Chapter 2 - The Benefits Realization Approach
As we enter the Knowledge Economy, the challenge of effectively managing technological change in organizations and indeed across entire industries is becoming acute. This is not primarily a technology issue, nor an issue of interest only to IT managers, it is an issue for all business managers. The traditional industrial-age approach to managing automation-focused projects has become a relic, leading to silver bullet thinking about the new generations of IT and how they can be applied to support advanced information management and enable business transformation. The end result is unacceptably high failure rates in applying new technologies. We need a new approach.
The Benefits Realization Approach is such an approach. It provides a new basis for using information technology to deliver business results more consistently and predictably. It proposes two inter-related shifts: in mindsets about IT and in management methods. Silver bullet thinking is replaced with a new benefits mindset that focuses on integrating technology into the business system. Its central tenet is that IT alone, no matter how technically powerful, cannot deliver business results.
Before we describe the approach, it is useful to note that while the focus of this book is on investments in IT-enabled change, the Benefits Realization Approach that we describe in this chapter, and all through the book, is applicable to any major investment in organizational change. Our examples throughout the book have a strong IT component, but the astute reader will observe, as many of our clients have done, that the approach, and its underlying fundamentals have much more general applicability.
The benefits mindset underlying the Benefits Realization Approach is based on the following premises:
The benefits mindset forms the basis for a major shift in management methods and practices that is the main focus of this chapter. The industrial-age approach to project management described in Chapter 1 focuses almost exclusively on the delivery of technology, on time and on budget. In contrast, the Benefits Realization Approach focuses on all the projects and initiatives required to produce business results, whether they involve training or technology, change management or software engineering. It focuses on managing the continuous benefits realization process.
Benefits Realization Process
The benefits realization process includes traditional project management processes, which are well understood and documented. But it reaches well beyond the "design-develop-test-deliver" cycle of conventional project management. Upstream from traditional project design, the benefits realization process reaches to the initial hatching of project concepts. At the other end of the cycle, it includes the ultimate harvesting of end results, which occurs far downstream from traditional project completion landmarks such as the delivery of new software, networks and information systems. Viewed this way, the process includes all phases of investment decision making, project management, delivery, implementation, monitoring and continuous adjustment. In contrast to traditional project management cycles, it reaches from "concept to cash" rather than from "design to delivery."
All organizations today have a benefits realization process, whether they know it or not. It is probably not a formal process, and therefore, is neither known nor understood. It almost certainly does not work very well. It is a passive process, not a managed one. We have found that, like manufacturing or product development processes, the benefits realization process can be designed and engineered systematically to improve business performance.
The Benefits Realization Approach is designed to provide proactive management of the benefits realization process. By continuously improving the benefits realization processes of many organizations, we can envision the day when the success rates of investments in IT-enabled change will rise to 80 per cent, then 90 per cent and beyond – considerably higher than the casino odds prevailing today. Information technology will be recognized as delivering demonstrable business value consistently and predictably.
The Benefits Realization Approach is designed to help people build a shared vision of the benefits realization process. It gives senior management a clear understanding of what business results are to be achieved through a major investment, and of IT’s contribution to those results. It gives middle management a clear understanding of the resources required to get these results, and of their role in achieving this goal. All employees and work groups develop an understanding of how they will contribute to results and how they will use new technologies to do their work in new ways. With the Benefits Realization Approach, organizations will only embark on IT-enabled change with both a clear road map depicting the paths that lead to beneficial results, and the capabilities required to realize those benefits.
The Benefits Realization Approach is not just another academic theory. It is a practical approach, much of which was developed, tested in the field and successfully used in Canada, the U.S., Europe, Australia and New Zealand in organizations that include telecommunications companies, energy utilities, banks, insurance companies and manufacturers. It has been used to meet a variety of business transformation challenges, such as: