To understand Benefits Management, the need to understand what benefit is in terms of business is important “…an advantage on behalf of a particular stakeholder or group of stakeholders”.
Benefits can be categorized in two groups: tangible/ intangible and efficiency/ effectiveness, each of which has been defined below.
- Tangible or ‘hard’ benefits are those that can be quantitatively associated and can be mostly measured using financial data. However, there are tangible benefits that need not be directly associated to any financial measures such as number of staff participating in training.
- Intangible or ‘soft’ benefits are those that can be qualitatively associated and is usually measured subjectively. Organizations usually tend to discard these benefits as they are hard to measure and the absence of financial gains. However, some organizations have developed measures to realize the soft benefits especially using the ‘Balanced Scorecard’ approach.
- Efficiency benefits include speeding up customer calls or transactions, increasing the product life cycle and saving money by reducing the employee strength, which seek to reduce costs of performing a particular process by utilizing IT. Here the nature of the objectives associated with the tasks does not change.
- Effectiveness benefits such as increasing profit by developing new product/ services, through mergers and acquisitions or by having a strategic competitive advantage is basically doing different things that better achieve the same required results.
As shown above benefits help transform a businesses current ‘As Is performance’ to a ‘New Business As Usual’ state and benefits don’t simply emerge, but requires careful planning and management. Proper planning determines if the expected benefits are realized or converted into dis-benefits.