Why is Business Value Important?

Key Question

All organizations have goals with underlying needs.  These are often highlighted in a CEO’s “Letter to the Shareholders,” in which the CEO discusses past successes as they lay out upcoming opportunities and challenges for the next year.  Organizational objectives are driven by these goals.  Why is it important to understand the underlying business value that supports these goals?

The Challenge

No project should be undertaken by an organization if the business value of that project is not understood.  There is no clear cut definition of business value because the value to the business varies based upon the type of business, organizational objectives, and core functions. However, business value is often generalized as the net benefit, monetary or non-monetary, realized by the key stakeholders (customers) of a project. What every project should strive to do is to create clear and measurable key performance indicators that focus on delivering business value relative to their organizational objectives and specific functions provided to customers.

When a business becomes complacent and is not driving the organization to create new value for its customers, it becomes vulnerable to competitors by virtue of market innovation and progress.  Eventually, companies which fail to continually innovate and fulfill the needs of its customers will become stale, exposing their client base to competitive alternatives which satisfy expanding needs more effectively. Therefore, companies must assess where, when, and how they can add value for its customers through projects, the lifeline of a viable business, in order to maintain market share and presence.

Business Value as a Core Corporate Value

One of the core Orchestral.ai values is defining and assuring business value for our clients.  If we are unable to deliver demonstrable business value, then we will not engage in a “Proof of Value” (POV) project consuming time, money and effort on the part of all participants. By clearly defining how our platform specifically provides value to the client and mapping this to their organizational goals and objectives, we ensure that our client’s stakeholder benefits easily justifies the costs of implementation and operation.

Determining Business Value

There are many ways to map business value for key stakeholders.  Here are five ways that should be considered when determining if a project should go forward or not:

1. Understand the vision.  The project sponsor needs to be able to articulate why the project should take place.  This will become the charter of the project which will steer the course and general understanding of the project.
2. Clarify how business value arises from a project.  This is the challenging part.  The project charter must be translated and mapped back to the business value and the expected outcome from completing the project. Given that business value can be both monetary and non-monetary, predicting business value can be captured by a variety of assessments, from quantitative ROI analysis through Net Present Value (NPV) calculations to qualitative cost-benefit analysis.
3. Evangelize the realized vision and business value of the project. This is significant because this becomes the “true north” for the project and will be the guidepost throughout the engagement. Oftentimes this stems from higher-level management roles like the CIO who have the influence, experience, and credibility to serve as the “project champion” for the company. 
4. Organize the team responsible for overseeing both the day-to-day and general progress of the project.  Defining roles and responsibilities and managing the project on an ongoing basis is critical to meeting milestones and completing the project on time. By understanding how the project should function both in the short-term and long-term, the project team is qualified to delegate tasks, set deadlines, and evaluate progress. 
5. Establish the KPIs necessary to continually measure the business value of the project. This is a continual process throughout the lifecycle of the project.  Key performance indicators are crucial for understanding how business value will be fully realized at the end of the project. Additionally, having a post-project feedback loop to the business is a critical element when tracking long term business value within the organization and planning future projects of a similar nature. Ultimately, the key stakeholders must be assured by the KPIs that the expected business value of the project will be returned in order to continually sponsor the project.

Takeaway

Understanding business value and how it maps to the overall objectives of the organization is the most critical element in the success of a project.

Business value matters.

Marshall Bartoszek, Founder & Chief Value Officer

Learn more at: https://orchestral.ai