Identifying and Agreeing Benefits
Typically you start with the benefits before tackling the costs (but the reverse is also possible). That way, the likely scope of the project can be estimated in advance and if the benefits are going to be sufficient to excite the customer. Click the Add benefits button.
Evaluators
Shark models the benefits arising from a solution by using pre-defined Evaluators which all have similar functionality:
- They allow the user to enter data about the current situation and any likely improvements.
- They control the timing (start and stop months) of the benefits. For example, it is rare for solution benefits to start immediately as there is often a solution ramp-up period or delay for implementation.
- Growth rates can be entered to describe a benefit that changes over time.
- A place to keep notes which can be used to describe why this benefit is likely and what assumptions have been made. These will appear in the report output to give the reader a clear understanding of where each benefit has come from.
Evaluator Suites
The Evaluators are grouped in Suites around solutions. The number of available Suites will depend on your configuration. Choose the evaluator Suite for your solution.
Types of Benefits
Hard i.e. quantifiable economic benefits, signed up to by the Prospect, are needed for a rigorous analysis.
Softer and intangible benefits are usually not included in the calculations but can be included in the text of the Business Case. Keep a record of benefits that were considered but fell outside the rigours of the economic analysis, they may still be important for approval of the Business Case! Evaluators which are set to zero improvement appear in the output reports but do not impact the ROI analysis.
Benefits may fall into one of the following major categories:
- Running cost reduction
- Running cost avoidance
- Revenue increasing
- Revenue pull forward
- Customer loyalty improving
- Capital spend avoiding
- Capital spend delaying
Benefit cashflows can be:
- ongoing on a monthly basis
- increasing or declining over time
- one-time only
Use the pre-defined benefit Evaluators that best describe the economic impact of the solution or features of the solution and fill in the known data, estimating where necessary.
A Prospect may wish to select and discuss their own economic arguments that are not part of the pre-defined list. Don’t panic! Use the Custom buttons (Custom Monthly Benefits or One-Time Benefits) which can be added and filled in free-form.
The Evaluators can be used to test assumptions e.g. “How many new customers do I need to justify the project?” or “What is the effect of improved campaign effectiveness?” Entered data can always be deleted so don’t worry about experimenting with possible scenarios.
Benefit Evaluator Tips
It is better to use half a dozen powerful benefit arguments rather than 12 weak ones! Do not try and over-justify the project. Claims of fantastic returns will be treated sceptically and benefits must stand up to scrutiny.
Avoid double-counting. There is no way this can be done automatically by Shark because benefits with the same titles may be used in the same Business Case to represent different parts of the Prospect’s business e.g. labor saving may occur in more than one department and needs to be expressed using two labor saving Evaluators.
Extending the Review Period of the Business Case can be used to increase the total benefits. However don’t forget, additional costs may also be incurred if the project duration increases.
Subtle persuasive techniques are important. For example a ‘throw-away’ argument can be included which may be removed later by the Prospect’s expenditure approval board giving them partial ownership over the Business Case!
Solutions may generate benefits from either or both of:
- Costs savings e.g. Improve Cash Collection
- Revenue generation e.g. Improve Customer Retention
Shark has been built to include as many benefit discussion topics as possible around your solutions.
Where applicable Shark also comes with example Business Cases which have been built in conjunction with your experts to provide you great starting points for new Business Cases.