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Proving Business Benefits 6 Simple Steps 

Proving Business Benefits 6 Simple Steps

 

 
 
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Published:  November 20, 2011
 
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Slide 1: EDITION 009 Learning Tree Management Insights Expert Advice from Today’s Top Professionals Creating and Proving Business Benefits in Six Simple Steps Is this a familiar scenario? You need to get management approval for your project to proceed. In a panic, you look for the last proposal you wrote—or get a copy of the last successful one—and use it as a template. To be persuasive, you frame the benefits of the initiative by advancing “the numbers”, believing it’s what the business cares most about. But here’s the catch: You don’t have a clue how to prove your initiative’s benefits using “the numbers” because there are intangible benefits that are difficult to quantify in both the short and long term. You struggle with determining the cash value of “increased efficiency” and “improved morale”. Plus, your knowledge of the financial factors affecting the return from this project is limited—so even the value from the tangible benefits is suspect. Your recourse is to invent numbers for the intangible benefits and mix them in with the tangible ones. You do all this, all the while knowing full well that cash is historically the least effective predictor of project success. On the up side, generating costs for the project is simpler, and once you have your cost and benefit numbers, you can provide a cost/benefit analysis. However, since the benefit numbers you invented are qualitatively different from your cost numbers, your analysis is suspect at best. Nevertheless, you persevere and submit the proposal. One of two things happens: 1. Your proposal is approved because the key decision had already been made. Writing the proposal was simply an internal process requirement and it was never actually read. 2. Your proposal is read but rejected. While it had many numbers, it never made a strong case for pursuing the project, so management didn’t fully trust the cost/benefit analysis. For the purposes of this article, let’s presume the latter outcome. In a proposal, tangible costs and benefits do need to be compared to each other, but many businesses are also seeking to achieve benefits that are harder to quantify. For example, “improved efficiency” is valuable, but how do you prove (or quantify) that value? Rather than start with the numbers, consider the real goals of any proposal: • Clearly outline what is being proposed • Demonstrate the ways in which the proposal benefits the business • Make sure your proposal is understood by all stakeholders (not just those with finance degrees) This is what’s involved in creating a successful business case, and it can be easily done using a simple six-step process called ADAPTS. Peter Dillon-Parkin Able Solution UK Ltd Our Management Insights article for this month addresses the fundamentals of creating a clear and persuasive business case. Author Peter Dillon- Parkin, a documentation specialist and business analyst, offers a six-step process for success. 1-800-843-8733 OR VISIT www.learningtree.ca CALL
Slide 2: Learning Tree EDITION 009 Management Insights Expert Advice from Today’s Top Professionals ADAPTS: A Six-Step Process for Creating and Proving Business Benefits Applying the ADAPTS Process to Create a Successful Business Plan Step 1: Agree on the Scope Your first step is to harvest the stakeholders’ key perceptions and opinions to build a clear set of business requirements. Next, write a clear statement of the problem or opportunity that has engendered the proposed initiative and compare that to the requirements. Requirements that address the problem or opportunity are the key requirements while the remaining are “nice to have” and rarely cause the initiative to fail if they’re not met. Step 2: Develop the Initiative Now you can add detail to the key business requirements by identifying all stakeholders, understanding their goals and activities and getting more detailed information. This step provides two important insights: First, an understanding of the user scenarios that will be affected by implementing the initiative and, second, possible alternatives for meeting the business need that engendered the initiative. Step 3: Analyze Costs and Benefits The first part of this step corresponds to a traditional proposal where you compare tangible costs with tangible benefits. Because you are comparing apples to apples, standard financial measurement tools such as return on investment, payback period and net present value are helpful here. The degree to which you’ll deal with the financial aspects of a business case is directly related to the exposure to risk for the business caused by the sums involved. If you’re unsure about this aspect, involve the finance department or an outside expert for their expertise. In a business case, you must also go beyond the “the numbers” to measure intangible benefits by tying those benefits to business drivers and their Key Performance Indicators (KPIs). A business driver is one or more of your business’ critical success factors, grouped into areas such as market attractiveness or operational efficiency. For instance, in the “customer satisfaction” area, a key business driver might be “increasing our responsiveness in dealing with client needs”. Having identified a driver, you can tie it to a measurable KPI. For “customer satisfaction”, a KPI measurement could be “average call response time”. If you can demonstrate that your initiative will result in a measureable improvement in a KPI tied to one of the company’s critical success factors, then your initiative demonstrates a benefit to the business. Step 4: Prioritise Risk Here’s where you help the business recognise areas of potential deviation in the business case. You should use behaviourally anchored ratings (BARs), which are anchored to those factors that the business worries about. For instance, a cash rich business might not care about cash overruns but care very much about missed deadlines. Using BARs lets you synchronise the evaluation of risk in your initiative with the risk profile of the business. Step 5: Target Alternatives Now you must ensure that your initiative (and the alternatives you generated back in Step 2) are culturally compatible with the way the business, and/ or its management, operates. To do this, you must profile the decision-making processes of the key stakeholders and satisfy the selection criteria they use, thus establishing that you’re presenting appropriate alternatives. For instance, presenting an alternative that stresses “increased throughput” for a company that values “care and quality” is unlikely to succeed. Step 6: Sell the Business Case Finally, pull together the knowledge you’ve collected from the previous steps to create a compelling reason for implementing your initiative. Remember: Without a strong rationale for implementing your initiative, readers will distrust any numbers you provide. More business cases fail because of this than for any other reason. To further help your cause, consider writing a clear, concise executive summary that focuses on the key points the decision makers are interested in. It is often the best place to make your case. Following the ADAPTS process, you’ll produce a business case document that accurately represents the real value that your initiative provides to the business and, more importantly, enables informed decision making. About the Author Peter Dillon-Parkin is the author of Learning Tree’s Course 212, “Building an Effective Business Case: Analysing and Communicating Business Opportunities”. Peter is a consultant specialising in documentation, business analysis and communication skills, and works in Europe, the USA and the Middle East. pdillonp@yahoo.co.uk 1-800-843-8733 OR VISIT www.learningtree.ca CALL ©2009 Learning Tree International. All Rights Reserved. CA0903_Business Benefits

   
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