Business Benefit Realisation Process Analysis for a Telecommunications Organisation

Abstract

FMS:

The rapid growth in New Zealand’s telecommunications industries allowed growth of supportive industries like Information Technology (IT) development companies. This case study is about a small IT company called Field Management Services (FMS) and their struggle in the current economic market. New Zealand’s telecommunications industry is regulated by the government and due to economic benefits of the internet the government invested $5billion in its growth and made changes to promote competition in the market. This allowed FMS to grow along with the market.

FMS launched in 2003 and doubled in size every 2-3 years until 2013 when the market became unstable due to the government conducting a price review of regulated products. This stopped the Retail Service Providers (RSP’s) like 2degrees, Telecom and Vodafone from spending what they usually do with FMS for software and hardware services. FMS needed to be more careful with how they spend their capital expenditure, they needed to make sure it was being spent on the right IT initiatives to produce a certain level of benefits for the organisation.

Key products for FMS are software applications development specifically for the telecommunications network and data centre management offering cloud solutions. The FMS organisational structure has a Chief Executive Officer (CEO) and four key executives that also sit on the Capital Control Council (CCC). The IT department sits under the Chief Information Officer (CIO) who also manages the Project Management Office (PMO) which runs all the IT project initiatives.

The current issue facing FMS is the CIO cannot justify the current capital expenditure of his IT department. There does not seem to be an end to end process for benefit realisation. Everyone in the IT department agreed that the benefits are never measured. The benefits appear in the business case presented to the CCC but they are not tracked and even if they were most times projects cancelled out each other’s benefits. The CIO conducted research to find out if there was a business benefit realisation process and if it could be improved upon. With business on the decline FMS needed to become more efficient.

Literature:

The academic literature identified the lack of a business benefit programme as an issue in the IT sector. There have been advances in project management to track the time, scope and cost of IT projects but 30-40% of IS projects are still delivering no benefits at all (Bradley, 2010). Very few organisations engage benefit identification early enough and they also do not track the benefits through to completion, which could be 6 months to 2 years down the track.

The literature also recommends what an organisation can adopt to increase the benefit realisation in their organisation. Fink (2003), suggests identifying and tracking tangible and non tangible benefits which are financial and non financial. Using a tracking register that regularly reports up to an executive level is beneficial, along with a clear plan of what , who and how it will be measured. The Stakeholder Identification Theory will be applied to the current validated benefit process at FMS to identify weaknesses and assist in making those weaknesses stronger. The theory analyses each stakeholder and assigns them a ranking. If the ranking is low it is a weakness in the process and recommendations will be made on how to increase the ranking of the weak stakeholders.

Analysis:

The method of research consists of qualitative research in the form of conversational style interviews. Some preliminary investigation produced a draft benefit realisation process that would be used as a hypothesis for the interviewees to validate and comment on.

Validation of the process diagram showed: 1. No official process for benefit realisation, 2. Business Technology Manager (BTM) was missing, 3. No feedback loop to the CCC, 4. Only two people in the whole organisation knew about a benefit tracking register, 5. PMO successfully using the 3 ‘O’ model to outline benefits at the initiate gate phase, 6. Specialist Material Expert (SME) needed to be added.

There were six trends that came out of the interview questions that gave deeper insight to the weaknesses in the benefit process for FMS:

1. CCC is only about funding and the report to executive committee on benefits is too highlevel. 2. Capital Performance Manager (CPM) has tracking register but is only tracking financial benefits from business cases. 3. BTM acts as Business Owner (BO) as well as a BTM on some projects, is the BTM appropriate to act in all the BO roles. 4. Benefits in business case are too vague and only financial (tangible) benefits officially reviewed. 5. BO is part-time and has disbanded so no one is responsible for measuring benefits. 6. Benefits in business case not always reviewed when scope of funding changes to the project.

With these issues in mind the case study then applies the Stakeholder Identification Theory to the categorised stakeholders in the FMS benefit process and assigns a ranking number. Three stakeholders stood out with low ranking numbers, this pinpoints weaknesses in the process. Stakeholder: Part-time BO and Investment Manager = 2 Discretionary stakeholder, and the CPM = 3 Demanding stakeholder.

Recommendation:

Three recommendations came out of the analysis: 1. Part-time BO passes on accountability for benefit realisation to someone else once they leave, 2. IM incorporates the 3 ‘O’ model currently being used in the PMO to identify benefits clearly in the business case, 3. CPM, IM and BO develop a report specifically on benefits to close the loop with the CCC.

The case study concludes by applying the theory to the benefit realisation process again once the recommendations have been incorporated. The results on the three weak rankings of the stakeholders improves to: Part-time BO moved up to a 7 Definitive stakeholder, the IM and the CPM improved to a 6 Dependant. The BO had continuity of accountability with the IM and the CPM having clear and official reporting tools. The IT division were now able to effectively and efficiently report on business benefit realisation and justify the value that they add to the organisation through capital funding initiatives.