive Sustainability Plan is also required after completion to maintain benefits and assist in arresting a slide back to the previous state. This includes continued measurement of benefits and a review of objectives to maintain momentum. It will also help demonstrate whether the changes made are still delivering the benefits set out in the business case.

While staged reviews are essential to benefits realisation throughout the initiative, Jenner says in his book Managing Benefits the importance of a post-mortem style of review at the completion of the project cannot be overestimated 4. He says although studies have shown most projects do not have such measures in place, these reviews can shed additional light on benefits and are pivotal for informing forecasts and continual improvements in benefits management for future change initiatives.

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