Benefits estimation is an optional feature that can greatly enhance the substantiation of your strategic roadmap. The Benefits Estimation feature is related to the Cost Estimation feature. These can be enabled separately, but both cost estimation and benefits estimation are often applied together.
Jibility supports the ability to describe and capture the estimated benefits for each initiative. The estimated benefits will support cost benefit analysis and allow you to state tangible and intangible benefits as input into the business case for your strategic roadmap and portfolio of initiatives.
There are two primary reasons why cost estimation and benefits estimation are useful:
- It supports prioritization of initiatives with consideration given to financial constraints, i.e. you can quickly decide which initiatives fall within your available budget.
- It supports the roadmap and initiative business case, e.g. identify the initiatives where the benefits outweigh the cost.
In Jibility, you can choose to include or exclude cost or benefits estimation in the Canvas Properties settings.
Tips: Similar to Cost Estimation, the Benefits Estimation feature can be disabled upfront to focus on building the basics of your strategic roadmap. You can then socialize this with your stakeholders without getting stuck in detailed discussions around costs and benefits.
Defining Initiative Benefits
Benefits are defined at the initiative level. For each initiative, you can define:
- Tangible benefits;
- Intangible benefits
- Estimated benefit value; and
- Benefit period.
Tangible and intangible benefits
There are different schools of thought on the subject of benefits realization and, in particular, benefits estimation. Fundamentally, there are two types of benefits; tangible and intangible. Generally, tangible benefits are measurable such as increased revenue, reduced cost and reduced time. One school of thought suggests that the only benefits worth capturing are those that impact the bottom line (e.g. Profit and Loss).
Another school of thought suggests that the intangible benefits are also worth capturing. Intangible benefits are harder to measure and often have an indirect impact on measurable benefits. Examples of intangible benefits include "Positive brand perception", "Improved staff satisfaction" and "Strengthened industry leadership position".
To support the different schools of thought, Jibility offers two free text fields for capturing tangible and intangible benefits. You can choose to enter just hard bottom line benefits in the tangible benefits field or choose to also describe the intangible benefits as well. It's up to you.
Estimated benefit value and benefit period
For the defined tangible benefits, you can enter an estimated benefit value. This represents the gross benefit value which includes the cost required to achieve the benefit (as opposed to a net benefit which is minus the cost).
The benefits period is described in years and allows you to define the period of time which you will expect the benefit value to be realized. For example, if you have an expected benefit cost saving of $100,000 and benefit period of 3 years, you are estimating the organization will achieve a cost saving of $100,000 within 3 years.
Putting it all together with an example
In this example, we have an organization that currently has its own recruitment function to service the peak and trough demand for new staff. Through a strategic roadmapping exercise, an initiative to outsource the internal recruitment function to a specialist labor hire firm was identified. The strategic roadmap team put together the following:
In this example, the tangible benefit of this initiative is very clear and has an estimated benefit value of $750,000 over three years. The total estimated cost over the same period ($720,000) is less than 5% lower than the estimated benefit value. On this basis, the justification for this initiative is not particularly strong.
However, upon review of the intangible benefits, the executives decided to proceed with this initiative on the basis that there is a need to flex and scale the recruitment capability in light of current market conditions (uncertainty). Also, the executives were keen to look after their existing staff (the two internal recruiters).
In Jibility, the benefits information for the above example would be entered in the properties panel as shown below.
The Initiative Summary document in the Publish step can produce a Cost Estimate and Benefits Summary for each initiative. When the benefits feature is enabled, you can choose to show benefits only, or estimated cost and benefits, by setting the features field in the properties panel.