To be successful, all business projects should have a clear objective, practical implementation, and deep understanding of all the related costs and benefits of the project. While it may seem relatively simple, understanding and defining business benefits can be tricky sometimes. To break down the concept in a simple and comprehensible way, business benefits can be divided into three major types – soft benefits, hard benefits, and productivity.
Determining and measuring hard benefits
These benefits include measurable firm commitments in terms of savings or revenue. Your business manager may claim hard benefits due to an increase in revenue or savings. He may make additional changes to the project, like increasing revenue growth by increasing sales and expanding market shares. Additionally, other changes like cost reduction in terms of electricity and other resources, and eliminating unnecessary employee positions can be made.
Understanding the soft benefits
Soft benefits are usually anticipated benefits in any business project, and are generally not accompanied by solid statistics. These benefits sometimes carry a small amount of risk, because of which business managers are hesitant to make adjustments in the budget. If savings or revenues are based on unsubstantiated estimates or educated guesses, business managers may not prefer soft benefits. However, they do provide considerably in terms of benefits.
An important type of soft benefit is cost avoidance, an automated process that allows businesses to increase processed transactions without increasing the headcount. Although you may not have made any adjustments to your current budget, productivity improves without incurring any additional expenses. This makes cost avoidance an important benefit. Risk-oriented benefits for business projects are considered in terms of anticipated growth, whether for revenue increase, cost reduction, personnel reduction, or cost avoidance.
Increasing productivity
IT projects mainly consist of automating manual business processes, and streamlining or simplifying complex ones. When fewer employees and lesser time are required to complete a job or to generate good results, you are increasing productivity within your organization. Productivity benefits are considered as reduction, since the effort required to complete a task is greatly reduced. Generally, full-time equivalents (FTEs) work about 2,000 hours a year.
Productivity is generally considered as a soft benefit, since increase in productivity cannot always be achieved in the same way as revenue generation. Many times, your company may be unable to cut down on employees or resources, which in turn limits the productivity. But an increase in productivity is considered as a benefit because it reduces overtime, headcount, and subsequent costs.
FAQs
These benefits include measurable firm commitments in terms of savings or revenue. Your business manager may claim hard benefits due to an increase in revenue or savings. He may make additional changes to the project, like increasing revenue growth by increasing sales and expanding market shares.
How to identify the benefits of a project? ›
Here's a list of best practice when it comes to measuring benefits.
- Step one: identify your objectives and outcomes. ...
- Step two: identify tangible and intangible benefits. ...
- Step three: document your benefits. ...
- Step four: capture your baseline measurements. ...
- Step five: realise your benefits. ...
- Step six: monitor your benefits.
Financial Benefits and Nonfinancial Benefits
Businesspeople readily accept positive financial outcomes as business benefits. These are easy to measure in terms of cost savings, revenue growth, cash inflows, or profits.
How to define business benefits? ›
The definition of business benefits would be the difference between the total income of a company obtained from the sales of a product, plus the assumed costs of marketing the product. These costs would be those related to the production and distribution of the product.
What will allow you to ensure that all project benefits are identified in a project? ›
Monitor and track progress
This allows project management professionals to identify any deviations from the expected outcomes and take corrective actions in a timely manner. Ongoing monitoring helps ensure that the project remains on track and that benefits are being realized as planned.
What are the methods for measuring benefits for a project? ›
Cost-benefit Analysis (CBA)
Cost-benefit analysis is a way of assessing a project prior to making a decision on whether to pursue or not to. Cost-benefit analysis may not immediately be perceived as a 'benefit measurement method', as the focus is on looking at both the costs vs the benefits as a comparison.
How do you evaluate project benefits? ›
How to Conduct a Project Evaluation in 6 Steps
- Step 1: Identify project goals and objectives. ...
- Step 2: Define the scope of the evaluation. ...
- Step 3: Develop a data collection plan. ...
- Step 4: Analyze data. ...
- Step 5: Report your findings. ...
- Step 6: Discuss the next project evaluation steps.
The process:
- Identify benefits.
- Define in detail what each benefit will entail.
- Assign dates for the delivery of the benefits.
- Detail the necessary implementation procedures to ensure that benefits are delivered in full.
- Plan for change management as the processes to deliver new benefits are implemented.
Plan exactly how the benefits will be realised
Consider how the business will use the time saved. You might decide to uplift quality for Customers, or lend staff to another team that needs extra people.
What are measurable benefits of a project? ›
Types of benefits in a project
- Quality improvement,
- Production cost reduction,
- Error rate reduction,
- A higher level of customer service,
- Increased customer retention rate.
A Benefits Management Framework systematically plans, manages, and measures the Benefits an organisation expects to achieve from its projects and programs. It helps ensure that the Benefits are clearly defined, aligned with the strategic objectives, and tracked throughout their lifecycle.
How does a business case affect an IT project? ›
The goal of a business case is to provide decision-makers with the information they need to decide whether a specific project should go ahead. A well-written business case can help to secure funding, resources, and support for a proposed venture.
What is a business benefits roadmap? ›
A business roadmap helps you visualize exactly what needs to happen — and when — to transform a company's vision into reality. You can lay out what will happen in a given month, quarter, or year (or whatever timeline you prefer for visualizing when you will achieve your goals). A business roadmap is flexible by nature.
What are the three most important things for a project? ›
The project management triangle is made up of three factors: scope, time, and cost. It visualizes the problem of the three constraints and the need to balance these factors to maintain a superior-quality final product.
How do you calculate project benefits? ›
First, you tally up all of the projected or estimated costs you expect to incur over the course of a project, and then add up all the benefits you're expecting. Finally, you subtract your net cost from your net benefit to get a number or cost benefit ratio.
How do you identify product benefits? ›
To identify the benefits of your product, you need to understand what your customer's needs and wants are. You also need to understand what your competitor's products are offering. Once you have this information, you can identify the unique benefits that your product offers.
