Strategic Benefits Realization

Optimizing Value through Programs, Portfolios and Organizational Change Management

Craig Letavec

• Publisher: J. Ross Publishing
• Year: 2014
• Print ISBN: 9781604270938
• eBook ISBN: 9781604277494
• Edition: 1
• Topic: Business
• Subtopic: Project Management
• Index: Business

This desk reference offers practical guidance for program managers, portfolio managers, and business leaders in the implementation of benefits realization management in organizations. Aligned with global standards, this book extends the knowledge contained in these standards through practical implementation guidance, examples, and additional detail created to assist organizations in implementing benefits realization management as a business practice to support the achievement of strategic business benefits. It also addresses important considerations in organizational change management, providing insights on leveraging key principles to guide successful implementation of the business change required to realize benefits through project and program work. Leveraging benefits realization management at the business portfolio level is covered as well. This book is ideal for organizations beginning to implement benefits realization management and those that wish to mature existing practices. Strategic Benefits Realization provides a practical approach to implementing benefits realization management in organizations that is aligned to PMI's Standard for Program Management and other global standards, and is presented in the context of program and portfolio management. The guidance offered supports effective governance and execution management to deliver business value.

INTRODUCTION TO BENEFITS REALIZATION MANAGEMENT

---

INTRODUCTION

This chapter presents an overview of the fundamental terminology of benefits realization management. In addition, it identifies the primary differences between benefits realization management and capability creation, drawing on parallels between projects and programs in the practical business environment.

WHAT IS A BENEFIT?

Before discussing benefits realization management, it is important to define what is meant by a benefit. Definitions of benefits vary, but for the purposes of this discussion, we will focus on the foundational benefits definition found in two well-regarded industry standards in project and program management, as well as a classic dictionary definition.

Beginning first with a dictionary definition, the Merriam-Webster dictionary defines a benefit as “something that promotes well-being” or a “useful aid.”¹ We can view something that promotes well-being or a useful aid as representing some sort of desirable outcome or advantage. Perhaps some information system that provides better information to support business decision making, if correctly designed and appropriately implemented, provides a useful aid to business users who have data analysis needs. This notion of a benefit underscores the basic notion of a benefit as providing some advantage. That advantage, however, must be valued by someone in order to truly be a benefit. If one creates a better mousetrap in a world with no mice, it might be proposed that the relative advantage is lost and—although improvement of the mousetrap is created—there is no customer for the better mousetrap and therefore, no advantage. This may seem a simplistic example, and counterpoints could be made, but in essence the point is: benefits need to benefit someone.

A second, and more relevant example in a project management context, comes from the definition of a benefit in the Project Management Institute’s Standard for Program Management, which defines a benefit as, “an outcome of actions, behaviors, products, or services that provide utility to the sponsoring organization as well as to the program’s intended beneficiaries.”² This definition is significantly more focused than the general dictionary definition and is worth digesting a bit. The first notion worthy of mention is the idea of benefits coming from actions, behaviors, products, or services. Benefits have to be delivered by something: It could be a differentiated product that provides a benefit to a user, such as a simpler user experience; it could be a service that offers convenience; or it could be some other form of action that creates value.

These benefits are provided to a sponsoring organization and to intended beneficiaries; both are worthy of mention. The idea of a sponsoring organization is not new in our project and program management world. We understand that sponsors are the people who pay the bills and champion the project or program efforts. In our benefits realization management world, the sponsoring organization plays this role, but as indicated by the definition of a benefit, the sponsoring organization expects to get value from the delivered benefits. The sponsoring organization doesn’t just want the work to be done; it wants the benefits to be realized. As such, representatives of the sponsoring organization will play a strong role in “benefits realization management.”

Secondly, it is expected that utility will be provided to the program’s intended recipients. While the use of the word “program” is somewhat specific to a definition that comes from a program management standard, it can be extended beyond programs to the general notion that there are intended customers of the benefits, and those customers need to derive benefits from whatever is created. The diversity of these intended customers may be large. We could imagine a scenario of building a public park. Intended customers of the park may be the general public, and thus the group of intended beneficiaries may be quite large. Will it be possible to build a park that satisfies everyone’s needs perfectly? Probably not, but we recognize that benefits may be extended to relatively large stakeholder groups, and while it may not be possible to meet all of their needs perfectly, understanding the intended beneficiaries and their needs will be an important part of the process of aligning the proposed benefits with the sponsoring organization early in the benefits realization management life cycle.

Finally, we can look to the very well regarded APMG-International Managing Benefits reference guide, which defines a benefit, as per the UK Cabinet Office, as “the measurable improvement resulting from an outcome perceived as an advantage by one or more stakeholders, which contributes towards one or more organizational objective(s).”³ I prefer this definition for its simplicity and completeness. It contains some important words. First, and perhaps foremost, is the notion that a benefit is not just an improvement but also a measurable improvement. It is unfortunate how many business cases in the world are built largely on intangible benefits. We need to get better. A fundamental notion of benefits realization management that is worth repeating many times is that we need to be able to measure the improvement. Does this mean that we always need to develop complex measurement systems and financial models that are accurate to the second decimal place? Certainly not. But at some minimal level, we need to be able to establish a target and measure against it in order to understand whether the benefits to be achieved will meet the plan. If we don’t do this, how will we ever know whether we are heading towards a situation in which what we deliver is not “beneficial enough” to be used? The idea that some benefits are better than no benefits is a dangerous one. We use benefits realization management to fully realize the potential of the benefits we desire, not to create compromises. And while some compromises may be made from time to time, effective measurement helps to limit the risk that we must make compromises down the road—by being the proactive mechanism by which we monitor and manage benefits realization.

The concept of a benefit being valued by a stakeholder has already been discussed, so the second point is the notion of the benefit contributing towards one or more organizational objectives. Some may be flip and say it is obvious that the work we do has to contribute to the organization’s objectives. But how often have we found situations where, despite our best efforts, pockets of work occur that appear to be contrary to the general direction of the organization? How often have we encountered cases where managers are doing what is best for them, rather than what is best for the organization at large? It happens. In fact, in the project portfolio management discipline, we often advocate that an initial starting point for implementing portfolio management is to inventory the in-progress projects and programs to determine the extent to which these projects and programs align with the current organizational priorities. Inevitably, this exercise roots out work that probably shouldn’t be occurring. As we undertake benefits realization management, we have an imperative to ensure that as we define benefits, we correspondingly ensure the alignment of those benefits with something the organization values, which is often articulated in corporate strategies, objectives, or similar constructs. As these strategies or objectives are cascaded through the organization at large and transformed into actionable initiatives, projects, programs, or other work, benefits realization management may be used as a basis for alignment of work with what the organization values.

And so, the basic notions of a benefit can be summarized in a few key points:

• Benefits are perceived advantages—things that put someone in a better place than they are today
• Benefits must be valued by someone—often a sponsoring organization as well as an end customer of the benefit
• Benefits require alignment with the goals of the organization
• Benefits are delivered through work—project work, program work, operational work, and the like
• Benefits must be measurable—we can’t rely exclusively on intangibility

This is a lot. And it’s not easy. Throughout the remainder of this book, we will focus on all of these aspects, individually and collectively. But first, it’s important to relate benefits to the context of project and program work.

WHERE DO BENEFITS COME FROM?

One may intuitively understand that benefits do not create themselves out of thin air. In fact, benefits are often the end result of a lot of work that gets done to create them for the stakeholder(s). Consider a large program. Initially, the program may charter certain projects to accomplish work. These projects themselves may not create any benefits at all. Rather, they may create some set of capabilities that when integrated together and into the business organization, begin to realize benefits. A practical example may be useful here. Consider an IT system to help a company better process travel expense reports. One component of that system may be a feature that allows employees to submit expense reports electronically versus having to submit paper documents and receipts. Once the programmers have done their work, the system is tested, and the software is delivered by the IT staff to the business users, with the capability to reduce costs and processing times for expense reporting. The capability to enhance user satisfaction through a simpler process exists. These capabilities are created by the IT project itself. Does the IT project realize the benefits? Perhaps not. Only after the appropriate business processes are implemented, the users are successfully trained, the initial bugs are worked out, and the change associated with this new system is successfully embedded in the organization and working properly may the benefits of increased efficiency, reduced costs, or other desirable outcomes be realized.

Figure 1.1Relationship between capabilities and benefits

So, we have a simple notion that can be summarized in a basic diagram, as shown in Figure 1.1.

As Figure 1.1 demonstrates, the realization of benefits is dependent upon the creation of capabilities, which are often themselves realized via projects. Those capabilities, if successfully embedded in the organization via program and organizational change management, create the relevant benefits of interest to the organization. A further extension of this diagram might describe where the definition of these planned benefits originates, a topic to be discussed separately.

Some benefits realization management literature describes additional terms to distinguish between the tangible outputs of the project, the corresponding capabilities that are created, the results of business change, and the corresponding benefits realization. The commonly used terms are identified in Table 1.1.

These terms can be applied to the general model provided in Figure 1.1, which has been modified in Figure 1.2 to illustrate this relationship.

Figure 1.2 demonstrates the relationship between projects, capabilities, outcomes, and benefits. In this figure, projects produce outputs that are combined to create capabilities. Capabilities are embedded in the business organization through transition, which undertakes the appropriate organizational change management activities to introduce the developed capabilities into the business organization. These capabilities, once transitioned and in use in the receiving business organization, create benefits. The models prese...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• Acknowledgements
• About the Author
• Introduction
• WAV™ Page
• Chapter 1: Introduction to Benefits Realization Management
• Chapter 2: Benefits Realization Management in the Project, Program, and Portfolio Contexts
• Chapter 3: Benefits Realization Management Roles and Responsibilities
• Chapter 4: A Benefits Realization Management Life Cycle
• Chapter 5: Benefits Identification
• Chapter 6: Benefits Analysis and Planning
• Chapter 7: Benefits Delivery
• Chapter 8: Benefits Transition
• Chapter 9: Benefits Sustainment
• Chapter 10: Descriptions for Primary Benefits Realization Management Roles
• Chapter 11: Organizational Change Management in the Benefits Realization Management Context
• Chapter 12: Benefits Realization Management in the Portfolio Management Context
• Chapter 13: Benefits Realization Management in Project-based Organizations
• Chapter 14: Program Management Office Role in Supporting Benefits Realization Management
• Chapter 15: Business Case Considerations
• Chapter 16: Practical Guidance for Implementing Benefits Realization Management
• Appendix A: Case Study—A PMO Role in Benefits Realization Management
• Appendix B: Sample PgMP® Examination Questions