ESTABLISHING VALUE FOR MONEY AND DELIVERING MORE WITH LESS FROM IT INVESTMENTS

There are three basic questions to be answered about an investment:1. 2. 3. Does this investment represent value for money or could I obtain the benefit for less cost? Is the investment what we really need, or could we spend the money on something else more in line with our current goals? Has the investment been well managed, and have we realised the benefits claimed?

MAKING THE BUSINESS CASE

The purpose of this process is: To assure that the input to the investment process is complete To quantify its value and priority with respect to other investments To provide an informed basis for making the investment decision

To provide a mechanism to monitor and control the realisation of the investment, there are 5 steps to perform to complete the business case:1. 2. 3. 4. 5. Collect the data and prepare the basic case Develop the business case and prepare to make the decision Make the decision Control the implementation Audit the achievements

COLLECT THE DATA AND PREPARE THE BASIC CASE

Data collection activities are required in three main areas:1. 2. 3. Requirements & business objectives, describing the desired changes Systems solution and options, including resources estimates for system development work Estimate of the benefits which will result from satisfying and meeting the requirements

Requirements & business objectives

Goals, trends and competition Business processes to be supported Information systems to be reviewed Problems to be overcome Sources external to the organisation

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Systems solution & cost estimates

Typical cost areas will include:Hardware and its installation Software provision and customisation Maintenance Running and operating costs Networking Training Consultancy

Benefits

By what criteria should IT investments be judged? Any quantifiable measure, however attractive, will be inadequate if taken alone. Intangible benefits are often equally as powerful and are being more highly rated in the overall assessment of IT investments.

Tangible benefits

In building a business case, the most important stage is that of calculation. Tangible, quantified benefits give the impression of being calculated , but in most cases this is only partially true, because in most cases they depend upon large amounts of personal judgement. However, within that classification, they can be further delineated into:Typical areas wthin healthcare

Tangible Benefit category Cost or expense reduction Headcount reduction Estimate time spent on office activities by function, department or job type Productivity gain Make former unproductive time useful Time - shifting Expense reductions Cost of materials, documents, communications, printing, travel Reduction in office support functions Reduction in unnecessary travel Cost or expense avoidance Postpone the need for additional recruitment Better use of resources resulting from IT can delay the decision to make further investments in fixed assets Revenue or income generation Improve the level of service to clients may lead to an increase in income or funding

Visit additional patients Ability to access information from home or anywhere at any time Reduction in carbon emission less travel and therefore meet green Agenda Reduction in paper usage, ink Avoid travel back to office base

Potential to reduce unplanned admissions Reduction in in-patient stays Service redesign. Look at the end to end pathway

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Intangible benefits
Many of the significant benefits cannot be reduced to credible , quantifiable amounts and are referred to as intangible, but the issue is whether or not they can be expressed in potentially measurable parameters with a worthwhile degree of certainty. The main categories are:Intangible Benefits category Management and organisation Improved planning and forecasting Improved management control Typical areas wthin healthcare Organisational flexibility External factors Service Users improved quality of care More detailed analysis and iterations Standardised way of reporting Outcome measures available in real-time and captured automatically Presented through real-time dashboards Contemporaneous notes lead to improved clinical safety and management Ability to provide clinical guidance for any patient from any location Ability to contact team colleagues by awareness of their presence Less dependence on physicial facilities, location and connectivity More time to spend with patient or service user improved patient/staff interaction Avoid repetitive questions being asked all information available in patient record Ability to monitor their own progress from information in workspace Factual outcomes reporting

Timely presentation of information Improved quality of decisions

Organisations image Improved promotion of services Internal factors Employee morale

Professional empowerment all clinical information readily available in one place and up to date Potential for cross discipline and cross agency working Outcomes measures Compliance with standards

Service development and redesign Improved care pathway delivery Strategic alignment Support to organisation strategies Alignment with clinical and information governance Agility to take advantage of future options Downside risk management Compliance with legal governance and good practices Compliance with DPA and FOI

Improved security of information Relative loss of services if no investment

Alignment with the Care records guarantee Approval with local Caldicott Guardian & Information Governance group Transparency and auditable activities All service users confidential information in one safe secure place

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Further considerations for benefits estimation

End-user computing:This is the provision of shared IT facilities that are not designed to provide the same function to all users; e.g. collaboration, office automation, personal computing. This now includes the deployment of Cloud or Private hosted services which offer benefits through little or no infrastructure expenditure Is available as a subscription service which can be flexed

DEVELOP THE BUSINESS CASE AND PREPARE TO MAKE THE DECISION

Evaluate investment opportunities Principles of evaluation

Impact analysis is a key technique for analysing the benefits of computer applications. The table below identifies the principle criteria that are used for tangible and intagible benefits, cost items and levels of risk. Intangible benefits, by definition, are those which cannot be confidently quantified. Therefore their evaluation needs to be in relative terms, which implies that mangement judgement must be used and that they cannot therefore not be involved.

Evaluate benefits Impact analysis

Financial evaluations quantify benefits numerically and ultimately in units of money. Intangibles can be similar if notional values are assigned to them. Intangibles areweighted or scored, and it is this assignment that needs management judgement. They can then be used as a relative measure of value and lead to a statement of priority and ranking. The weighting should be made on a 5 point scale, where 5 is high and 1 is low. The achievablity should also have a 5 point scale, where 5 is highly likely, and 1 is unlikely. The Impact should be developed using a 3 point scale, where 3 is high, and 1 is low.

Criteria
Tangible benefits Cost or expense reduction Direct costs - materials Direct costs - space Direct costs - people Cost or expense avoidance Staff productivity Indirect costs Revenue generation Sales revenue Income (performance related) Income (interest) Intangible benefits Management & Organisation External customer service Internal emloyee morale Strategic High downside risk Items of cost Equipment costs Network needs IT development costs

Weighting

Achievability

Impact

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Levels of risk Commitment of management Technical complexity Project size and structure The weighting in each cell is then multiplied by the weighting assigned to the achievability and impact and the values recorded. It should be remembered that the discussion and analytical process is of prime importance not the arithmetic. There are clearly limitations in the overall process in that: It only provides a profile of the unquantified benfits costs and risks It does not provide a quantified statement of benefits and costs and therefore they need to be stated in addition.

Further criteria for the evaluation of intangibles

Benefit groupings Cost Benefit Competitive advantage Service to the public Job enhancement Information economics Business Return on investment Strategic match Competitive advantage Competitive response Financial Cost benefit analysis Value linking Value restructuring innovation Technical/operational values and risks Strategic systems architecture Technical uncertainty Systems infrastructure risk

In the above evaluation, benefits were placed in 5 groups. Other groups may also be considered, namely:-

There appears to be no perfect investment appraisal method, but there is a continuing search for practical and effective tools. Ultimately, the business case, and the decision to invest, is a team and managment activity. This is the reason that we offer a Benefits Assessment workshop (see below for a detailed description of the objectives and activities).

Evaluate project risk

To achieve the benefits the project must be completed. Therefore the assessment must include the risk of not completing the project successfully and therefore not achieving the benefits. This is arguably the most significant first step towards avoiding the risks. Risk assessment requires a high degree of judgement based on experience and perception, as does the evaluation of intangible benefits, and needs a set of criteria for the assessment. Each risk area should be factored by size of risk threat, and chance of occurring vulnerability. The Size of risk should be weighted from 1 to 5 - 5 being a high risk and 1 low The Chance of occurrence should be weighted 1 to 5 5 being highly likely and 1 unlikely

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Risk factor
Project size Cost Duration Size and number of team Number of departments and people affected Project experience and leadership skills Project structure & procedure Number of phases and task Probability of change to requirements Project planning and control Design and productivity tools Application and technology complexity New application area Leading edge design of technology Technical competencies Supplier competencies Fit with technical policies Operational impact Organisational change Operational complexity Levels of training and education required Number of departments and people affected. Commitment of management Correct sponsorship Level of involvement of users IT knowledge in the community Effectiveness of steering committee reviews

Size of risk Threat

Chance of occurrence Vulnerability

The same comments that were made for the evaluation of intangibles applies here. It is the process of discussion and analysis that represents the value, not the arithmetical value.

MAKE THE DECISION

There are seven key questions to be asked of the project and seven criteria that the business case must meet:Is it relevant to the business objectives? The proposal contributes to the organisations objectives and is consistent with business strategies Are the Implications clearly understood? The proposal and implied changes are visible and understood by executive and middle management Are the requirements defined and is there a feasible solution? They are defined in sufficient detail by users and there is a feasible solution available Are the people resources available? The estimates amount and type of resources needed to implement are available and the project timescale is realistic What Return on Investment (ROI) or value for money can be expected? Estimated costs and benefits are within financial boundaries Is it achievable and operationally feasible? It has been assessed in terms of size and complexity Is it complementary to other planned activities? It fits well with other activities and complements them rather than complicates them rayjordancompany@gmail.com Copyright 2012 Page 6

CONTROL THE IMPLEMENTATION

There are eight key factors that need to be managed to ensure effective implementation of the decision to invest. Key roles in the project need to be filled by appropriate people The scope and potential impact of the project are clearly stated Project activities are planned within an overall structure Expectations of the project outcomes must be primarily with the system user Ways of communicating about the project must be set up Cost-effective procedures are needed for administration and control The planned resources must be available Arrangements must be made for an effective handover of deliverables to the users.

AUDIT THE ACHIEVEMENTS - ASSESS THE BENEFITS

Prepare for assessment workshop Identify a sponsor who should set objectives and nominate the team members Initiate and prepare for interviews Review the statement of requirements Identify additional information requirements Select interviewees and prepare Conduct inteviews and briefings Review job responsibilities, key problems and critical success factors, as well as the main information requirements and benefits they expect to receive Consolidate and analyse findings Analyse application using impact matrix Identify and document assumptions Develop quantified benefits estimates for application Complete estimates and benefits assessment Estimate costs and risks Develop recommendations Consolidate into presentation and report Agree structure of report and presentations Assemble presentation and report and give to sponsors

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