Benefits

Management
‘A strategic business
skill for all seasons’
October 2009

Disclaimer
The contents of this document have been prepared
by the APM Benefits Management SIG and do not
necessarily represent the views of APM.
FOREWORD

I am delighted that the Benefits Management SIG has This is the start of an exciting journey, one which will CONTENTS
published its first piece of thought leadership since it challenge current thinking and extend the boundaries
was formed in May of this year. The current economic of best practice. • Executive summary 2
climate and the ever closer move towards outcome- • The need to
I look forward to your
based project and programme management have transform capability 3
reactions and thoughts.
accelerated the need for professionalism in benefits • Making a difference 3
management. One of the objectives of this report is to • Conclusion: seizing
challenge a broad spectrum of business managers to Peter Glynne the opportunity 6
consider how they can continually improve their Chairman – • Notes 6
organisation’s approach to benefits management. APM Benefits Management SIG
• Contacts 6

EXECUTIVE SUMMARY
EXECUTIVE SUMMARY

Formal benefits management is often a much Our vision, ‘a strategic business skill for all seasons’ is
misunderstood area. It is a relatively new approach that centred on using benefits management to align the
has not yet reached a high level of maturity. As a result, journey from business strategy to delivery to the
many in business circles regard benefits management as embedding of change within organisations. It is
an esoteric subject. There is now an opportunity to re- supported by the following factors:
define the approach to managing benefits, both within • the economic climate is driving the requirement for
the project/programme management community and greater value for money, including cost reduction,
amongst wider business professionals engaged in across both public and private sectors;
implementing change.
• the contribution of benefits management to
The economic downturn has increasingly focussed successful strategic planning;
business attention on benefits, both financial and non-
financial, particularly to inform strategic decision- • the need to align strategy, delivery and the
making. In addition, many senior executives have embedding of change into a single approach to
become dissatisfied with process-led project and managing benefits;
programme management not delivering the expected • benefits management is emerging as a core
business outcomes. With investment in change being business skill for all managers engaged in leading
more closely scrutinised by senior executives, there is a and implementing change;
need for greater innovation in using benefits
• strategic portfolio management is now recognised
management to drive change. The increasing
as a standard board-level competency;
frequency, scale and complexity of change is also
driving the need for a more strategic approach to • the need to align the management of change with
managing benefits. corporate performance management across the
organisation.

Our challenge is for a broad spectrum of business

leaders to consider how they can improve their
organisation’s approach to benefits management in
times of downturn and recovery. Rod Williams

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 THE NEED TO TRANSFORM CAPABILITY

MAKING A DIFFERENCE

All organisations invest in change in order to deliver The increased emphasis on benefits management in
their business strategy and this is necessary to remain the APM Body of Knowledge, PRINCE2 and Managing
competitive. Benefits are the single reason why we Successful Programmes is starting to make a
undertake change, yet so often the race for delivery difference. There are a number of other emerging
and other business priorities detract from the reason factors which are building organisational capability and
why change was undertaken in the first place. support our vision, ‘a strategic skill for all seasons’.
They are:
Most organisations undertake formal projects and
programmes to deliver change. More recently, portfolio 1. The economic climate is driving the requirement
management has become the accepted standard for for greater value for money, including cost
managing the overall set of projects and programmes reduction, across both public and private sectors;
across an organisation or business area. Organisations
Most business organisations in the UK are experiencing
also invest in initiatives related to the softer aspects of
a tightening of financial spending, particularly those in
embedding change such as organisational design,
the public sector. For example, government
employee engagement and customer communications.
professionals are facing choices over resource
The common thread between strategy, delivery and
allocation, head-count, capital programmes and the
embedding the change is the requirement to realise
need to align their service delivery planning more
benefits. However, benefits management is
closely to minimum statutory commitments. The private
traditionally seen as an element of project and
sector is facing difficult choices in order to minimise
programme delivery.
costs in challenging market conditions. In the recent
Formal benefits management is less than twenty years APM national survey, 54% of respondents indicated
old and has developed out of the limitations of more that cost reduction is a primary driver of projects and
traditional investment appraisal techniques, such as programmes in their organisation.
Return on Investment. A recent national APM survey
Approval for investment in change now requires
asked respondents to describe the approach to
tangible evidence of sustainable benefits, both financial
benefits management within their organisation.
and non-financial. While the economic situation creates
Interestingly, 60% described the approach as informal
challenges for many organisations, it is proving to be a
or incidental. It is evident that the maturity of benefits
catalyst for improving benefits management.
management is still developing. In our view, the
Organisations are taking the lessons learned from
reasons for this include:
applying essential cost reduction and using them to
• senior executives becoming dissatisfied with improve their approach to benefits management.
process-led project and programme management Successful benefits management provides a rational
not delivering the expected business outcomes; argument to gain approval for investment in change
• benefits management is often wrongly seen as a and to ensure subsequent success in realising the
specialist discipline requiring deep expertise; benefits and then exploiting them.

• benefits management is often misperceived as 2. The contribution of benefits management to

only a financial skill-set; successful strategic planning;

• a misperception that benefits management is Business strategy is delivered through projects and
benefits tracking which provides monitoring of programmes. Many successful organisations are using
metrics only after the change has occurred. benefits identification and planning to inform strategic
decision-making. This ensures that desired strategic
outcomes are linked to project/programme delivery
and change management from their inception.

2
A large UK public sector organisation is using benefits identification and planning to
decide whether or not to enter new markets and make a major investment in new
service delivery models. The potential benefits are identified at a high level, modelled
and communicated to the executive team to inform its strategic decision-making.
Once agreed, the strategy is translated into programmes and projects and the benefits
are profiled. Benefits profiling takes place as part of the critical work to define the
programme – before any projects are started. When the portfolio enters the planning
phase, the benefits are baselined and individual ownership is allocated. Beyond this
point, benefits are managed in close coordination with delivery. This innovative
approach, owned and championed by the strategy director, provides an early insight
into the likely business outcomes from the organisation’s investment in change.
It ensures that delivery is benefits-driven and clearly focussed on business outcomes.

The opportunity to drive strategic decision-making

through benefits management requires commitment A successful UK organisation undertaking a large scale
from the senior management team to ensure that the
transformation programme designed their change
organisation’s culture supports the approach. Ideally, it
requires an executive champion with strong influence
communications around individual benefits. The benefits
across the organisation. The alignment of benefits identified during strategic planning were categorised into
management to strategic decision-making is a major various internal stakeholder groups. Communications to staff
catalyst in the development of outcome-based relating to change were centred on the principle of ‘how does
programme and portfolio management. Many this benefit affect my job?’ This resulted in staff being directly
organisations have already implemented benefits-
engaged in realising the benefits relevant to their role.
driven strategic business planning to drive their
investment in change. As a result, they are constantly
It strongly contributed to communicating the corporate vision
improving the success rate of their change programmes for change and to empowering staff to act on this vision.
and thereby increasing their competitive position in
relation to other organisations. 4. Benefits management is emerging as a core
business skill for all managers engaged in
3. The need to align strategy, portfolio delivery leading and implementing change;
and embedding change into a single approach
Change is almost continual for business organisations
to managing benefits;
and many people are impacted. According to John
Evidence suggests that a long history of process-led Kotter in his Harvard Business Review article on
project and programme management has resulted in leading change, ‘Up to 70% of change initiatives fail to
many organisations having a delivery-led culture to deliver on the benefits that they set out to achieve’.
managing change. This can result in failure to realise Realising benefits cannot be the responsibility of only
benefits post delivery as once the project/programme the project or programme manager. Instead, it needs to
is delievered, change is seen as complete. In addition, be a partnership approach between the managers
the softer aspects of change management are not delivering change and those in ‘business as usual’. The
always aligned to delivery resulting in a disconnect governance model needs to be centred on ‘business as
between those delivering the change and those usual’ managers owning the benefits relevant to their
embedding the change. To be successful, the journey area. Often when a programme closes, the changes are
from strategy, through delivery, to embedding change still being embedded and significant benefits are yet to
needs to be benefits-driven. There are good examples be realised. To ensure success, all managers involved in
starting to emerge. change must understand their roles and responsibilities
in this partnership approach. Benefits management is
becoming a core business skill for all managers
engaged in implementing change.

3
 5. Portfolio management is now recognised as a
standard board-level competency;

Traditionally, project and programme management

has had limited exposure in the board room.
Senior executives often perceive it as a tactical or
operational level skill. Portfolio management is now
the accepted standard for managing the overall set
of projects and programmes across an organisation. CONCLUSION:
In simple terms, portfolio management ensures SEIZING THE OPPORTUNITY
alignment of change with corporate business strategy
whilst prioritising the use of resources. In the recent
In recent years, organisations have come under
APM national survey, 37% of respondent’s
increasing pressure to ensure that investment in change
organisations currently use portfolio management
realises the expected benefits. This challenge has been
whilst a further 35% are considering doing so.
heightened in the last twelve months by the economic
Ultimately, senior executives are interested in the downturn. By adopting a more strategic approach to
strategic benefits from change and the associated risks benefits management, organisations can address this
to them. A benefits-driven approach to portfolio challenge.
management ensures that the overall set of projects
Implementing the vision set out in this report depends
and programmes are outcome focussed. It also ensures
on the ability of business leaders to recognise the need,
that benefits across the portfolio are not double-
not only for a series of tactical adaptations but also for a
counted, thereby avoiding financial and reputational
broader programme of strategic transformation across
risk. Successful benefits management provides the
the key areas outlined. This includes developing new
framework to ensure that portfolio management is
corporate capabilities in benefits management
benefits focussed.
encompassing the broad range of business functions
6. The need to align the management of change that all have a role in realising benefits. This includes
with corporate performance management board members, finance, strategy, project/programme
across the organisation; and change management, human resources and the
wider business organisation.
All organisations undertake performance
management at a corporate level whether through The vision set out in this report should encourage
monthly management accounts, performance reports business managers to undertake an end to end review
CONTACTS or other measures. For example, Public Service of their entire approach to benefits management. This
Agreements detail the aims and objectives of UK should include an assessment of how well the
w: www.apm.org.uk
government departments over a three-year period. organisation is using its leadership, skills and systems to
E: [email protected]
Such agreements also describe how targets will be manage benefits.
Peter Glynne achieved and how performance against these targets Changing hearts and minds across an organisation can
Deloitte
will be measured. For change to be successful, be challenging. The economic downturn provides an
Rod Williams management information on benefits should be
Ascot Barclay Group opportunity to drive through a new approach to benefits
aligned to the corporate performance framework; management to ensure that it is ‘a strategic business skill
Nick Wensley
this ensures ownership and accountability for the for all seasons for recovery as well as downturn’. The
Steria
outcomes of change. In the recent APM national time to respond to that opportunity is now.
Stewart Moffatt
Ministry of Defence survey, 60% of respondents indicated that their
organisation had a standard set of key performance The SIG is committed to supporting APM members and
Trevor Howes the wider business community to develop
Fujitsu indicators to measure corporate business performance.
However the same survey revealed that only 12% of professionalism in benefits management. This is the
Helen Anthony
respondents used a software application to support start of our journey towards the development of new
Serco
management information on benefits. This implies a professional standards in benefits management. Use us.
Llye George
Independant consultant lack of maturity in the software market for benefits Join us!
Sarah Harries management.
BT Openreach
Without robust management information, the
David Waller NOTES
NHS Information Centre governance of benefits is likely to be ineffective as
decisions will be made without fully understanding 1. Change for the Better, an APM survey on
Alan Pay
Logica the implications. It is important to ensure that there is benefits management (2009)

Allan Gregory a ‘single version of the truth’ to manage performance 2. Leading Change ‘Why Transformation Efforts Fail’,
The Nichols Group at a corporate level. John Kotter, Harvard Press Review (1995)

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5
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