Benefit Realization Management (BRM)

IT Project Management Strategy and a BRM (benefit realization management (BRM) Solution

According to change management ‘guru’ John Kotter, “Up to 70% of change initiatives fail to deliver on the benefits that they set out to achieve.” The question is why, what is the problem?

Proper evaluation of Business benefits is the key for achievement.  These days IT (Information Technology) (IT) is a significant component of capital spending for most companies, representing typically 50 % to 75 % of total expenditures. Especially IT Companies are spending billions of dollars in development project.  However, most surprising matter is that still many organizations report ROI from IT investment project is 1% or less. For example, only in the US & UK, average cumulative yearly IT project loss is about £58 billion. World Information Technology Services Association (WITSA) Digital Plant, 2010 forecast says, the global spending on IT is expected to grow 1.5% year on year to USD 573.4 billion over the next few years. The locus of growth is expected to shift from North America and Europe to the APAC, which will account for 43% of the growth over pre-recession levels.

Due to technological revolution, over the last decade the world changed rapidly. Organizations started viewing IT as the major driving path for change however only 50% organizations undertake ex-post evaluation of business benefits delivery – and this is largely unchanged over the last decade.  Only 12% companies can accurately measure the business impact of their IT investments. Most commonly, they evaluate IT projects from industrial-age approach resulting automation-focused approach.

Five broad sectors – hardware, software, services, telecommunications and semiconductors – are the the major technologies of IT user industries but over the next five years virtualization, the Cloud, Service-oriented Architecture (SOA) would be the major technology shift. To cope up with the technology every organization will have to re-design their IT investment strategy focus as well as measurement metrics. It is already proved that the financial techniques like Return on Investment (ROI), Net Present Value (NPV), Internal Rate of Return (IRR), Cost-Benefit analysis and other similar payback approaches are failed to consider the long term and intangible benefits that may accrue from an IT investment. As a result worldwide 87% of the projects are overrun, 57% are over budget, and 45% are failed to deliver expected benefits. It is proved that, all the used approaches are failed to evaluate an IT investment project properly:

  • in terms of cost
  • in terms of benefit
  • and balance benefit against cost

The companies are constantly pursuing new metrics to make proper balance between cost and benefits. Benefit Realization Management (BRM) is such an approach used to identify, prioritize and optimize business benefits arising from IT projects, which cannot be done effectively through traditional financial techniques. BRM model helps organization to keep track of the processes involved in successful IT management and increase their ability to identify not only the monetary returns but also the business benefits.

Here KDM (key decision maker) has to play a big role. First need to change the attitude from just financial return to overall business impact, creation of EPMO (enterprise project management office), and linking BRM approach in organizational framework. A conceptual linking framework is given below:

BRM

Understanding BRM

A great example of BRM implication is Vodaphone Customer Intelligence improvement. Vodaphone implemented BRM approach in project planning to implementation stage in 2007 that delivered a £15 million worth of benefits and transformed their customer service center “a points of pain” to “a points of gain”. The key results of their success were:

  • The Handset Replacement improvement program reduced repeat call volumes by between 15 – 20 %, and delivered 100 % quality checking on all devices
  • The Account Set-Up initiative reduced the processing time per connection by 40 minutes and significantly reduced errors when setting up Accounts
  • Delivered quantified financial benefits of £15 million over three years
  • Delivered increases in both EBU’s employee and customer satisfaction scores.
  • This in turn is expected to translate into stronger, more profitable customer      relationships

To learn more about other success stories, different BRM approaches, market projection, how to deploy BRM models and possible benefits; please see:

http://www.mindcommerce.com/Publications/BRM_Solutionst.php

About Mind Commerce

Analysis of telecom and ICT infrastructure, technologies, and applications.
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