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07.01.05


Intranet - The Benefits Realisation Plan

By David Viney

The Millennium Experience

A successful project is one that delivers on-spec (`quality'), time and cost. Right? Well consider these two projects…

The Millennium Dome was delivered on time for the 31 December 1999 and safely within a budget (fixed in 1998) of £289 million. The Project was also delivered to quality, albeit against a Specification that had been adjusted several times during the project to simplify the scope of work required (and ensure that time and cost deadlines could still be met). However, visitor number targets were greatly overestimated, the business a total flop and the whole endeavour deemed a failure by many.

The Millennium Wheel (or "London Eye") opened one month late on a dreary February morning in 2000 (following problems raising the wheel and then safety & quality issues with one of the 32 pods). It was also over budget, with building costs of £70m (against the £25m British Airways had originally planned to spend). However, an average of about 10,000 people a day now ride the wheel, making the London Eye the UK's biggest tourist attraction (and generating £15 million of trading profit a year) - a healthy return on investment for the shareholders.

A New Mindset for Change Projects

Traditional methodologies for change / project management (of which PRINCE is an example) tend to focus primarily on time, cost and quality. Benefits are all too often only implicitly recognised and the accountability for realising them is assumed to lie outside the project.However, the pace of change within our society, industry and business grows ever faster. Somewhat paradoxically, there is an ever- greater need to ensure that changes `stick' (delivering sustainable benefit and competitive advantage to the organisations making them). Most businesses have already achieved greater efficiency and effectiveness within single functions or processes; The challenge of the 21st Century is increasingly how to realise end-to-end change across a boundary-less business.

Rarely (these days) will a single customer sponsor a single project, delivering a single system into a single department.

The leadership challenge is thus how to engage multiple sponsors and change agents across the whole business to deliver excellence in change and the ruthless pursuit of business benefits and true return on investment (ROI).

The Case for a focus on Benefits Management

Recent research from the Cranfield University School of Management finds that 78% of IT-enabled change projects (in large UK companies) fail to deliver business benefits. 47% believed assessment of business benefits in business cases was poor or worse and 79% said that all the available benefits were not captured during that assessment. 45% believed benefits were overstated in their organisation to get investment approval.

Arguably, this will only change when project managers and their people become accountable for - and obsessed by - delivering business benefits and value through Change, rather than simply projects to time and cost.

Benefits Defined

Soft Benefits (sometime called "non-quantifiable" benefits) are those intangible improvements to be obtained from a change, including improved employee satisfaction, better customer satisfaction, increased knowledge sharing and re-use of intellectual capital. Whilst it is often accepted that such benefits do lead to financial gain, it is deemed impossible to demonstrate a proven causal link that would enable one to place a financial value on the benefit.

Direct Benefits are those which lead to a measurable impact on the bottom-line of the organisation, including increased revenue, reduced costs of sale / improved margin, operating cost reduction (e.g. through reduced headcount) and improvements in working capital (e.g. through a faster debt collection cycle). An individual or team can be held directly to account for achieving them and providing evidence of their realisation.

Indirect Benefits are those which facilitate or enable bottom-line impact, without leading directly to realisable items for which can individual or team had be held accountable. Such benefits include cost avoidance (i.e. costs not currently budgeted that might otherwise become payable) and capacity creation (where efficiency savings free up people to undertake high-value adding tasks but do lot lead directly to the release of FTEs or other costs).

The Benefit Realisation Toolset

In the Benefits Realisation section of my free-to-read Intranet Portal Guide (see http://www.viney.com/DFV/intranet_portal_guide/), I outline a number of tools that can be used to better manage benefits on the typical portal project.

1) An enhanced Business Case:

Many business cases simply do not sufficiently reference Benefits. Make sure that you dedicate at least as many column-inches to benefits as you do to costs. Split benefits between soft, direct and indirect. Ensure that direct benefits are included in the ROI, NPV or IRR calculations and that the people who will be accountable for their realisation have signed them off.

Read the Rest of the Article.

About the Author:
David Viney (david@viney.com) is the author of the Intranet Portal Guide; 31 pages of advice, tools and downloads covering the period before, during and after an Intranet Portal implementation.

Read the guide at http://www.viney.com/DFV/intranet_portal_guide or the Intranet Watch Blog at http://www.viney.com/intranet_watch.

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