The last two decades have seen Businesses throughout the Globe focusing on the acquisition and use of Technology. This has been done in order to change, improve and enhance their sustainability so that they can influence and competitively improve the life of their Business. The Digital Age has seen technology being used as a tool and facilitator for rapid change and this momentum is continuing as the new industrial age of Artificial Intelligence is ushered in. The issue that is a carryover from the Digital Age is still the complex activity of realising benefits from the implementation of projects and change management. These have had varied success rates but have often failed to meet the outcomes stated. This failure can be attributed to a variety of reasons but generally it is often because an inadequate business case has been developed. Even when a sound business case has been constructed realising of outcomes or benefits is not fully secured. This is because a sound benefits realisation plan has not been created as part of the business case submitted to the decision makers in organisations.
In practical terms, it is difficult for even large corporations to predict how major investments in new technological systems will turn out, or how many months and years will go by before these investments produce solid economic returns, if they ever do. Few of the Executives approving multi- million dollar investments have a clear idea of the results that they expect to get, or whether they actually achieved the benefits when the money is spent. This is not a technology or change management problem – it is a business problem. It is about the potential value of technology and or change management to the organisation. Understanding how to deal with this problem is an imperative for all business managers. For those embarking on the acquisition and implementation of technology or embarking on a change management project it is fundamental.
A classic example is highlighted for ERP (Enterprise Resource Planning) technology projects which were on average, 178% over budget, took two and half times longer than intended, and delivered only 30% of promised benefit. Crux of the problem was an improper implementation plan. Additionally there was no benefits realisation plan which identified both Tangible and Intangible benefits and the securing of these benefits. Krumbholz and Maiden, (2001
Benefit Realisation Process
Defining the “Realisation Plan”
Defining the “Realisation Plan” is considered to be a complex process. As indicated earlier it involves finding the activities, responsibilities and timing, and it is outcome focused. Figure 1.1 shows the process which was followed in order to develop the “Realisation Plan”.
The process involved three major phases: set the current baseline (“as-is” position). Develop target baseline (“to-be” position), and prepare the realisation plan (implementation framework) (see Figure 1.1). The Benefit Realisation builds on prior work undertaken for the business case and seeks the assistance of additional information and analysis, to validate the findings of the business case and identify additional benefits. Finally, a realisation plan is developed to set out how the Organisation will realise the benefits and what initiatives must be put in place in order to achieve them. The work plan incorporates a number of inputs, including the results of the “Visioning and Targeting phase of Systems, the incorporation of world’s “best practices” and “benchmarking” data, the outputs of “process redesign workshops” and “interviews” with staff.
Figure 1.1: Process for Realisation Plan
Benefits Realisation and its Impact
A structured approach to develop “target baselines” (see figure 1.2) and benefits for each sub system is effected, and can be undertaken by external consultants and internal business representatives. The outcomes can include a series of recommended business changes to maximise benefits. Process Management principles can be developed in the Visioning Phase of any Project by adopting the “Industry Process Print”. The process Model can be further developed and accepted during a current Benefits Realisation phase. This paves the way for breaking down cross functional organisational barriers that hinder change and place responsibility on Process Owners for leading the implementation of change initiatives. (Blick and Quaddus, 2005, p. 151)
Any technology or change initiative can used by the business as a process improvement tool. For example, a HR Service Centre can be implemented, where a new central function is created to reduce transactional staffing numbers Organisation-wide, while improving the process. Shared business support functions may also be reviewed to improve operational effectiveness, achieve savings for the business, and reduce staffing numbers, such as Logistic Services (Material Management Process). There is potential for similar benefits in the Plant Maintenance Process from centralising transactional functions associated with Work Order feedback and employee Daily Time Sheets. (Blick and Quaddus, 2005, p 151)
System functionality and integration can provide the business with opportunities to commercially benefit from centralising some of its functions. There is no reason why this should not continue, if there are sound commercial opportunities, and no negative impact on business performance. (Blick and Quaddus, 2005, p 151)
Expected Strategic Benefits with SAP
Before implementing technology or a change management programme a detailed list of “expected” benefits can be worked out. For example the following strategic benefits could be identified:
Increased customer satisfaction
Faster response to regulatory reporting demands
Increased competitive advantage
Supported alliances, mergers and acquisitions
The Benefits Realisation Process
Figure 1.2 shows an overview of the benefit realisation process
The Benefits Realisation Process consists of three phases:
Define the Benefits Rationale – This phase establishes the overall context for any change that is proposed through the implementation of a technology or change management programme.
Define the Plan – Having defined the rationale, the approved benefits realisation initiatives are planned in terms of activities, responsibilities and timing. The plan is primarily outcome focused.
Benefits arising are measured at the major initiative level. The focus is on the explicitly identified segments that provide the greatest measurable payback.
Why would an organisation include a Benefits Realisation plan as part of its Business Plan? Quite simple really. In order for Operational Executives to deliver the expected ROI (Return on Investment) on the acquisition and implementation of either the acquisition or development of a new technology or change initiative, clearly identified deliverables need to be put in place. This is done so that they know exactly what benefits need to be realised and delivered. This business - like approach will contribute to the sustainability, profitability and competitiveness of the organisation.
Perhaps devising commercially sound business cases and real benefits realisation plans is an additional set of skills which need to be factored into a skills matrix. The skills matrix will record the skills and development required in both the Digital and Artificial Intelligence ages with which we are faced and are endeavouring to meet. Identifying the skills and development needed to facilitate the changes required for the rapidly emerging scenarios including the issues surrounding Brexit can be done by a training needs analysis or from direct feedback from operators and supervisors.
Blick, G and Quaddus, M, (2005). Benefit Realisation with SAP: A Case Study. In Managing Business with SAP: Linda Lau. Idea Group Co. Australia.
Krumbholz, M. and Maiden, N. (2001). The Implementation of Enterprise Resource Planning Packages in Different Organizational and National Cultures, Information Systems, Vol 26, pp. 185-204.