Tag Archives: Organizational Environment

Enterprise Benefits Realization Strategy: laying the foundations to maximize return on investment

When in high school I first heard about a cost-benefit analysis, it made a lot of sense to me that every investment (i.e. cost) made by a person or organization is expected to generate some type of return (i.e. benefit). That was probably the first time when I understood benefits in a logical and mathematical sense rather than in a generic and intangible way.

Later on, as a project planner, I developed an even better understanding that a project is an investment that is usually subject to some type of feasibility assessment, where the benefit-cost ratio is expected to be as greater than 1 as possible. This means the project is being expected to generate financial benefits that are as much greater than the costs as possible. The result of this type of analysis along with an assessment of the strategic alignment of the initiative is what drives organizations to make investment decisions.

Nevertheless, later working as a project manager, I learnt that a lot of the logical rationale that sponsors and business analysts develop to support the business case (or benefits case) in driving the investment decision might not be exactly what we are going to experience in reality. From a project manager’s perspective, this could be (erroneously) considered something acceptable that does not require any further actions by having in mind that project managers are unlikely to be around when benefits are realized, since project products have already been delivered and then the responsibility to make benefits happen has been passed across to someone else who is outside of the project organization. Although it doesn’t sound fair, in reality project managers are most times not responsible for realizing any benefits, which makes sense since benefits are realized mostly after project closure.

Therefore, we have gotten to a challenging scenario where project managers deliver products while organizations are actually expecting benefits to be realized, whereas investors are expecting organizations to generate profit. In this scenario, who tracks the benefits all across the entire lifecycle of the project products to make sure they really happen as planned?

Years later, by leading a business processes and business performance management team, I realized how important it is for an organization to have someone monitoring the performance of their key value-adding processes and also tracking the real impacts (benefits) of any investment initiatives (projects) on the performance baselines. This is really crucial and can be done by a number of organizational roles, for example by a business process owner, by a project-sponsoring function, or by a (sometimes independent and cross-functional) business process management or business performance management department.

If we understand the business strategy as a plan that drives the changes to the existing organizational environment towards the achievement of business process performance targets by creating new capabilities or by improving existing ones, we easily identify the need for a strong alignment between project delivery and business-as-usual (BAU) operations in order to be successful in implementing the business strategies.

Over the last decade, while working with a number of portfolio level PMOs, it has become even clearer to me how valuable for an organization it can be to have in place strategic or tactical PMOs. Such PMOs provide support to the project portfolio on the alignment between BAU, strategy, and project delivery in realizing benefits during the program/project lifecycles and consequently in handing over this responsibility to another organizational role that will track business process performance and benefits in BAU. I also realized how challenging this task can be if not well framed by an overall strategy that guides the straight alignment between the roles and processes mentioned here.

Based on the scenario described above, we can highlight three key groups of roles that are expected to work together in order to maximize return on investment. These are related to: ( 1) benefits realization governance, (2) program and project delivery, and (3) benefits ownership.

Key roles

Key groups of roles for Enterprise Benefits Realization Management

That is where an Enterprise Benefits Realization Strategy comes into place. In addition to clarifying the set of processes and tools to be employed for benefits realization management, it provides a clear pathway for the organization to get from the design of a variety of strategic initiatives to the actual achievement of strategic goals. It translates the value of each initiative into tangible and measurable indicators that enable PMOs and business process management departments or business performance management departments to work in alignment to support projects and regular operations (BAU) in executing the business strategy, and then in delivering value to shareholders and any other key stakeholders.

 

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This article was originally published at the website Accelerating IT Success, on 27th May 2016.

Learn more about this topic by watching the webinar Implementing an Enterprise Benefits Realization Management Strategy, to be released on 2nd June 2016.

More on this topic will be also available in a book from the same author to be released in the third quarter of 2016.