Professional Documents
Culture Documents
Alan McSweeney
Objectives
July 1, 2010 2
IT and Benefits Realisation and Business Value
July 1, 2010 3
Disconnect Between IT Investments and Business
Value and Benefits
• 62% of organisations say they find it difficult to calculate
ROI for IT investments
• 45% of organisations say their business value metrics do
not accurately capture the value of IT investments
• 52% of organisations say that business executives are
sceptical of efforts to measure business value of IT
• Only 41% of organisations perform an ROI assessment for
IT budget
• Poor picture of IT investments and disconnect between
expenditure and business benefits
July 1, 2010 4
Ensuring Strategic Project Alignment to Projects
Business Strategy
Business Vision and Link Projects to
Goal Business IT Strategy and
Benefits and Delivery
Business Value
Strategy
Business Plan
Managing
the IT
Managing IT Budget
Like a
Business Closing the
Loop Between
Cost and
Demonstrate Value
Achievement of Managing
Business Benefits and
and Business Value Delivering IT
Capability
July 1, 2010 6
Benefits of a Structured Approach to Benefits Identification,
Assessment, Validation and Realisation
July 1, 2010 7
Realising Benefits from IT Investments
July 1, 2010 8
Benefits Identification, Assessment, Validation and
Realisation Framework
Identify Assess
Potential Identified
Benefits and Benefits and
Associated Associated
Value Value
Ensure
Realisation Validate
Benefits and Benefits and
Associated Associated
Value Value
July 1, 2010 9
Effective Benefits Identification, Assessment,
Validation and Realisation Within the IT Function
Structures,
IT Leadership and processes and ability Total Cost of Budget
to make decisions to Benefits from IT
Governance Ownership projects are Management
review and adjust
benefits realisation important to budget
plans Definition of creation and
organisation’s strategic management
objectives as basis for
IT demand
Ability to
Definition of Benefits evaluate
organisation’s Identification, benefits of
strategic Funding and
Strategic Planning
objectives as
Assessment, opportunities Financing
Validation and is important to
basis for IT decisions on IT
demand Realisation
funding
July 1, 2010 11
Achieving Benefits – Some Questions to Ask
July 1, 2010 12
Benefits Dependency Network
July 1, 2010 13
Types of Changes
Provide for
Require Allow Enable Delivery of
Information
Technology
Enablers, Enabling Business Business Business
Changes and Changes Changes Benefits Objectives
New
Capabilities
• BDN provides a framework for explicitly linking the overall investment objectives
and the requisite benefits with the business changes which are necessary to
deliver those benefits and the essential IT functionality to both drive and enable
these changes to be made.
• BDN forms part of the benefits realisation plan
• Helps keep the focus on benefits realisation during the program execution
• Allows variations of the project or program to be assessed for their impact on
benefits realisation
July 1, 2010 15
Benefits Dependency Network
Information
Technology
Enablers, Enabling Business Business Business
Changes and Changes Changes Benefits Objectives
New
Capabilities
July 1, 2010 16
Benefits Dependency Network
Understand Why the Business Will Use the Information Technology System
July 1, 2010 17
Benefits Dependency Network
July 1, 2010 18
Constructing a Benefits Dependency Network
July 1, 2010 19
Constructing a Benefits Dependency Network
IT Business
Enabling Business Business
Capability Objective
Change 1 Change 1 Benefit 1
1 1
IT Business
Enabling Business Business
Capability Objective
Change 2 Change 2 Benefit 2
2 2
IT Business
Enabling Business Business
Capability Objective
Change 3 Change 3 Benefit 3
3 3
IT Business
Enabling Business Business
Capability Objective
Change 4 Change 4 Benefit 4
4 4
IT Business
Enabling Business Business
Capability Objective
Change 5 Change 5 Benefit 5
5 5
July 1, 2010 20
Key Building Blocks of Benefits Identification,
Assessment, Validation and Realisation Framework
Establishing a common language for business value and benefits
between IT and the business
Using objective, consistent and accepted benefits and value
Benefits Planning evaluation methods
Enabling better investment decisions through robust business cases
and comparable data across programmes and projects
July 1, 2010 21
Structure of a Comprehensive Benefits Identification,
Assessment, Validation and Realisation Framework and
Associated Organisational Skills
Benefits Identification,
Assessment, Validation
and Realisation
Framework
July 1, 2010 22
Benefits Identification, Assessment, Validation and
Realisation Organisational Skills
Establishing a Business Value Adopting a business benefits metrics as common language of describing
business value between business and IT to consistently capture business benefit
Language is important for alignment of objectives
Creating and then using standard templates to ensure consistent and objective
Creating Benefits Templates and benefits evaluation and measurement is important to allow comparison of
Guidance investments in prioritisation decisions and organisation-wide consistent value
reporting
Establishing a Benefits Forecasting Establishing a capability to support benefits forecasts with reliable business
value data including a capacity for calculation of intangibles and benefit risks is
Capability important in the benefits planning process
Establishing a Benefits Realisation Establishing a capability to identify benefits dependencies and assign clear
accountabilities for value realisation, measurement and reporting is important
Capability in the benefits planning process
Business Value Tracking and Establishing a capability to measure benefits over lifecycle of investment,
review results and adjust if required within dynamic of business environment is
Reporting important in the benefits planning process
Implementing and Using Standard Implementing and embedding the use of a standard benefits realisation process
and uses benefits realisation data in other processes, e.g. budgeting and
Benefits Process portfolio management is important for achieving a sustainable benefits culture
Using Business Value Data in Ensuring the use of business value results in investment decision making and
ensuring investment decisions are based on solid business cases is important for
Decision Making achieving a sustainable benefits culture
July 1, 2010 23
What Does Benefits Identification, Assessment,
Validation and Realisation Maturity Look Like?
• Using consistent set of business benefit metrics and templates to
both develop effective business cases that can be compared for
risk/value/cost decision making
• Creating and using a common value language, metrics and guidance
for business case and realisation plan development and execution
• Be able to create and execute benefit realisation plans, from which
delivered value can be tracked, measured and reported on
• Implementing benefits identification, assessment, validation and
realisation across the organisation
• Leveraging performance results and reporting feedback to maintain
consistency, reduce risk and drive overall realised business value
• Provide a business value function that can help drive best practice,
readiness and consolidate and report both business and benefit
realisation maturity investment results, to help embed benefit
realisation as part of normal business operations
July 1, 2010 24
Benefits Management Maturity Levels
5 Optimising
4 Advanced
3 Intermediate Increasing
Business
Value
2 Basic
1 Ad Hoc
July 1, 2010 25
What Does Benefits Identification, Assessment,
Validation and Realisation Maturity Levels
Level 1 Level 2 Level 3 Level 4 Level 5
Business value vocabulary and
Isolated and sparse Business value Business value language Business value
language pro-actively
Establishing a Business use of business value language agree but in linked to business unit language are aligned
enhanced to maintain
Value Language language limited use goals to enterprise goals
alignment to extended
Benefits strategic objectives.
Planning Business case
Business case Templates pro-actively
Creating Benefits Ad hoc use of business templates are aligned
No templates or templates/ guidance enhanced to maintain
Templates and Guidance case templates/ to enterprise goals and
guidance in use used in IT and business alignment to extended
guidance are now mandatory for
units enterprise strategic objectives#
enterprise investments
July 1, 2010 28
Project – Fix an Existing Problem
Identify the combinations of IT facilities,
2 business changes and enabling that can Define the improvement targets
contribute to achieving each of the and potential business benefits
benefits 1
July 1, 2010 29
Project – Implement a New Solution
Define IT solution
3 that enable the Describe the new ways of
changes 2 working and the benefits
1 Create an overall vision
these will deliver for the new solution
Information
Technology
Enablers, Enabling Business Business Business
Changes and Changes Changes Benefits Objectives
New
Capabilities
July 1, 2010 30
Business Case and Benefits Management
July 1, 2010 31
Business Case Generation Process
July 1, 2010 32
Elements of Business Case
Business need and its contribution to the organisation's business strategy
Strategic Fit Key benefits to be realised
Critical success factors and how they will be measured
Plan for achieving the desired outcome with key milestones and dependencies
Contingency plans
Plan for Achievement Risks identified and mitigation plan
External supplier plans
Resources, skills and experience required
July 1, 2010 33
Implementing Benefits Identification, Assessment,
Validation and Realisation
• Key requirements
− Ability to get lifetime costs right
− Ability to define benefits correctly and effectively
− Ability to manage the benefits management process
− Ability to increase and sustain benefits management maturity
• Use existing methodologies and frameworks to implement key
requirements quickly
− ITIM
− Benefits Dependency Network
− ValIT
− Organisational change and commitment
• Create customised integrated approach to suit the needs of your
organisation
• Adapt and simplify as required – take the best and most suitable
elements
July 1, 2010 34
Ability to Get Lifetime Costs Right
July 1, 2010 35
Characteristics of Credible Cost Estimates
July 1, 2010 36
Challenges of Developing Good Cost Estimates
July 1, 2010 37
Reasons for Good and Bad Cost Estimates
Ineffe
and U ctive Risk
Effect ncer
i ve
Unce Risk and Unfa Analy tainty
r ta Techn miliar s is
Ident
ificat Analy inty First- ology or
s is
Rang ion of a Time
Use
Probl
em
Confi e
dence of De Acces s Getting
Level Docu tailed s to D
m ata Unre
s and H entation Unre
Proje asonable
Adeq
ua istor Train Unre alistic or ct Bas
Conti
ngen te Data ical E xp e
ed an
d
liable
Data Unre elin e
Mana c y and r ience
ge Detaile Analy d Assumalistic
Reser ment d , St a
b
sts No o ption
ves Agree
d
l e, Comp r Limited s Overo
Requ ariso ptimi
ireme Ag Avail n Data sm
n ts
Assumreed able New
ption Pr ocess
s e s Untra
Proje Inexp ined and
ct Ins er ie
t abilit
y Comp Analy nced
le sts
or Te x Project
chnol Unre
ogy alistic
Savin Project
gs
July 1, 2010 38
Sources of Risk and Uncertainty in Estimating Costs
July 1, 2010 39
Ability to Define Benefits Correctly and Effectively
July 1, 2010 40
Ability to Manage the Benefits Management Process
July 1, 2010 41
Val IT Processes and Management Practices
Framework ValIT
VG1 - Ensure Informed and Committed PM1 - Maintain Human Resource IM1 - Develop a High-Level Definition of
Leadership Inventory Investment Opportunity
IM2 - Develop Initial Programme
VG2 - Define and Implement Processes PM2 - Identify Resource Requirements
Concept Business Case
IM3 - Develop Clear Understanding of
VG3 - Define Roles and Responsibilities PM3 - Perform Gap Analysis
Candidate Programmes
VG4 - Ensure Appropriate and Accepted
PM4 - Develop Resourcing Plan IM4 - Perform Alternatives Analysis
Accountability
PM5 - Monitor Resource Requirements
VG5 - Define Information Requirements IM5 - Develop Programme Plan
and Utilisation
VG6 - Establish Reporting Requirements PM6 - Establish Investment Threshold IM6 - Develop Benefits Realisation Plan
VG7 - Establish Organisational PM7 - Evaluate Initial Programme IM7 - Identify Full Lifecycle Costs and
Structures Concept Business Case Benefits
PM8 - Evaluate and Assign Relative IM8 - Develop Detailed Programme
VG8 - Establish Strategic Direction
Score to Programme Business Case Business Case
IM9 - Assign Clear Accountability and
VG9 - Define Investment Categories PM9 - Create Overall Portfolio View
Ownership
PM10 - Make and Communicate IM10 - Initiate, Plan and Launch the
VG10 - Determine Target Portfolio Mix
Investment Decision Programme
VG11 - Define Evaluation Criteria by PM11 - Stagegate (and Fund) Selected
IM11 - Manage Programme
Category Programmes
July 1, 2010 43
More Information
Alan McSweeney
alan@alanmcsweeney.com
July 1, 2010 44