© Sigma (Bookham) Ltd 1 Benefits Realisation Management Gerald Bradley Ann Watts 19 th March 2007 BCS – North London Branch Ensuring IT and change adds value and delivers planned business benefits

© Sigma (Bookham) Ltd 2 OASIG Survey Results: 80-90% do not meet their performance goals ~80% of systems delivered late or over budget ~40% of developments fail or are abandoned <40% fully address training and skill requirements <25% properly integrate business and technology objectives 10-20% meet all their success criteria sm260 Recent survey on Benefits from IT Projects: Only 25% of organisations are measuring benefits Of these 25% only 25% are observing benefits in line with expectations sigma ’s View: Most companies achieve between 10% and 25% of potential benefits from their IT Investments and change programmes Achieving the expected or potential benefits is not the norm

© Sigma (Bookham) Ltd 3 Pioneer of the leading methodology for Benefit Realisation Management (BRM) Established 1986 Specialist provider of Benefit Realisation Management consultancy, education and software Partner to many leading private and public sector organisations Who are we (sigma)?

© Sigma (Bookham) Ltd 4 sigma ’s clients include: Banking and Financial Services Abbey National AXA Insurance Barclays Bank Bradford & Bingley Cornhill Insurance Friends Provident Hewitt Bacon & Woodrow Lloyds TSB Mellon Bank NatWest Bank UnumProvident Healthcare and Pharmaceuticals Amersham Health AstraZeneca GlaxoSmithkline Oil and Gas BP Canadian Natural Resources Limited Shell Central Government and other Public Sector Department for Transport Foreign & Commonwealth Office Highways Agency Home Office MOD National Air Traffic Services Office of National Statistics OGC Police Over 30 Police Forces Police IT Organisation (PITO) Scottish Police IS Group (SPIS) Miscellaneous Private Sector Associated British Foods BT General Motors Lloyd's Register of Shipping Orange United Utilities

© Sigma (Bookham) Ltd 5  Benefits – why consider them? what are they?  Foundations for success  Be serious about realising benefits  Don’t neglect ‘business change’  Begin with the vision or end goal  Some proven tools and techniques  Strategy Maps  Benefits Maps  Benefit Dependency Maps  Investment Assessment Matrices  Process, roles & responsibilities, available support Successful Benefit Realisation

© Sigma (Bookham) Ltd 6 Benefits – why? how? and what? The only valid reason for investment in change is the realisation of benefits So change should always start with benefits and end with benefits In fact benefits should be the core of any change project – the central theme – not an afterthought But what is a benefit – ‘an outcome of change perceived as positive by a stakeholder’ So success is the timely realisation of the expected benefits This is not automatic, it doesn’t just happen, it must be managed – Benefit Management

© Sigma (Bookham) Ltd 7 Purpose: To improve the ROI from change Fewer wasted investments Earlier benefits More benefits Return Time Sustained benefits ChangeDirecto r What is success? - the purpose of programmes/projects

© Sigma (Bookham) Ltd 8 Justifying In UK until 1990 To justify? Justification Measuring Emphasis shift To measure? Justification Measurement In UK in the 1990s To harvest? In UK in the new millennium Harvesting Achievement Measurement Justification Why consider benefits?

© Sigma (Bookham) Ltd 9 Enablers Business Change BRM External Drivers Stakeholders Cultural Factors Benefits Objectives Process: Focus on the real goal - Objectives & Benefits As is Can be

© Sigma (Bookham) Ltd 10 Corporate or Programme Objectives To increase effectiveness To Improve deployment To speed up responses To reduce costs The bridges may consist of processes or changes or intermediate benefits Bridging between enablers and objectives Projects delivering Capabilities

© Sigma (Bookham) Ltd 11 Business change activities Project(s) Projects delivering Capabilities Corporate or Programme Objectives To increase effectiveness To Improve deployment To speed up responses To reduce costs Vision End Goal Business Case Benefit Realisation Plan Programme level work streams Business change activities Project(s) Drivers Centralised deliveryBusiness unit delivery Top level control Enablers Enabling Changes Enabling Changes Intermediate Benefits Intermediate Benefits Business Changes Business Changes End Benefits End Benefits Building a programme around its benefits

© Sigma (Bookham) Ltd 12 To Increase profit Business Objective Benefits Technology Feature Change in Working Practice Electronic communication Meetings Management Co-authoring documents Captured learning Interactive working with Country Mgrs. Search facilities Document Management Information sharing Electronic discussion Shared ‘best practices’ Increased efficiency Increased effectiveness Increased sales Increased margin Reduced costs Improved performance of Country Mgrs. More focused selling More focused sales force Faster resolution of pricing issues Cross-fertilisation between Countries Maximised launch impact Improved pricing Improved launch planning Improved succession planning An example of a ‘bridge’ which distinguishes between Features, Changes and Benefits

© Sigma (Bookham) Ltd 13 Strategy Delivery Change Process with Review Points 1. Set vision and objectives 2. Identify benefits and changes 3. Define initiatives 4. Optimise initiatives 5. Manage initiatives 6. Manage performance R6 R5 R4 R3 R2 R1 Engage stakeholders

© Sigma (Bookham) Ltd 14 From a representative set of stakeholders gather answers to the why question - why do we want to undertake this change? Group these answers and determine group headings expressed as objectives Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Aaioewty 0abua spfu aspdo aps Use drivers to determine objectives for the change Afadfyagy apsyg aoyg aoayg oayg aogy aoyg aospgy aoygoasod asysodfy ao yaoiyf aopyf

© Sigma (Bookham) Ltd 15 Confirming Programme Objectives For a programme to roll-out Benefit Realisation Management (BRM) within an organisation, clustering and linkage resulted in the following Objectives Linkage Diagram (Strategy Map). What would you choose as a set of key objectives for the programme? To increase awareness and understanding of benefit realisation issues To maximise benefit delivery from each programme To improve project prioritisation and selection To introduce a standard Benefit Management Methodology To produce better quality business cases To improve stakeholder management To improve business strategy To change to a more benefit focused culture To improve benefit tracking and reporting To increase shareholder value

© Sigma (Bookham) Ltd 16 Confirming Programme Objectives For a programme to roll-out Benefit Realisation Management (BRM) within an organisation, clustering and linkage resulted in the following Objectives Linkage Diagram (Strategy Map). These objectives are key and bound the programme. To increase awareness and understanding of benefit realisation issues To maximise benefit delivery from each programme To improve project prioritisation and selection To introduce a standard Benefit Management Methodology To produce better quality business cases To improve stakeholder management To improve business strategy To change to a more benefit focused culture To improve benefit tracking and reporting To increase shareholder value

© Sigma (Bookham) Ltd 17 Creating a Benefits Map for each of the bounding objectives To improve project prioritisation and selection 3. Improved awareness of options 1. Improved understanding of requirements 2. Improved management of investment process                                                      

© Sigma (Bookham) Ltd Improved awareness of options 1. Improved understanding of requirements 2. Improved management of investment process                                                       Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Hope this work s tom morrow Creating the Benefit Dependency Map from the Benefits Map To improve project prioritisation and selection

© Sigma (Bookham) Ltd 19 Creating a Benefits Map starts with the identification of ‘end benefits’ which equate to the objective

© Sigma (Bookham) Ltd 20 Continuing the development of the Benefits Map

© Sigma (Bookham) Ltd 21 Completing the Benefits Map

© Sigma (Bookham) Ltd 22

© Sigma (Bookham) Ltd 23 A weighted Benefits Map

© Sigma (Bookham) Ltd 24 A Benefit Dependency Map (BDM) with weighted paths

© Sigma (Bookham) Ltd 25 A Benefit Dependency Map (BDM) with weighted paths and scores

© Sigma (Bookham) Ltd 26 Benefit Classification Benefits can be usefully classified in a number of ways. Some frequently used classifications are: Beneficiary-Stakeholders who will feel they receive the benefit Benefit category-generic or family grouping Boston Grid-Business impact sigma Value Type-value expectation Change Type-degree of change required for benefit achievement Classification frameworks may be used as an aid to benefit identification or to classify benefits already identified in order to aid analysis and the management of expectations

© Sigma (Bookham) Ltd 27 A Programme to roll-out BM within an organisation

© Sigma (Bookham) Ltd 28 Value typeDefinition Example FinancialNon-financial TangibleTangible Definite Expected Logical Intangible Increased sales Quicker performance of tasks Improved management of insurance risk Greater customer satisfaction Reduced costs Fewer steps in a process Improved image sigma value types Value may be predicted on the basis of someone else’s experience or based on historic trends Logically a benefit may be anticipated whose value may be measured but not predicted May be anticipated, but difficult to substantiate Value may be predicted with confidence or certainty – not effected by external drivers

© Sigma (Bookham) Ltd Fewer steps in a process 3. Improved productivity 5. More coffee breaks 6. Shorter working day 4. More time spent with customers 7. Fewer staff 10. Improved staff morale 11. Reduced salary costs 8. Increased sales revenue 9. Improved networking 2. Faster response to customers Value benefits in the way they are described If the benefit is “fewer steps in a process”, the measure, which is also the value of the benefit is the number of steps in the process – the baseline may be 72 and the target 55 and the value at any point is the current number of steps in the process. It is important not to try to give this a financial value, as of itself it is not a financial benefit. It may lead to a financial benefit, which would be shown on the Benefits Map, but this depends on the intention. Based on the above map, reduced salary costs is only one of four possible end benefits, it may occur several months after fewer steps has been achieved and additional changes (e.g. making staff redundant) may be required in order to achieve this later benefit.

© Sigma (Bookham) Ltd 30 Value typeDefinition Distribution FinancialNon-financial TangibleTangible Definite Expected Logical Intangible Value may be predicted on the basis of someone else’s experience or based on historic trends Logically a benefit may be anticipated whose value may be measured but not predicted May be anticipated, but difficult to substantiate Value may be predicted with confidence or certainty – not effected by external drivers Benefits by sigma value types for Met Police Case

© Sigma (Bookham) Ltd 31 Case ExampleMajor Bank Improved image Customer database and sales processing system Fewer errors Easier sales processing Fewer complaints Increased productivity Better information on customers and sales profitability Improved customer service Improved staff morale More high value customers More quality time with customers More focused selling More high value sales Less unpaid overtime Benefit linkage chart for the whole investment

© Sigma (Bookham) Ltd 32 Four reasons for tracking all / most of the benefits in the Benefit Linkage Chart To know that a change in the end benefit can be attributed to the project/programme To know that all paths in the linkage chart are operating in order to generate the maximum improvement in the end benefit To satisfy the needs of different stakeholders - e.g. sales processing; customer relations; HR To have some interim milestones, rather then waiting two years to see whether the sales had improved

© Sigma (Bookham) Ltd 33 Predictive model Value of the measure Time T1 T2 T3 T4 Don’t try and be more sophisticated than this in your predictions and use months (or preferably quarters) as your minimum time interval Baseline Target M1 M2

© Sigma (Bookham) Ltd 34 Tracking the benefits

© Sigma (Bookham) Ltd 35 Case ExampleMajor Bank Improved image Customer database and sales processing system Fewer errors Easier sales processing Fewer complaints Increased productivity Better information on customers and sales profitability Improved customer service Improved staff morale More high value customers More quality time with customers More focused selling More high value sales Less unpaid overtime Software supports RAG Status (including on Benefit Linkage Charts)

© Sigma (Bookham) Ltd 36 Obtaining further help The book gives a very full and comprehensive treatment of benefit realisation with application to projects, programmes and portfolios. The book, published in June by £55, is available from Sigma’s stand £48.

© Sigma (Bookham) Ltd 37 Complete toolkit: MethodologyA consistent, comprehensive, flexible and scaleable process A circular process which can be entered at any point A proven process tested in many different environments A bag of many different techniques to suit a wide variety of situations EducationEducation to change mindset War stories from a diverse variety of organisations ConsultancyTo embed the approach in the behaviours and culture of the organisation Workshop facilitation to engage stakeholders and secure commitment Partnership consultancy to transfer skills through whole life-cycle To advise and mentor in unusual and complex situations TrainingTo introduce an extensive set of techniques. To give guidance as to their use - why? when? how? Software To manage the data, in order to: Improve the quality and consistency of information Analyse and prioritise solution options Manage cross-programme dependencies Monitor programme and portfolio performance

© Sigma (Bookham) Ltd 38 Some good news Benefit Realisation Management (BRM) can and does make a difference Instead of 20% of potential benefits you could be enjoying at least 80% of potential benefits

© Sigma (Bookham) Ltd 39