I find that most companies I work with nowadays are pretty good at insisting that business requests for IT solutions are accompanied by a robust business case that surfaces all the costs (including total life cycle costs), expected return on investment (ROI), risks, mitigation strategies, and so on. They have good business case templates, and often associated tools to facilitate the development of effective business cases with a consistent ‘look and feel.’
Beyond the Business Case
These things are all necessary, but are woefully insufficient to drive value realization. In fact, they can be a trap, creating a false sense of security. “We’ve done a solid analysis of the business case, so now we can just blaze ahead with the system and the results will naturally and inevitably follow!” Wrong!!! It’s quite likely that the results that do follow bear little, if any, relationship to the business case.
Seven Steps to Value Realization
There’s a level of analysis, engagement, measurement, control and accountability here that is essential to driving business value and that does not automatically come along with business case development. So, here are some techniques I recommend to help ensure value realization, not just project approval.
- Be deliberate and explicit on the language of ‘business case’ versus ‘value realization.’ Whether you use those terms, or other terms, differentiate between things you do/artifacts you use to analyze a project’s or program’s merits and risks, versus those things you do to drive value realization. They are both critical to success, and many more people do the business case well than do value realization effectively, which is a shame – leaves lots of money on the table!
- Get really clear on costs and value and accountabilities for each. Each accountable party should be a party to the value realization plan, and sign up explicitly for their part. See my earlier post, Lack of Accountability – Who’s Dirty Little Secret?
- Don’t limit value realization to financial return. Get explicit about the “value system” at play in your organization. ‘Time’ may be an important value (e.g., this will reduce new product time-to-market from 6 months to 4 months through…). Quality may be an important value (e.g., this will reduce defect rates from 1% to 0.25% within 12 months enabled by…) Employee engagement may be an important value (e.g., this will increase overall employee engagement scores as tracked in our annual engagement survey from 85% to 95% within 12 months due to…) As long as it is an important value, and can be quantified in terms of degree and time frame, and can be measured, it is meaningful to value realization. Even if you can’t predict with accuracy or precision what a 10% increase in quality is worth, you can measure it and learn the relationships between intermediate outcomes and financial implications over time.
- Figuring out the value system and the outcomes and intermediate metrics and goals is not easy. Therefore, it is a great opportunity to engage a broad audience of stakeholders in figuring the metrics out. This not only ‘spreads the load’ but engages stakeholders in the value realization conversations. Sometimes, it surfaces problems and opportunities early on, while there’s time to do something about them. For more on this, see my earlier post on Measuring the Business Value of IT – Where You Can Win by Simply Trying.
- Once you’ve figured out the outcomes and intermediate metrics, create the measurement plan and document it as part of the program. I don’t favor post-implementation audits as the primary vehicle for value realization assessment. Audits are good for lessons learned, but value realization is so important, it is better if you can build the instrumentation into the implemented solution. The difference is like designing cars where you have to get out every now and again and dip a stick into the fuel tank to figure out how much gas you have (bad), versus designing a fuel gauge into the car (better) versus designing a widget that tells you how many more miles you can travel and that sounds an alarm when you are 50 miles from empty (best).
- Implement the measurement plan, and take measurement seriously! Get a senior executive sponsor who’s going to pay attention to this.
- Ideally, find ways to ‘close the loop’ between measured realized value and individual and/or group rewards and recognition. This need not be money in someones back pocket – there’s tremendous power in an internal newsletter or collaboration hub celebrating the success of value realized through a system, and congratulating those associated with the program.
If all this sounds simplistic, it is – deliberately so. I find people obsess over false precision and accuracy, rather than see this whole exercise as on of learning and growth – of driving the right conversations to increase understanding of and commitment to value realization. Keep it as simple as you can, especially to get started. Once you’ve got some momentum going, you can get more sophisticated if you feel the need (and the value!)