Conversation with Joe Peppard, Prof Cranfield on Benefit Realisation with Business Intelligence Propositions at the BCS Event
Joe Peppard is Professor of Information Systems and Director of the IT Leadership Programme at Cranfield School of Management. He is also Adjunct Professor at the University of South Australia. Over the years he has held academic appointments at Loughborough University, Trinity College Dublin, Groningen University and the University of Sydney.
How do you create an investment proposal for an initiative where the outcome does not lead to a classic productive benefit but an enabler such as business intelligence (BI)? Where the value in use comes from asking the big data the right questions, the business insights are derived from interaction of the manager and the data?
This was an issue addressed by Prof Joe Peppard from Cranfield School of management at the BCS event in London on Benefits Management – Delivering on the Promise of IT-enabled Change on his talk around Big Data.
His suggestions (hugely summarised) were
- Position the investment case around creating a capability rather than tangible outcome/benefit and get strong leader sponsor who can make a leap of faith assumption on the value of BI
- From a valuation perspective it makes sense to look at alternative quantification mechanisms (also borrowed from corporate finance. i.e.
- the VC model that says the size of the price is 10x the current investment (however risks in getting there are high) or
- go for real options where each incremental creates an option that is valuable and each step you have the right and not the obligation to proceed with the next step
To make these applications more robust rather than an activity looking for benefits – Stephen Jenner suggests
- Ensure that the organization’s Business Model or Value Chain is articulated – this enables benefits to be related to not only business outcomes but also the drivers of those outcomes. Then clearly state what difference the project (the BI in this case) will make to the drivers of the elements in the Value Chain. The funder can then come to a decision on a ‘willingness to pay’ basis about whether the BI is the most cost-effective way of gaining the enabling improvement.
- ‘Results-led’ rather than ‘activity centred’ programmes – where we start with the outcome intended and then work back in scoping the programme. In this way BI is included in a wider performance improvement programme led by the business. This is also called the right to left approach for benefit modelling
Stephen Jenner is one of the world’s leading Project Portfolio and Benefits Realisation Management subject matter experts. He is a regular speaker at international conferences, author of several books in the field, and Chief Examiner for the OGC’s ‘Management of Portfolios’.