Benefits Management: Program Success Criteria
Businesses spend a lot to improve, change, and innovate to maintain a differentiated competitive position. In 2019, companies are believed to have spent $1.2 Trillion Dollars on digital transformations with an expectation over $6 Trillion by 2025. IDC’s Insights and Analysis Group shared that “Digital transformation is quickly becoming the largest driver of new technology investments and projects among businesses”. (1) Companies are busy changing and innovating. But, are they getting their money's worth?
A lot of companies are doing a lot of things! The problem is, most of them fall short. Earlier this year, the Project Management Institute (PMI) released its updated Project Managers Book of Knowledge (PMBOK) which for the first time emphasized the need for projects to take a comprehensive lens to value creation across the ecosystem of the business that must enable change. This came because of some simple math according to PMI in 2020 (2):
Companies can expect to waste about 13% of every project dollar if 30% of projects don’t meet goals times and 42% of projects that exceed their budget. If companies are going to spend $6 Trillion dollars in projects by 2025, then we can expect $765 Billion dollars wasted globally.
And that is just Project Management KPIs. The math explodes when companies lack the operational maturity to effectively navigate change and drive adoption of new processes and systems. That’s where the real value in changing a business lies: When people use the change and the company and users benefit from it.
This challenge is supported by one of the seven key underpinnings of the Sandcastle Change Transformation Readiness Framework: That a mature ability to change is critical to enabling effective and sustainable value from change.
Of the 7 distinct major dimensions in the Transformation Readiness Framework is Benefits Management consisting of 3 key factors and 13 key attributes. One of the 3 factors under Benefits Management addresses Program Success Criteria. We look for three key attributes in this area:
► Company has established defined metrics linked to business objectives and directly referenced in a business case for this program.
The achievement of business objectives can be validated by measuring the degree of change created. This will provide indication of the amount of value creation or erosion. Project Objectives are usually intended to articulate a form of value improvement. When the value to be improved can be related to current state value, a team can be informed about what specifically should change. Those project objectives when aligned with business objectives demonstrate alignment between them. Finally, objectives and associated value metrics should be included in the project business case.
Key Tactic: Develop a Project Business Case (often called Project Charter) to describe how the project is aligned with business objectives in terms of measurable performance.
► A Cost Benefit Analysis (CBA) has been performed, documented and approved by stakeholders
A Cost Benefit Analysis (CBA) is often a subset of a Project Business Case that describes the cost to implement a project as compared to business attributes that should change. A CBA provides an indication of the project will produce value higher than the cost to produce it. A CBA should serve as input to Portfolio Management.
Key Tactic: Develop a Cost Benefit Analysis for the project and relate it to the Project Business Case considered for investment approval.
► A Cost Benefit Analysis (CBA) has been prepared which includes measurable and intangible benefits expected from the program.
A Cost Benefit Analysis (CBA) describes the tangible and intangible benefits a that are expected from completing a project. Tangible benefits are those business performance factors (e.g., process time, quality measures, satisfaction measures) that can be quantitatively measured while intangible benefits cannot. A CBA that enables an understanding of quantifiable success measures can be used to validate value created when completed to judge if project objectives are met.
Key Tactic: Develop a Cost Benefit Analysis to consider measurable and intangible benefits expected from completing the problem.