Opportunity Benefit Matrix and the Business Planning Process

In a previous blog on the business planning process, we discussed the post-go-live steps for creating the foundation of your business transformation process journey. These included:

• Understanding the opportunities available to significantly improve your business
• Creating an effective cross-functional team to drive the process
• Implementing and managing with the right set of performance measures
• Setting crazy, aggressive performance improvement goals
• Creating a process and culture to keep the business transformation momentum moving forward

The business planning process begins with a detailed understanding of the barriers to world-class performance that exist throughout your organization today. The Opportunity Benefit Matrix (OBM) provides a listing of the many opportunities for improvement identified during the Business Process Improvement (BPI) phase of the project.

How to Develop Your Opportunity Benefit Matrix

There are a few easy steps to developing your company’s Opportunity Benefit Matrix (OBM) to further your business planning process:

List Project Pain Points

Developing the Opportunity Benefit Matrix begins with a comprehensive listing of the problems that currently exist within each functional and process team. This should have been developed during the early stages of your transformation effort. If you skipped this step, then just start now by convening a cross-functional team that works each process daily and discuss the pain points they live with every day.

This cross-functional team will own the Opportunity Benefit Matrix and the process that follows, including leading the sub-teams that will assist in developing and implementing the process improvements that will yield expected benefits.

Categorize by Process Group

Next, categorize each opportunity by the process group and functional areas affected by it. This will help with grouping and filtering as you work through the OBM development process.

A good approach to this categorization is to look at the potential impacts from the customer’s point of view as shown in the example that follows.

Understand Qualitative Benefits

To properly categorize each opportunity by process group, it is important to understand the qualitative benefits of each.

These groups were initially categorized by the cross-functional project phase, i.e. Quote to Order, Design to Deploy, Plan to Produce and Ship to Invoice. However, many organizations are not structured by these process flows, they are structured instead by function or product line.

Categorize by Opportunity

Given this situation you’ll need to categorize the opportunities. A good approach to beginning this categorization is to look at the potential impacts from the customer’s point of view as shown in the example that follows.

Now that you’ve identified how the proposed improvements will affect your customers, take some time to identify how the positive impacts to the customer will affect the various functions and teams in your company.

Financials

Now it’s time to apply some financial impacts to the identified opportunities. It is often difficult to identify financial impacts to individual projects. I have found it helps to group several projects into a higher level, i.e. an initiative. At this level it becomes easier to see the big picture.

This is a given initiative that may provide the impetus to increase sales significantly while maintaining the makeup of the current team.

On the other hand, the opportunity could be a straight-forward cost reduction or improvement in cash flow, i.e. an inventory reduction. The key step is to develop an approach to quantify this financial impact.

Prioritize Opportunities

The final step is to prioritize the opportunities in your business planning process so you can have a rational discussion covering which ones to work on first. There are several thoughts on this topic.

One is to rate each opportunity on IMPACT, the cost of the inefficiencies caused by a problem, along with the COST TO REMOVE, i.e. how expensive will it be to implement tasks to address the opportunity.

Another thought is to look at the SEVERITY of the problem along with FREQUENCY, i.e. how often does this problem occur.

Either method can work, but one method may be a better fit for your company’s culture. For me, a simple mathematical model can create the initial prioritization, which can be adjusted as needed based on discussion and agreement between the team members.

An example of this mathematical model follows. Both approaches will yield a highest to lowest ranking:

PRIORITY = (IMPACT/COST TO REMOVE or IMPLEMENT)
PRIORITY = (SEVERITY x FREQUENCY)

Final Steps for Furthering Your Business Planning Process

After walking through the steps outlined above, you are finally ready to begin the process of correcting what may be years of frustration over which the identified problems have been developing.

With the priorities identified it will be imperative that the cross-functional team manage the process. Creating this cross-functional team and making it effective will be the subject of the next blog in the Business Transformation series.

To learn more about the business planning process, read our whitepaper entitled “7 Steps to Effectively Organize an ERP Project.”