What is it about benefits realisation that makes it so difficult? For many years, the mere mention of those two words could elicit an immediate cringe of pain from seasoned project managers. For many it was about as exciting as being reminded to mow the lawn. However, there are now signs that benefits realisation is coming back onto the management radar. This time there may be real progress and some lasting solutions. The theory of benefits realisation is quite simple and very sensible:
- Why would you start a project if you can't identify the benefits?
- Why approve a project business case if there is no intention of harvesting the agreed benefits?
But real life is more complicated. Projects commence for a variety of reasons and business priorities change along the way. Some projects are long running and can extend beyond the expected tenure of business and project leaders. Sometimes it is just easier to simply argue that conditions have changed, and the savings are no longer needed.
These issues appear to extend across all industry sectors. Government IT is no different. In his 2008 review of federal government IT in Australia, Sir Peter Gershon came to some sobering conclusions. He found only 5 percent of the projects he surveyed had successfully identified and delivered clear benefits. This is notwithstanding the fact that most agencies had already purchased or developed good quality methodologies.
To be fair, government IT is a particularly difficult sector when it comes to measuring benefits. Many government policy initiatives deliver good outcomes for the community but cannot simply be measured in dollars and cents. Recent global and local events are now focusing the minds of project managers; perhaps in a way unlike ever before.
As the world emerges from the global financial crisis, there is little room in the corporate sector for projects that fail to deliver quantifiable outcomes. Governments are now "laser focused" on the problem of solving sovereign debt.
It is time for all that excess baggage to be jettisoned. There is no room for under¬performing or unresponsive projects. In this kind of atmosphere there is little sympathy among citizens or shareholders for any news of ¬corporate waste.
Some real success stories are beginning to emerge. In the government sector, some of the Gershon reinvestment work has come up with the goods.
For the past two years, many government agencies and their suppliers have been doing it extremely tough, as millions of dollars were cut from government agency business-as-usual IT budgets. Gershon reasoned that too much was being spent with no clear benefits being realised. The recommendation was certainly a big dose of tough love.
Gershon however did have a point. If benefits realisation is to be taken seriously, it must start with project budgets. Gershon further recommended that half the savings should be reinvested in strategic ICT undertakings. The only way to access the reinvestment money was through a competitive process where agencies had to submit their best business case. Since the reinvestment fund stretches over a number of years, many agencies have a ¬significant incentive to keep on delivering against their business cases. Money talks!
And the practice appears to be working. As part of the federal budget process, the government recently announced the latest set of winners. It is interesting to note the government's announcement not only contained the list of project titles but also their anticipated outcome. Forty-four projects, in all, were declared. Of these a significant portion were slated for the coming financial year.
In spite of best efforts, a project manager's lot is not an easy one. Additional governance, intended to sharpen up project outcomes, also delivers much unwanted administrative work.
As yet it is unclear whether the two-pass tender process will deliver better quality outcomes, or whether it will just create more work for both government and vendors.
Anecdotal evidence is pointing to very positive results from government project gateway reviews. While it has frequently been an uncomfortable process, external peer review has certainly delivered results.
Methodologies have also come a long way, and there appears to be a renewed sense of energy. The past 10 years have not been kind to benefits realisation, but there are clear signs of hope across many sectors. The future now depends on all of us.
While business and project managers are certainly in the front line of delivery, it also requires vigilance from citizens and shareholders to continue to demand accountability for outcomes.
Kevin Noonan is a research director in Ovum’s government practice. Email comments to kevin.noonan@ovum.com
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