CHAPTER 4

Program Benefits Realization and Management

Benefits realization is one of the main reasons organizations employ programs. This chapter provides an in-depth analysis of the program benefits realization domain. It defines business value, and business results are helping us understand the differences between the two. Analyzing the program management continuum shows how benefits delivery increases as the organization moves into the program-oriented space. This chapter describes that benefits management is achieved by employing the benefits management strategy, which includes five phases: benefits identification, benefits analysis and planning, benefits delivery, benefits transition, and benefits sustainment.

The chapter includes the following sections:

• Benefits realization; and
• Benefits management.

Benefits Realization

One of the main reasons organizations deploy programs is to realize benefits. Focusing on the business value for the client has helped many teams select the best solution for each project, facilitate decision making on product construction methods, and prioritize projects within the program.¹ Before analyzing how a program manages benefits realization, it is important to define a benefit and examine benefit components.

A benefit is an outcome of actions and behaviors that provides utility, value, or a positive change to the intended recipient.² Programs realize various types of benefits, including the development of new products and services, entrance into new markets, growth of the market share, improvement of financial organizational results, improvement of organizational processes, and more. Program benefits are comprised of two components: business value and business results.

Business Value

Business value encompasses the synergistic improvements that program management can provide to optimize the business functions of the enterprise. For example, the key business value that any program provides to the organization is a benefit realized from managing related projects as a program. For example, the key business value generated by the call center's process improvement program is an integrated implementation of projects one and two in all call centers. Additional examples of program business value include achieving business scalability through the assumption of business management responsibilities at the program level, integrating business functional elements for deployment effort, and aligning financial objects with the business objects.

Organizations realize program business value by optimizing some business functions:

• Aligning business strategy and execution;
• Integrating business functions;
• Navigating business and environmental ambiguity;
• Achieving business scalability;
• Managing distributed collaboration; and
• Reducing time-to-benefit.

Aligning Business Strategy and Execution

For many organizations, program management provides value by ensuring program alignment with the organizational strategy. Program management creates a critical linkage between strategic goals, program objectives, and program benefits. Initially, the linkage is being established during the program definition phase while preparing the program business case. The linkage is confirmed during the benefits delivery phase by conducting phase-gate reviews.

Integrating Business Functions

Program management adds business value by serving as a mechanism that integrates works of various operating functions within the organization to create an effective business model. Program management integrates collective efforts by focusing various functions on a common purpose, an achievement of improved business results.

Navigating Business and Environmental Ambiguity

By employing program management principles to business and environmental ambiguity, an organization will realize the following key benefits:

• Provide the leadership necessary to coalesce multiple perspectives and agendas effectively;
• Develop a framework to enable flexible management of change; and
• Appoint a business champion to ensure that the strategic goals set forth by senior management are achieved.

Achieving Business Scalability

Program management offers business value by providing an organization with a pathway to effectively scale business by assuming management of ROI duties for the development of each new capability.

Managing Distributed Collaboration

Effectiveness requires an integration of work efforts to satisfy growing complexity. However, another modern phenomenon, distributed teams, has added a layer of complexity to the integration of multiple work outcomes. Many companies have historically operated under a traditional structure, characterized by strongly siloed departments or groups, where horizontal collaboration across these departments was difficult, let alone collaboration across the globe. One by one, these companies are realizing a need to adopt a distributed model to be able to not only compete, but also in many cases, to survive.

Many companies that are succeeding in managing these increasingly distributed environments are doing two key things:

• Adopting a systems approach to developing capabilities; and
• Adopting program management to integrate solutions effectively.

Early adopter companies in the automotive, aerospace, and defense industries continue to utilize this approach. Most recently, companies such as Apple, salesforce.com, Intel, and Kaiser Permanente, among others, have found great success in utilizing systems and platform concepts coupled with program management to develop their new capabilities.

Reducing Time-to-Benefit

Besides demanding increasingly complex solutions, customers also want accelerated delivery of new capabilities. It is a well-known fact that in today's highly competitive world, time-to-benefits is a critical factor in gaining an advantage.

If an organization has a strong program management function, products are closer to what the customers want, and the team spends less time iterating late in the program to meet customer expectations. A program manager adds clarity for the engineering team by balancing market requests with the engineering capabilities, therefore setting realistic customer targets. This results in the most efficient use of resources, which allows a program team to deliver what the customer wants the first time.³

Business Results

Business results are tangible business outcomes derived from creating and implementing new products and services, and any other capabilities delivered by the program. Examples of business results include increased profitability, expanded market share, lowered product cost, and increased productivity. The call center's process improvement program achieved two business results: improved call response quality and decreased call response time.

There is a direct correlation between how program management is implemented within an organization and a volume of benefits realized through program management. Analysis of the program management continuum shows that benefits delivery increases as the organization moves to the right into the program-oriented space, as shown in Figure 2-2. The shift to the program-oriented organization allows for strengthening program strategy alignment and increasing benefits delivery.

Project-oriented organizations utilize programs that are formed from the combination of pre-existing projects and other work activities into a single entity. In this program type, a realization occurs that the projects may be more effectively managed under a single program. This realization is driven by a desire on the part of an organization's execution team to make a more strategic approach to work that gets accomplished within their organization.

In program-oriented organizations, by contrast, programs are most often driven by the strategic goals of an organization. Strategic objectives define strategic programs, and, therefore, define business results desired from the creation delivery of the program output.

As business makes a conscious decision to become more program-oriented, the responsibility for delivering business results begins to fall upon the program manager.⁴ In program-oriented organizations, a program manager becomes increasingly accountable for realizing benefits. A program manager ensures that business benefits are obtained by delivering an integrated solution, providing program leadership, coordinating multiple projects within a program, and collaborating with multiple business functions within the organization. A program manager can accomplish this through effective benefits management, as was described in detail in Chapter 2: What Makes a Successful Program Manager?

Benefits realization illustrates and measures how projects and programs add true value to the enterprise. Benefits realization is challenging, but when executed right, it helps ensure that the outcome of a project produces desired benefits. This is achieved by establishing, measuring, and communicating organizational initiatives results. Such insight into performance is an essential planning tool for future projects.

Organizations with mature benefits realization processes benefit from:

• Clearly identified strategic rewards;
• Effectively assessed and monitored risks;
• Proactively planned necessary organizational changes;
• Explicitly defined accountability for project success; and
• Routinely extended responsibility for project team integration.

Organizations that implement benefits realization programs understand this value because they are capturing the hard facts needed to showcase the return on their project management investments. Nevertheless, far too few organizations have effective benefits realization programs in place. In fact, many have no benefits realization program at all, so they are missing an opportunity to understand what would help them increase the rate of project success. We need to continue studying the challenges of benefits realization to gain insight into ways organizations can meet those challenges.

Pulse of the Profession®: Capturing the Value of Project Management (2015), published by the Project Management Institute, indicates that only one in five organizations report having a high level of benefits realization maturity. While low, this still represents an increase of 63% since 2013, indicating a high level of interest in this topic, even while organizations struggle to become adept at it. High performers are over four times more likely to report high benefits realization maturity, 39% compared to 9% of low performers, because they recognize it as a business imperative.

Also, organizations that report high benefits realization maturity have significantly better project outcomes, as noted in Figure 4-1.⁵

To successfully realize program benefits, it is important to develop an approach and tools to measure program benefits, as will be discussed in the next section.

Benefits Management

Benefits management can be achieved by using a program benefits management strategy that defines how a program will contribute to the realization of organizational strategic goals, if the program receives necessary funds and is properly executed. A program benefits management strategy is used to guide program execution by keeping a program aligned with the business results.

Program benefits management strategy development occurs during the program definition phase. During this phase, the program manager identifies, defines, and qualifies benefits. The program benefits management strategy is used to guide program execution as it keeps the program aligned to the business results desired.

One of the common issues that a program manager may encounter during the program benefits delivery phase is misalignment between intended business goals and a program output. To mitigate this issue, a program manager can use a benefits mapping tool to check and ensure that all components of a program are aligned with the benefits management strategy.

Program benefits management is a process of identifying a program's planned benefits and monitoring the program's ability to realize them. The purpose of program benefits management is to focus program stakeholders on the outcomes and benefits to be provided by the various activities conducted throughout the program. To do that, a program manager employs program benefits management to continually:

• Identify and assess value and impact of program benefits;
• Align expected benefits with the organization's goals and objectives;
• Assign responsibility and accountability for the realization of benefits provided by the program;
• Monitor interdependencies between outputs delivered by projects within a program, and ensure that these outputs contribute to the program benefits;
• Analyze potential impact of planned program changes on the expected benefits delivery; and
• Ensure that realized program benefits could be sustained.

During the program benefits delivery phase, program components are planned, developed, integrated, and managed to facilitate delivery of the intended program benefits. During the program benefits delivery phase, the benefits analysis and planning activities, along with the benefits delivery activities, may be performed in an interactive fashion, especially if corrective actions are required to achieve program benefits.

Program benefits management requires continuous interaction with other performance domains throughout the program life cycle. Interactions are cyclical in nature and begin top-down during the program definition phase and bottom-up during the program benefits delivery phase. For example, program strategy alignment, in conjunction with program stakeholder engagement, provides the critical inputs/parameters to the program, including vision, mission, strategic goals and objectives, and the preliminary business case that defines the program benefits. Program performance data are evaluated through program governance to ensure that the program will produce its intended benefits and outcomes.

Program benefits management takes place throughout the entire program life cycle and includes benefits identification, benefits analysis and planning, benefits delivery, benefits transition, and benefits sustainment, as shown in the Figure 4-2.⁶

Benefits Identification

Benefits identification occurs early on during the program life cycle, during the formulation subphase of the definition phase. During benefits identification, a program manager analyzes available elements, including program business case, a road map, environmental analysis, and other relevant information to identify and quantify benefits. The analysis includes deriving and prioritizing benefits components. It also includes preparing a metric that will allow measuring benefits during the program execution phase. After identifying benefits, the next step is mapping them to the project outcomes and deliverables.

The benefits map provides traceability between project outcomes and deliverables to the benefits intended from the output of the program. This is critical information to first establish the overall vision and scope for a program, and then to communicate how each of the constituent projects contributes to the goals of a program, and finally to trace the execution of the program and projects to final delivery of business benefits. Like many program-based tools, this tool is used to assist in characterizing how specific program objectives are met. However, benefits maps can become complex and confusing due to the one-to-many relationships between project deliverables and outcomes to the program objectives. The critical component in building an effective benefits map is to ensure each project deliverable or outcome is mapped to a program objective, and every objective to the business factors. For more complex programs, it is recommended that the mapping is performed and represented in tablature form to establish order, reduce confusion, and maintain greater value than effort in creating the map.

The benefits map is intended to be used throughout the life of the program to analyze consequences caused by adjustments and changes as they occur to the original program vision and scope. The first use of the benefits map normally occurs as part of the business case development process, where a high-level mapping of benefits to program objectives to strategic intent is established. Further detail is then added during detailed planning when the full comprehension of program scope and traceability of project outcomes to business benefits is necessary.⁷

A program benefits map includes the following data:

• Organizational strategic goals;
• Business success factors that translate an organizational strategic goal to program objectives using various categories (e.g., finance, accounting, marketing, time, quality, etc.);
• Program objectives that group business success factors into categories listed above; and
• Program deliverables that result from the program objectives.

Using the call center's process improvement program example, we will build a program benefits map (see Figure 4-3):

• The organizational strategic goal is to provide the highest call response quality and the fastest call response time;
• Business success factors translate the strategic organizational goal into two categories: quality and time;
• Program objectives for quality and time are:
  • Quality objective is to improve call response quality by 25%;
  • Time objective is to decrease call response time by 30 seconds;
• Program deliverables for quality and time are:
  • Quality deliverable is to improve call response scripts;
  • Time deliverable is to improve call response workflows.

Along with the program work breakdown structure and the program architecture, the benefits map is a useful tool for establishing the overall scope of a program and for demonstrating the alignment between project outcomes and deliverables to the objectives of a program. The benefits map can also be used to communicate to senior leadership, the overall program team, and other program stakeholders how the strategy of the organization and program are melded together, and how each program benefit will be realized.

There are several advantages to be gained by both senior management of an organization and the program team through the use of the benefits map. It helps to create better clarification and understanding of the program vision and scope, and establishes direct alignment between program objectives, project outcomes, and the business benefits to be realized. The benefits map also provides a systematic process for assessing program benefits as part of the program's cost-benefit analysis, which is a critical element of the business case for a program. Finally, it enables focused tracking and monitoring of progress toward realization of the benefits as part of the program governance process, and establishes an effective means of evaluating the success of a program from a benefits realization perspective.⁸

After benefits are identified and mapped, to ensure full realization, it is important to track benefits. Benefits tracking involves examining program progress toward benefits realization. If the critical business success factors are defined and consistently reviewed as a part of the program governance system, the means to objectively evaluate the value of the program is available to the program sponsor and the governance board.

A tool that assists with benefits tracking is called a benefits register. The benefits register collects and lists the planned benefits for the program and is used to measure and communicate the delivery of benefits throughout the duration of the program.⁹ Depending on the complexity of the program, the register may include the following fields:

• Benefit item number;
• Benefit name;
• Benefit description;
• How benefit will be realized;
• Benefit mapping to a component;
• Benefit measurement;
• Person responsible for benefits delivery;
• Benefit realization date; and
• Status, including not started, in progress, and complete.

It is important to note that the benefits register is updated iteratively during the benefits delivery phase, as not all component information may be known during the definition phase. We will use the call center's process improvement program to prepare a benefits register. The register lists two benefits: improve call response quality by 25% and decrease call response time by 30 seconds, as shown in Table 4-1.

Benefits Analysis and Planning

Benefits analysis and planning institutes how benefits are realized, and establishes how benefits realization is monitored by developing benefits metrics. Benefits metrics are critical to the successful realization of benefits, as it allows for monitoring incremental benefits delivery. Benefits metrics should include incremental benefits delivery dates and quantifiable benefits delivery measures. Quantifiable benefits delivery measures may include percentage completed by a certain date, percentage improved quality, time saved or reduced, percent increased market share, and percentage completed product design or readiness. Incremental and full benefits realization is tracked in the benefits register during the entire program life cycle.

We will use the call center's process improvement program to illustrate benefits metrics. The program has two benefits, each of which has incremental benefits realization metrics. For example, incremental metrics for improving call response quality is a percent improvement for call scripts. Incremental metrics for decreasing call response time is a percent improvement of call response workflows.

The program manager builds a benefits realization plan that formally documents the activities necessary for achieving the program's planned benefits. It defines how and when benefits are expected to be delivered to the organization and specifies mechanisms that should be in place to ensure that the benefits are fully realized over time. The benefits realization plan is the baseline document that guides the delivery of benefits during the program's performance. The benefits realization plan also identifies the associated activities, processes, and systems needed for a change driven by the realization of benefits; the required changes to existing processes and systems; and how and when the transition to an operational state will occur.¹⁰

Utilizing the benefits realization plan, a program manager builds a program road map, a chronological representation that depicts key dependencies between major milestones, communicates linkage between the business strategy and the planned, prioritized work, reveals and explains the gaps, and provides a high-level view of the key milestones and decision points. The program road map summarizes key end-point objectives, challenges, and risks; describes evolving aspects of the program; and provides a high-level snapshot of the supporting infrastructure and components plans.¹¹ A program manager updates a program road map during the benefits delivery phase, as will be described in the next section.

Benefits Delivery

Benefits delivery ensures that the program delivers benefits as defined in the business case. Organizations deploy programs to realize benefits. Program benefits are expected to exceed program costs over time, as specified in the business case.¹² Benefits management is an iterative process. As all component information becomes available during the program benefits delivery phase, benefits analysis, planning, and delivery may be continuously revised with the new information. Revisions translate into changes to many program documents, including the benefits realization plan.

A program has multiple components, including subprograms and component projects. Each component is integrated into the program. Start and finish of the components are also milestones for the program as a whole. Completion of the components marks the realization of the component and program benefits.

We will use the call center's process improvement program example. The program includes a subprogram one that includes projects one and two, and project three. Each component has start and finish dates that become program milestones:

• Subprogram one starts on 3 October 2016 with the start of the project one;
• Project one finishes on 30 December 2016 with the delivery of the project one benefit;
• Project two starts on 2 January 2017;
• Project two finishes on 31 March 2017 with the delivery of the project two benefit;
• Project three starts on 3 April 2017;
• Project three finishes on 29 September 2017 with the implementation of projects one and two in all call centers.

For a benefit to have value, it should be realized to a sufficient degree and promptly. The actual benefits delivered by the program components or the program itself should be regularly evaluated against the expected benefits, as defined in the benefits realization plan. A key aspect to consider is whether program components (and even the program as a whole), are still viable. This could occur if the program's value proposition has changed (e.g., if the overall life cycle cost will exceed the proposed benefits, or if the benefits will be delivered too late). Effective governance helps ensure that the promised value is achieved as benefits are delivered. That is why the program governance domain integrates with the benefits management domain to help ensure that the program is continuously aligned with the organizational strategy and that the intended value can still be achieved by the delivery of program benefits:

• Strategy alignment focuses on ensuring the linkage of enterprise and program plans; on defining, maintaining, and validating the program value proposition; and on aligning program management with the enterprise operations management.
• Value delivery focuses on ensuring that the program delivers the promised benefits and that these benefits translate into value.¹³

Benefits Transition

Benefits transition ensures that program benefits are transitioned to operational areas and can be sustained once they are transferred. Value is delivered when the organization, community, or other program beneficiaries can utilize these benefits. Benefits transition ensures that the scope of the transition is defined, the stakeholders in the receiving organizations or function are identified and participate in the planning, the program benefits are measured and sustainment plans are developed, and the transition is executed. Benefits transition planning activities within the program are only one part of the complete transition process. The receiving organization or function is responsible for all preparation processes and activities within their domain to ensure that the product, service, or capability is received and incorporated into their domain.

Benefits may be realized before the formal work of the program has ended and will likely continue long after the formal work has been completed. Benefits transition may be performed following the close of an individual program component if that component is intended to provide incremental benefits to the organization. Benefits transition may also occur following the close of the overall program if the program as a whole is intended to provide benefits to the organization and no incremental benefits have been identified.¹⁴

We will use the call center's process improvement program example. Even though components have incremental benefits, program benefits are not realized until the program ends. Project one delivers an incremental benefit of improved call response scripts and project two delivers an incremental benefit of improved call response workflows. However, the program benefit of implementing both projects one and two in all call centers is not realized until the program ends.

The program may have different benefits recipients (e.g., internal and external, various departments, and other programs). In the call center's process improvement program, program benefits recipients are all call centers.

Some organizations do not transition benefits to the ongoing operations, resulting in lost benefits, wasted capital, and lost window of opportunities. Key reasons behind deficiency around benefits transition include departments operating in silos and lack of communication during the program execution. Ensuring program benefits transition is vital to the organizational success. To ensure alignment with the transitioning department requires formal benefits transition processes and effective governance.

Benefits Sustainment

Benefits sustainment ensures that ongoing sustainment activities have been transitioned to the appropriate entities or subsequent programs to steward the ongoing post-transition work. As the program is closed, responsibility for sustaining the benefits provided by the program may pass to another organization. Benefits may be sustained through operations, maintenance, new projects and programs, or other efforts. A benefits sustainment plan should be developed before program closure to identify the risks, processes, measures, metrics, and tools necessary to ensure the continued realization of the benefits delivered. Ongoing sustainment of the program benefits should be planned by the program manager and the components project managers during the performance of the program. However, the actual work that ensures the sustainment of benefits is typically conducted after the close of the program and is beyond the scope of the individual component projects.¹⁵

Currently, it is being observed that some organizations do not sustain benefits during the ongoing operations. It results in rework, additional spending, and duplicate resource usage. Deficiency around benefits sustainment may occur due to lack of accountability for benefits sustainment and an absence of a formal benefits sustainment plan. Ensuring program benefits sustainment is vital to organizational success. To ensure benefits sustainment, it is important to have a formal benefits sustainment plan, and effective governance to ensure accountability of the transitioned department for benefits sustainment.

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¹ Merrick, A. (2015). Allied forces. Retrieved from http://www.pmi.org/-/media/pmi/landing-pages/business-analysis-tools-silverpop/pdf/allied-forces-project-management-business-analysis.pdf

² PMI. (2013). The standard for program management – Third edition. Newtown Square, PA: Author.

³ Martinelli, R. J., Waddell, J. M., Rahschulte, T. J. (2014). Program management for improved business results. (2nd ed.). Hoboken, NJ: John Wiley & Sons, Inc.

⁴ Martinelli, R. J., Waddell, J. M., & Rahschulte, T. J. (2014). Program management for improved business results. (2nd ed.). Hoboken, NJ: John Wiley & Sons, Inc.

⁵ PMI. (2015). Pulse of the profession®: Capturing the value of project management. Newtown Square, PA: Author.

⁶ Merrick, A. (2015). Allied forces. Retrieved from http://www.pmi.org/-/media/pmi/landing-pages/business-analysis-tools-silverpop/pdf/allied-forces-project-management-business-analysis.pdf

⁷ Martinelli, R. J., Waddell, J. M., & Rahschulte, T. J. (2014). Program management for improved business results. (2nd ed.). Hoboken, NJ: John Wiley & Sons, Inc.

⁸ Martinelli, R. J., Waddell, J. M., & Rahschulte, T. J. (2014). Program management for improved business results. (2nd ed.). Hoboken, NJ: John Wiley & Sons, Inc.

⁹ PMI. (2013). The standard for program management – Third edition. Newtown Square, PA: Author.

¹⁰ PMI. (2013). The standard for program management – Third edition. Newtown Square, PA: Author.

¹¹ PMI. (2013). The standard for program management – Third edition. Newtown Square, PA: Author.

¹² PMI. (2013). The standard for program management – Third edition. Newtown Square, PA: Author.

¹³ PMI. (2013). The standard for program management – Third edition. Newtown Square, PA: Author.

¹⁴ PMI. (2013). The standard for program management – Third edition. Newtown Square, PA: Author.

¹⁵ PMI. (2013). The standard for program management – Third edition. Newtown Square, PA: Author.