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Outsource magazine: thought-leadership and outsourcing strategy | August 22, 2017

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Remind me: why are we doing this?

Remind me: why are we doing this?
William Hooper

The reason for making any change is that there is an expectation that the new state will be sufficiently better than the current to justify the effort of undergoing the change. In business as usual, the customer needs to be sure that the service performs. Why do expected benefits so often not arise, and what can be done to improve the quality and probability of a good outcome?

Art enlivens the soul. It transports us to unimagined heights and depths. Many of us derive great pleasure from this. With few exceptions, we choose to leave works of fiction by the bedside table, or at most close a novel as the train draws into the morning station. Why then do the authors of business cases feel the need to spin fairy-tales during our waking hours?

Why benefits

Decisions need to be made in business, government and life in general. Some of the most important (love, war) are made with significant emotional components and extend beyond rationality. In this discussion, I take the definition of “benefit” from the UK Cabinet Office “measurable improvement resulting from an outcome perceived as an advantage by one or more stakeholders, which contributes towards one or more strategic objectives.” [Ref 1]

This definition was established following the investigation into the causes of failure of many government programmes. Similar causes have been found in research into programmes in other sectors. There is no requirement to separate the management of benefits from either the delivery of change or business as usual. Quite the contrary: good practice weaves it into these as an essential component. Research and experience show that were benefits are not actively managed, the full opportunity is not captured. In the worst cases, the costs over-run and deliver nothing worthwhile. This rightly wrecks personal and corporate reputations. Who wants to be known for wasting effort and failed promises?

Whilst benefits should always be measurable, there is nothing in the definition that requires them all to be financial or expressed in financial terms. The element of perception in the mind of stakeholders also accommodates the emotional aspects that are essential to making a case. The importance of measurability is to move the discussion from the subjective to that based upon evidence. This is vital to deal with fairy-stories, as the philosophy of benefits management is that of promise – evaluation – delivery – assessment – reappraisal. The presentation of a case involves the commitment by named individuals to deliver beneficial outcomes that advance the organisation’s objectives in a quantified manner on a predicted schedule. Or take the consequences.

Benefits in programmes

As I write this, the argument rages in the press concerning the business case for HS2 (the proposed high-speed rail link between London and the North). This is deadly serious. As with many changes, there is a significant number of people who stand to lose greatly. The good folk of the Chilterns are a vocal and eloquent lot. Quite rightly, they make their case clearly and loudly. The opposing camp represents a larger group with hopes of economic and social benefit. The many stand to gain slightly. They are less focussed and far less passionate. Some of the arguments stand scrutiny; some do not. It is right that such decisions are rationally evaluated and carefully considered on the balance of cost and benefit. On this particular case, I express no opinion of a just outcome and am thankful that adjudication falls to others.

I have been involved in the preparation and evaluation of many business cases. One CEO for whom I worked had the reputation of conducting business reviews in the manner of a blood-sport. He was a mathematician by training and was famously swift in using mental arithmetic and rough ratios to spot incredible claims in review. Whilst his manner was destructive of his organisation, the thoroughness of review meant that all preparing for the inquisition would rehearse intently and present generally good cases. How much better for those petitioning to think their case through first, than rely on others to catch stupid mistakes.

When I am planning a major change, I know that errors of omission in estimating costs are far more significant than are errors of estimation. There is a really good technique in the field of benefits management that helps with this. It is called “benefits mapping”. A good approach to this is to be found in The Information Paradox [Ref 2]. The unscrupulous and careless rely on a vague contribution of several initiatives (e.g. buy my software / service, add a lump of hardware) followed by “then a miracle happens” before magically the customer’s business profits soar and customer delight shines forth. Queue choirs of angels. Experienced managers look for tight contributory links and omitted dependencies with large associated costs (e.g. the user population adapts to new ways of working instantly without expenditure on training). The process of mapping benefits is rigorous (when done well) and minimises the risk of omission by making the contributory links clear through a series of short logical steps.

William Hooper Oct 2013 body graphic

The preparation of a business case, with associated costs and benefits, is often pursued as a means of justifying the course advocated by the proponent. This is the answer: now how do we get it done? Often the answer has much merit, but flaws in this line of thinking can have serious consequences. The problem is that while the answer may be a good one, it is not necessarily the best. The solution is to start by asking “what are our objectives and the outcomes we seek?” Benefits have an essential role in optimising the choices made during project and programme delivery.

I was recently asked to review a programme of change for a client. The outline business case had been well written and was sensibly argued, proposing five major benefits. It had been produced in a good standard format and had been properly reviewed and authorised some months before. They had even considered lower-level benefits and how to measure and manage them. The problem was that nobody delivering the programme was paying any attention to it. One of the five benefits received intensive attention: the others were quite irrelevant to daily decision-making and design. The review identified simple steps by which the realised value of the programme could be significantly improved by redressing the balance. Is your low-hanging fruit rotting in neglect too?

How do you know?

Good programme management tells us that benefits should be at the centre of the design and governance of programmes [Ref 3] and should be reviewed at each stage to make sure we are doing the right things in the best way. It does not permit such amnesia.

Benefits in Delivery

Whilst the project delivery phase frequently receives much attention, it is in service delivery and use that the bulk of business impact is seen. In most organisations, there is a separation of responsibility between the delivery of change programmes (residing in a “Projects” department or similar) and the daily operational management (perhaps reporting to a COO or CIO).

The Quality Movement, with its ISO 9000, the Lean movement and Service management (with ITIL and ISO 20000) all place heavy emphasis on continual improvement. The IT Governance standard, COBIT 5 addresses benefits capture under its first principle [Ref 4]:

Principle 1: Meeting Stakeholder Needs—Enterprises exist to create value for their stakeholders by maintaining a balance between the realisation of benefits and the optimisation of risk and use of resources. COBIT 5 provides all of the required processes and other enablers to support business value creation through the use of IT.

Good practice in service governance continually monitors for the capture of benefit at the best cost. A framework for doing this of which I am fond is the “4 Ares” from The Information Paradox:

  1. Are we doing the right things?
  2. Are we doing them the right way?
  3. Are we getting them done well?
  4. Are we getting the benefits?

The original business case (amended throughout delivery) would have projected the progressive improvement in specified performance measures over time. Reality will often deviate from plan. Can we do anything to accelerate capture? Is there additional opportunity that can be realised? Should we cut an activity because circumstances have moved on and rendered it redundant? The governance bodies should be holding sponsors to account for the delivery of what was promised.

They should be looking to learn lessons and to feed them back into future programmes. This all requires energy, inquisitiveness meaningful and timely data. That comes down to an effective performance management regime. It is worth it.

A recent publication [Ref 5] supports a qualification that does much to bring together earlier thinking on the field and present it within a coherent framework. This is closely tied to Portfolio Management, which maintains an overview of activity in development and the lifecycle of assets, retiring those that are no longer useful. This is a fine body of work that has done much to bring rigour to the field. It recognises that the act of measurement and management has a cost, and advocates that this is incurred critically and only when the benefits of managing the area exceeds this. It is not done for academic elegance but to drive business performance and deliver results.

Organisations get the services they deserve. If they screw suppliers to the floor with aggressive contracts or miss-aligned incentives or ignore their performance, the consequences are predictable.  In our infancy, fairy tales had a place in communicating perils and folk-wisdom. Rational evaluation and the weighing of evidence may lack the excitement of fiction, but is rather more reliable. Do you really want the Brothers Grimm to write your annual appraisal?


References
1.    Cabinet Office – Best Management Practice glossary, http://www.best-management-practice.com/gempdf/BMP_Common_Glossary_2012.pdf
2.    The Information Paradox: Realizing the Business Benefits of Information Technology. John Thorp and Fujitsu Consulting’s Center for Strategic Leadership. 2003
3.    Managing Successful Programmes. Rod Snowden, Cabinet Office. 2011
4.    COBIT 5: A business framework for the governance and management of enterprise IT. ISACA 2012.
5.    Managing Benefits: Optimizing the return from Investments. Steve Jenner. APMG International 2012

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