Addressing the Risk of Inadequate Value Management
In the words of a risk register; “there is a risk that there is a lack of robust processes to establish, manage, monitor and realise benefits”. Which in many organisations is very true, but not often reflected in the risk register.
Because often, the concept of Value and Benefit Management is not viewed as being important – either because its importance is not fully appreciated, or people are unfamiliar with the subject. This risk could result in benefits being overstated in the business case to gain investment approval, lack of ongoing stakeholder interest and support, and an inability to link measurable business benefits to the transformation effort and cost. It can also compromise the bridge between technology and the business.
In a survey by the Business Transformation Academy of 13 large-scale business transformations, the aggregated results showed that of the nine management disciplines (based on BTM²) assessed, the most poorly performed was Value Management. In general, value estimation, creation of a detailed business case and benefit realisation planning were either not performed, or performed poorly. Four other areas of Value Management were performed only to some extent, or not particularly well, and only “establishing potential for future benefits” was performed well. At a macro level, the four phases of BTM² Value Management are:
- Value Identification
- Plan Benefits Realisation
- Execute Benefits Plan and Evaluate Results
- Establish Potential for Further Improvements
There is a comprehensive body of knowledge behind each of these, and the state of a transformation's Value Management should be properly assessed and addressed. But some general action that the business transformation manager or programme manager might consider in the meantime could include:
- Establishing a benefit management strategy, along with benefit profiles, map, plans and processes
- Establishing clear ownership of the above
- Ensuring the business case includes in-depth descriptions of benefits and what is required to achieve each
- Documenting and implementing the process for identifying, monitoring, realising and assessing benefits
- Ensuring early engagement with, and commitment from, key stakeholders to realise the benefits
- Defining the boundaries with other programmes or projects to ensure benefits are not double-counted
- Updating the business case if circumstances have changed
- Understanding that value and benefits should include benefits other than financial, such as effectiveness and efficiency
Value Management should be initiated up-front along with transformation strategy, and continue right the way through the transformation. Addressing the subject late, is akin to putting the cart before the horse.