The biggest single destroyer of value in a business case is accountants taking control and allowing only strictly financial benefits, says Jed Simms, managing director of business process management company Capability Management.
Simms was presenting seminars in New Zealand this month as the first step of a partnership formed with Optimation. He founded Capability Management 10 years ago in Australia after completing a study for the Boston Consulting Group on why businesses weren’t getting value out of information technology.
“IT has been under the hammer for 15 years to reduce costs, and that’s been done, but the real need is to tackle the business side,” he says. “The business must be simplified to define outcomes. Measurable terms are needed to service customers.
“The need to install a new accounting system might be obvious but a proper business case will tell you what else you might get to service the customers,” he says. “It becomes a problem if the project is named after the software, say the SAP Project.”
Capability Management has developed a business model to measure returns based on processes and management.
“There is a correlation between capability and returns that doesn’t exist between money and IT,” Simms says. “We do a lot of project health checks and we don’t often find clear definitions of business outcomes.”
Simms says the key is getting the right level of sponsorship from the business — “the right people taking responsibility”.
Capability Management initially gets a business to specify benefits in five ways, ranking them from: benefits for the customer, competitive benefits, new capabilities, better productivity and financial benefits.
Financial benefits are deliberately fifth in the rankings. Simms uses the analogy of buying a car compared to using public transport. “On the surface, there’s no comparison in cost. But there is a much broader spectrum of benefits in owning a car.”