This is something that is quite often overlooked by the management, as focus shifts on increasing the market share and delivery of products/services to customers. It is common to hear organizations talk of product improvement, customer service, market image and so on, but fail to realize the engine that holds all these together. In the advent of technology growth, IT was basically perceived as an automation tool. Most things which were previously done manually became easier and less error-prone as they became automated. As years passed by, IT rose to a point where the only benefit value that was associated with it, was reduced costs and marginally increased productivity.
Wait a minute, Benefits, Values, aren’t they the same?
Well, it sounds so and thought so too before. But they are distinct though they are used interchangebly. To understand this in a layman’s understanding, benefits are advantages that the customers get from the deliverables. It is not a product or service that is sold, rather it is how the deliverable profits the users. It is the answer to the customers’ question “What’s in it for me?”, “What will I get out of this?” If the customer is able to find an answer, then they can see the benefit of investing in your business.
Values on the other hand, goes further than what the product Value extends beyond what your product or service can do for your prospect and aligns your benefits with the prospect’s larger goals and objectives. Values on the other hand, are what will actually make the users to take advantage of the benefits that the business offers. They are measurable and can be tangible or intangible. The PMBOK guide explains it as “the net result of realized benefits less the cost of achieving these benefits”.
In the late 90’s, businesses started realizing that they could achieve more by improving business processes through IT to benefit their customers more hence realizing values. Slowly but steadily, IT began to play a role in the business cases that were being developed. A relevant example was the launch of Nokia mobile phones, which were the first in the market to be internet enabled. This made it possible for the owners to access internet, albeit with low speeds, from anywhere. Cyber cafes soon mushroomed in most cities, making it possible to chat with people who were far away. Sending documents as attached mails soon became normal and customer began to see the benefit that IT brought along. Yet in most organizations, it was not still integrated as a central core of the business plan to realize the business benefits.
Fast forward to today, technology has pushed IT to new heights and it is at the core of every business strategy. It has shaped the way businesses make their plans to realize more value and increase benefits.
Why did it take so long…? What makes it so difficult to realize benefits?
Comfort zone. That is the only answer I can come to. Most businesses were accustomed to their traditional way of working, that it took the time to realize the need to shift gear. It can also be argued that it was the case of sceptical management that did not want to enforce IT in their BRM. Think of how Kodak used to be successful, until the digital camera came in to the market and they hesitated to be the lead players in digital photography. It costed them heavily and they are still struggling to recover to date. Again, the management should take a fair portion of the blame when such blunders occur. This simply highlights the fact that there is no proper alignment between the portfolio, program and project management with the strategic goals of the business. The end-to-end deliver process fails to focus on the business benefits and how they can be realized, right from the early stages. Whereas every business is unique in it’s own nature and the way of operations differ, the following are the most common reasons why businesses struggle to realize benefits and values in their businesses.
Change in governing policies: This is a number one killer that hurts most businesses. History has proven that business which fail to factor in uncertainty risk in their risk management plan, have always courted trouble in the event that a regulatiory law is changed. This may bring in negative effects in a business, causing panic and making them lose attention on the BRM. For instance, with Britain soon leaving EU, it has caused unknown headache to most international companies which had european headquarters in London. The threat of loosing the european market, has seen most of them move to other major european cities costing them millions of euros. Nonetheless, it is a factor that they have to deal with and will ultimately force them to change plan if any benefit is to be realized. Businesses hurt as they don’t have certainity to make intelligent decisions that corresponds to the BRM. Plans are abandoned, projects suspended, some get stopped and jobs are lost. Some of the reasons that make it difficult to realize benefits include:
Incompetence: Business complexity can be stiftling. It is even worse with incompetent personel. If the management level in the critical levels of the company are incompetent, then they are not able to steer their team towards the right direction. They may fail to understand the role they play in the big picture thereby creating a weak link in the whole setup. This may end up leading to unrealized goals and missed targets and deadlines. It also leads to poorly channeled communication between team members making it so difficult to effectively and effeciently realize benefits and values. A laid back executive that does not engage and inspire their employees may also be the source of the problem, as employees do not feel motivated to think outside the box.
Integrity: Most businesses are finding it difficult to keep pace with today’s demands and an ever-changing business landscape as explained in my earlier post. There is great deception in most companies, making counterfeit products of low quality standards that promise too much value, yet they are unable to deliver what they promise. It is not only unethical but the business plan suffers as they company tries to find shortcuts. Eventually, trust is lost between employers and employees, stakeholders and management and the customers. At this point, every level of management will be reading from different script, failing to align their actions with the business strategies.
Uncertainty: As business costs arise and the market becomes more competitive and volatile, most managements feel that it would be risky to make long term plans. Uncertainty has become so real today, especially with the advent of AI, terrorism, digital migration and so on, that most businesses no longer make long term plans. The ones they have are rarely reviewed, to be guided on how they should meet a company’s goal. As seen in the Kodak example before, failure to make long term strategic plans can be deadly. Companies should learn how to balance the need for a more reactive, short-term focus with the need for informed, long-term strategies. Uncertainty tends to put a company in a general malaise – unable to get anything done and as this contnues, the morale within employees falls as they anticipate how they will exit the company and move to their next job.
If you missed the first part of this series, catch it here. Find the third post of this series here.
Project Management 