The strange case of the disappearing benefits
Why do we undertake change? We’ve talked at length in the Real Change Club about the possible disruptive effects of change and how hard it can be on organisations. There must be some point to it all?
The point is simply to deliver benefit in some form, to the organisation. To make it better in some way. Nothing more complex than that. But our research (see Change Capability Survey on our website) suggests that making sure that these benefits get delivered is one of the most common areas that organisations struggle with.
Why do we struggle?
The above simple chart reflects reality far too often. Once the project starts, it seems to be inevitable that the costs rise and the benefits erode. Here are some possible causes.
We wrote the business case backwards
Most organisations have investment hurdles that projects need to clear if they are to gain investment.
When you’re passionately committed to a project it can be difficult to accept that it doesn’t meet these hurdles.
The temptation to pad the benefits or work the benefit case backwards from the answer you need can be overwhelming.
Don’t do it! If the benefits are not there at inception they will definitely not be there at the end. Don’t set yourself up to fail.
We changed the scope but not the outcomes
As projects come under cost or delivery pressure, there is a tendency to look at what can be dropped and where scope can be cut.
Avoid removing the components which drive benefit, by having a clear benefit map that relates the elements of delivery to the outcomes and benefits they drive.
Maintain this throughout the life of the programme and if the business architect tells you an element is key, believe them.
The world changed but our business case didn’t
All business cases are based on a set of assumptions that need to be managed through the life of the project and challenged regularly.
When assumptions change, we have to reassess how this will impact benefit delivery.
If you have assumed a certain potential market for a new product as first entrant, a new competitor entering the market will fundamentally reduce your business case, however an acquisition may create more upside.
It is vital that you understand how external factors influence your benefits and keep the programme properly aligned.
We didn’t deliver the enablers
Organisations break delivery down into smaller chunks to make it more manageable.
Whilst this makes sense, it can break the links between related deliveries.
Programmes or projects that appear to have little benefit are closed down without understanding the knock-on impact.
Benefit dependencies need to be explicitly managed with the same rigour as delivery dependencies.
We had too many projects shooting at the same target
Larger organisations will often identify an area of concern and focus several change activities on it. If not properly co-ordinated it can mean an overlap of projects delivering the same benefits or worse still, pulling in opposite directions.
A clear view of the portfolio of change impacting an area is crucial in managing this risk.
The “arms and legs” savings were never realistic
Process improvement or automation savings can be difficult to realise. If complete roles are not eliminated, realising fractions of a role is often not possible.
These sorts of benefits are best used to create additional capacity in growing businesses rather than reducing headcount.
We thought that technology alone would deliver the benefits
Upgrading technology may alter the costs of ownership, but it rarely delivers direct benefit.
Achieving the business outcomes, making real change happen and embedding it needs to consider topics such as changes to processes, handoffs, communication, management, engagement, organisation structures, job roles, reward, MI and training. There’s much beyond the technology.
What we gained on the swings we lost on the roundabouts
It is important to understand the full costs of change, including how on-going costs will be impacted post implementation.
Higher licensing fees or expensive upgrades can erode the one-off benefits from the implementation of new systems.
Make sure you consider the revenue and capital impacts of any project over the life of the change.
So how can we get better?
Don’t rely on a quick fix.
Many organisations have tried to address this problem by baking benefits into future budgets. Whilst this can provide an impetus to deliver the change, it can create as many problems as it solves.
Where projects don’t or can’t deliver, this leaves operational areas exposed and can lead to service failures which may have a greater impact on the overall business performance.
Baking benefits into future budgets is a possible solution, but it’s not a panacea.
Challenge unrealistic benefits
Benefit delivery is easier if the benefits exist in the first place! Robust independent review and
challenge of business cases prior to mobilisation is essential.
Have the benefits properly owned
Projects should be sponsored by someone pulling for their delivery. A business sponsor with skin in the game who will hold the project team to account is crucial in driving a successful outcome.
Don’t wait until the project ends
Mapping benefits to components of delivery not only makes them easier to track, but also allows more accurate management of benefit-realisation plans.
Breaking down benefits and tying them to individual milestones allows project teams to prioritise those areas of greatest benefit and to protect these through delivery.
Manage benefits as hard as the costs
Most project reporting focuses on cost and schedule. Ensure that benefit delivery is tracked, reported and managed on the same basis, throughout the life of the project.
Work from one version of the truth with a strong PMO
The best tool in your benefit delivery arsenal is a strong, independent PMO, which can track delivery, identify duplication and act as guardian of the
Using your PMO to support post-implementation
benefit reviews and build a fact base of why projects fail can prove invaluable learning for future projects.
15 November 2016