May 2019 | Point of View

Business relationship management: Reinventing value realization in energy & utilities

For nearly 100-years, the energy and utility industry provided service without the influence of outside competition; however, with increasing complexity and demands for services, the sector has been forced to quickly transform the ways it responds to the demands of consumers—including adopting process frameworks to define and measure business value.

Today’s utility providers must evolve their operational cultures by creating workplace transparency founded on shared ownership of business outcomes. Shared ownership is established by nurturing organizational change at the cultural layer where supporting disciplines, capabilities, and roles converge to produce measurable value. Once realized, a shared ownership-based culture can achieve gains in speed and quality of service delivery that support the organization’s bottom line.

The role of value creation

A culture based on shared ownership requires dedication to standards where work is continuously delivered through a modeled approach executed by all members of the organization. If there are varying approaches on how to achieve business value, the culture will divide into independent groups. This decentralized approach is one of the driving forces behind workplace silos and waste.

If a model describes how an organization converges to create, deliver, and measure value, then a process framework serves as the road map for how to achieve it. The following sections describe three common frameworks for assessing, tracking, and realizing value creation.

ITIL4: Position on value realization

Organizational silos interfere with the ability to take advantage of opportunities or to optimize the use of resources across the organization. To reduce this impact, AXELOS, the governing body responsible for developing the IT Infrastructure Library (ITIL) framework, released ITIL4 and with it a refreshed perspective on value creation. ITIL4 recommends creating a culture that operates on iterative feedback loops amongst stakeholders, which serves as the primary driver for continual service improvement initiatives.

Per ITIL4, value creation is the primary outcome of the Service Value System (SVS), which describes how all the organization’s supporting activities work together to enable value creation. The purpose of the SVS is to ensure that the organization and stakeholders continually create value through the use and management of products and services. This is achieved by maintaining constant interfaces with other SVSs, which form an ecosystem that can in turn facilitate value for the organization, their customers, and other stakeholders.

This approach lacks a strategic roadmap outlining the key activities that the greater organization needs to undertake to successfully adopt the framework as a capability, discipline, and role. If the application of ITIL4 framework is disconnected from the strategic planning layer and is only used for the continued management of IT services, it will negatively impact value creation while strengthening the workplace silos it seeks to remove.

Project management institute: benefit management

In 2016, the Project Management Institute’s (PMI) sixth version of the Project Management Body of Knowledge (PMBoK) introduced a new process, Benefit Management (BM). The process was created because traditional output-driven metrics such as time, scope, and budget failed to provide a clear perspective on whether projects, individually or collectively, were producing the intended value as outlined in the business case.2 To overcome this, PMI developed BM as ‘a collective set of processes and practices for identifying benefits and aligning them with formal strategy.

In the BM process, ownership is a shared responsibility among project managers, business owners, executive sponsors, and senior leaders, even when a dedicated benefit owner has been appointed for the project. PMI believes that continuity from ideation to operations can be maintained by embedding someone from the operations or strategy development teams into the project management office (PMO) organization. According to PMI, project managers are the ideal individuals to be assigned the roles of benefit owners, where they can serve as ‘change agents that make project goals their own and use their skills and expertise to inspire a sense of shared purpose within the project team.

The use of the change agent role is valid; however, to ensure a change effectively creates value requires long-term commitment. To increase the probability of success, a change requires a transition management plan that acknowledges the challenges associated with the current-state best practices and highlights the benefits associated with the desired end-state.

Despite this shift towards BM, PMI still maintains the position that ‘a project is temporary in that it has a defined beginning and end in time, and therefore defined scope and resources.’5 For this reason, assigning ownership of the BM process to a role that conducts work with an intentional, finite scope is not an optimal choice.

BRM: How value is achieved as a discipline capability, and role

BRM embodies a set of competencies for fostering effective, business value-producing relationships between business functions and their business partners. These competencies can be leveraged through a shared organizational discipline, capability, and dedicated role.

To ensure the success of the process, a dedicated role, the Business Relationship Manager, partners with business unit leaders to share ownership in optimizing business value results. Together these individuals build strategy together and take shared ownership for results while ensuring that business value is optimized as a team. Within a mature cultural setting, BRM can be effectively measured in four phases:

Identify: When an idea for a project is surfaced, typically in the context of a business problem that needs to be solved or an innovation-based initiative supportive of business strategy, the value proposition associated with the idea is clearly defined along with the initial change impact assessment.
Measure: Expected benefits around budget reductions or revenue generation are monetized. Process efficiencies are measured in hours that result in redeployment of staff to other activities. Third-class benefits (e.g. regulatory compliance, safety, and data quality) are termed “intangible;” a supporting metric usually cannot be applied directly. The project sponsor and requestors must provide a framework for how these can be assessed show when project value has been attained.
Track: In addition to budget, schedule and scope, the agreed measurements are introduced as requirements into the PMO’s status reports. This will keep project value as a target for the project team; a change in the value potential will be treated like any other risk or issue to the success of the project.
Validate: As benefits are identified and measures are discussed in earlier stages of the project, timing of post-project validation is also documented. A business relationship manager owns this task and regularly meets with project sponsors and stakeholders to assess whether the realized value is supportive of business case estimates.