Have you read The Faculty’s Making it Stick report yet? As part of the investigation into the challenges and opportunities presented by benefits realisation, our researchers undertook a literature review to understand the present state of play for CPOs worldwide.
There’s some excellent material out there on benefits realisation, predominantly in the IT space where organisations want to ensure they extract the full value from significant investment in technology and systems. The amount of literature confirmed that this topic is front-of-mind for CEOs, CFOs and CPOs in procurement functions all over the world.
Boiling down the literature review to a handful of key findings produced the following five recurring themes:
- Globally, benefits realisation levels are poor and remain an enduring challenge for organisations.
Four years ago, Aberdeen produced a stand-out piece of research that contained an assessment of benefits realisation levels across 130 organisations. The Aberdeen Worldwide CPO survey found that the industry average (middle 50 per cent of aggregate performance scorers) achieved an average of only 8 per cent realised contract savings. The best-in-class (top 20 per cent) organisations had an average of 17 per cent, while “laggards” (the bottom 30 per cent) realised only 4 per cent of contract savings.
Eight per cent is a truly alarming figure and by all rights should have sent the procurement profession into a panic. To illustrate, imagine you have a staff member who works hard, seems extremely productive, yet at the end of the year, someone from Finance taps you on the shoulder and informs you that only 8 per cent of the staff member’s claimed achievements have actually made their way to the bottom line. You’d be furious, and that person’s job would be on the line. The same applies to procurement teams as a whole – this statistic brings the effectiveness and credibility of the function into question.
Findings from an earlier survey published by Gerald Bradley (UK, 2006) estimated that 10 per cent to 25 per cent of potential benefits are achieved from investment in change, costing the UK over £50bn per annum. The Faculty’s own 2015 survey found an average of 50 per cent in unrealised savings across our research participants  – an improvement on Aberdeen’s 2011 figures, but still representing a lot of money being left on the table.
- Benefits realisation is inextricable from change management
The Making it Stick report makes the point that there’s no quick fix to improve benefits realisation. It requires an organisation-wide change management program to encourage shared ownership of procurement’s targets, drive cross-functional collaboration, improve end-user compliance and build a cost-conscious culture. C-level support is integral to this process to mandate change from the top.
A report from the Great Britain Office of Government Commerce entitled Managing successful programmes (2003) defined the necessity for change very succinctly: “The fundamental reason for beginning a programme is to realise benefits through change”,  while Gerald Bradley also framed his definition of benefits around change: “A benefit is an outcome of change which is perceived as positive by a stakeholder.”
Stay tuned for part two of this article, and be sure to download Making it Stick if you haven’t already.
 Limberakis, Constantine G. Procurement Contract Lifecycle Management: Assessing the value of contract automation, Aberdeen Group, December 2011.
 Bradley, Gerald. “Why more CEOs are turning to Benefit Realisation Management”, CEO Magazine, August 2006.
 The higher figure is likely to be due to the relatively small number of research participants drawn from The Faculty Roundtable, with higher-than-average functional maturity across the group.
 Great Britain Office of Government Commerce, Managing successful programmes, Norwich, The Stationary Office, 2003.
 Bradley, Gerald. Benefits Realisation Management: A practical guide to achieving benefits through change, Hampshire, Gower Publishing, 2006, p.102.