Before undertaking any technology, digital or business transformation, an organization needs to ask why they are performing it. Is the program intended to reduce risk, support a major business initiative (M&A), support growth, start a new business or service offering, reduce or avoid costs? Often the answer will depend on how the business is performing at any given time and may be some combination of these factors. The reference to “business case” for many programs has been replaced with the act of achieving “business value” which focuses on helping the business achieve its strategy and objectives more effectively.
Standing alone, technology or automation programs do not provide value beyond labor arbitrage within the business or within IT itself; or the solution addresses risk based on a system or process failure. Most, if not all, of the value is dependent on the business which must use the information, process, capability or capacity to gain greater value than it can without it.
The underlying question for any program goes to the business to answer:
- With this data or capability, how much faster or greater value will you be able to achieve than without?
- What actions or activities will you perform to capture the value?
- How will it be measured?
Good + Good + Good <> Good
The first challenge with attaining business value is to have the business commit to do more or execute their plan faster when faced with the uncertainty of the new solution, its capabilities and benefits.
The second major challenge with realizing business value is managing the trade-offs between functions required to achieve the greater good. Some areas may not improve and may be getting perceived as worsening, but are still contributing to the greater good. The math doesn’t always add up; Good + Good + Good doesn’t always equal > Good when it comes to transformational programs.
- Driving best-in-class manufacturing capacity may not result in the right product at the right place at the right time.
- Selling more product that is not being produced doesn’t result in happy customers.
Informing the business lead for manufacturing to reduce capacity utilization or leading sales to sell products being produced is not an easy alignment. But not having the alignment could be worse!
There are no silver bullets when it comes to extracting value from your transformation. But there are tactics and methods to achieve business value that need to be integrated into the beginning, the middle, and after any significant technology, digital or business transformation. These methods need to be supported and reinforced by senior leadership within the organization.
A third challenge is for programs to maintain focus on business value over the course of the project timeline. New program priorities emerge to address budget, delivery and business risk. As resources are put in place to meet the demands of these new priorities, they often come at the expense of the focus to achieve business value.
There are different strategies and approaches that can be used within the organization to increase your ability to achieve business value. Our research shows that companies that follow these practices tend to achieve higher levels of business value attainment:
- Embed value attainment methods into your program approach and methodology
- Assign responsibility to achieve value
- Educate and align key sponsors and champions on value attainment
- Develop ongoing value governance and execution strategies
- Identify and implement quick wins
Embedding value into your program approach and methods not only helps achieve the targeted goals but it can also lay the groundwork for a cultural shift and mindset for the organization. Basically, value becomes a discussion point, a decision point and a deliverable throughout the program influencing everything from:
- Scope management (what’s in – what’s out – priority)
- Design (standard vs. custom, auto vs. manual, and prioritizing requirements)
- Schedule (deployment sequence; priority of resources)
- Communication and training
By embedding value into the program approach and methodology, it becomes a common language between the program and its stakeholders across borders and the organization.
Achieving value is the responsibility of everyone involved with or impacted by the program. But as we know, project teams can lose focus. We recommend defining a project role (value architect) with the responsibility of identifying and balancing the tradeoffs between value levers while focusing the team and organization on the big picture. The role is a cross team/functional role responsible for pulling and pushing the value agenda. Key accountabilities of this role include:
- Building and managing the business case
- Prioritizing value levers
- Auditing to ensure the embedded value methods are being followed
Educating and Aligning
Driving change and aligning an organization to achieve value is a key responsibility of both change management and the value architect. Aligning the sponsor and key business champions on the objective, securing alignment of the levers, trade-offs, measures and targets, is critical to success. This alignment leads to operational changes and change in culture to focus on the key priorities that drive business value.
Sustaining the Momentum through Governance
Extracting value does not begin and end with the program timelines. Value extraction is an ongoing business process that is both managed and measured. After a major program implementation, an organization stabilizes and with stabilization comes process opportunity insight. To leverage this insight, organizations are advised to set up a governance structure and allocate value capturing capacity. For example, if an organization identifies forecasted schedule variance as being driven by poor client data, effort is required to prioritize and negotiate the change with the appropriate partners to solve the issue.
Over time, markets change, expectations change, people change and without demonstrating some degree of success or value, momentum could be lost. Often, the effort associated with any transformation can be leveraged to drive early business value or achieve a quick win. These quick wins might take the form of:
- Pulling insights from cleansed/rationalized data (pricing, BoM, etc.)
- Supporting new offerings (attacking a new market or acquisition first)
- Optimizing an existing process (implementing supply chain tax efficiency models)
Identifying quick wins and dedicating resources to implement them needs to be incorporated into the execution of the program as a priority for any program to achieve value and keep momentum. Additional benefits of implementing quick wins is that they can help support program finances, minimize change impacts before deployment, and increase business adoption.
Incorporating these five activities into any transformational program is key to addressing the challenges of achieving business value.
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