More on intangible benefits…

Craig challenged the inclusion of intangible benefits in a business case (here).  I replied to his comments, but I thought I’d convert it to a post.  Craig commented:

You know, I’m not so much a fan of putting intangible benefits into the business case.  Into the presentation and discussions yes. Into the document, not really.  How do you go about measuring them?

Craig’s comments get to the heart of the challenge w/ intangibles:

  1. Intangibles should indeed be considered “lesser” benefits.  We suggest keeping the intangibles separate from tangibles and weighted differently than tangible benefits.
  2. Business cases are heavily dependent on company culture — e.g., finance-driven companies.  If intangible benefits aren’t appropriate, don’t include them.
  3. If you’re going to put them into presentations and discussions, then they should be in the business case itself (and if they’re not in the business case, they shouldn’t be in presentations).  My experience is that this approach causes huge expectations issues.
  4. Per the original post, sometimes we mistake intangible for hard-to-measure.  If one can’t figure out how to measure them by the time one finishes the main set of requirements, perhaps it is time to remove the intangible or further discount it. 

As implied by Craig’s comment, if there is not even a theoretical measure available, is the benefit intangible or imaginary?

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4 Responses

  1. I recommend that people involved in large IT implementations spend some time studying the field of intellectual capital. Academics and businesspeople in this field identify three types of intangibles:
    People (incl. competencies, experience, capabilities)
    Structural knowledge (incl. processes, software, IP)
    Networks (incl. customers, partners, suppliers, brands)

    An IT implementation needs all three kinds of IC to succeed. To measure these intangibles (just as you would anything else), you need to take a baseline measurement, identify the desired change and allow for a follow up measurement. Intangibles can be measured. Sometimes it requires assessments or different tools than you may use now. But think how powerful it is to identify the full context of your implementation.

    Craig commented, “Business cases are heavily dependent on company culture.” I think he means that you design a business case to be consistent with the culture–and if they don’t value intangibles, you should ignore them.

    I would turn his comment around to ask, “what is the culture of the company and how will that affect this implementation?” and “what do we need to do to ensure that this project succeeds?” and, of course, “how can we measure this?”

  2. Hi Mary,
    Thanks for the input…I echo your comments. The intellectual capital angle gives a new perspective to the challenge here, which is acute in IT.

    Any blogs/site to recommend on the topic?

    Thanks again,
    Paul

  3. I just started blogging on intangibles at http://www.hybridvigor.net. Our community also maintains two sites at http://www.icknowledgecenter.com (informational site) and http://www.icrating.com (site for an IC assessment tool).

  4. [...] on measuring intangible benefits of IT (information technology) projects. The first by Paul Ritchie More On Intangible Benefits and the other by Tabrez Khan A Case for IT’ s Non-financial [...]

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