How do you estimate the costs and benefits of your proposed change initiative?

Teams that I have been involved with have found that members that communicate change ideas in the same way tend to be understood and ideas accepted more often. Business cases should be to the point and answer a few key questions; 1) What do we want to do and why? 2) How will we measure success? 3) What are the potential outcomes? 4) How will we implement this? The business case needs to be no more than 3 or 4 pages with the potential outcomes section having a SWOT and cost/benefit analysis as an appendix. If all team members use this simple business case format, ideas can be analyzed quickly and direction set. If you know what outcome you want, start with that and then go back to number 1.

I often aim to align on what I call the "TRANSFORMATION PILLARS". 1 - Bring representative stakeholders in a room* 2 - share the vision / main ideas 3 - have them do a visualizing exercice, where they not only think about the future state but actively try to SEE it 4 - Gather all descriptions about the future state 5 - Identify clusters / patterns - those are your pillars *Note this is simplified, in practice it may take several sessions.

One thing I find helpful when defining the scope is to walk through the universe of all things that could be affected by an initiative and then get agreement from key stakeholders on what is in or out of scope for the study. For an IT initiative, this might look like defining what hardware, software and personnel are in within the scope of analysis. All the IT that the organization controls might be in-scope, but centrally controlled hardware and software that is unaffected may not be. In addition, especially with personnel, defining which organizations could be impacted plays a large role in defining the scope.

Any change initiative must be advercible and accepted by larger audience and when point come to estimating the costs and benefits of any change then i would say there various tools and technics that we can use to measure however it is perfectly depends on the costs what are the things we measure in it "Costs" can be financial or non-financial . so in generic way we can apply following cases while estimating the costs&benefits on any proposed change - a) Define the goals, outcomes & impacts b) Keep in mind all kind of benfits whthere it is tangible or intangible and its impacts c) Make some comparison between cost analysis of old /legacy projects with same resources with current project d) Always consider employees feed forward messages .

It's important to take into consideration both the financial cost/benefits and also the operational impact of a change. Involving stakeholders to build a shared understanding of what it will take to implement the change is essential. A business case can look great on paper, but be impossible to make 'stick' if it isn't built with a clear view of the organisational context.

1 - Involve the right people - Subject Matter Experts from all functions, not only C level, but also end users. 2 - Visualize the future state - the diversity of people will help you empathise with the future users after the transformation, which helps to detect costs 3 - Visualize the Transition / Transformation - once again, to have an exhaustive list of the costs, you need to picture each step. This way, you will identify what is feasible / what is not, and the associated costs.

To compare the cost and benefits of an initiatives, you should develop a cost element structure (CES) that captures all the facets of the costs of the current process (status quo) and allows for comparison to one or more change initiatives. The best practice is for those elements to be mutually exclusive and collectively exhaustive. Calculate the costs of the status quo by capturing baseline costs from financial records, surveys, or other methods for each method. Future costs are often estimated using techniques like parametric estimates, analogies, extrapolation from actuals, or analogy.

After identifying the right participants, I suggest to set up workshops and follow a DOUBLE DIAMOND approach: - ideate benefits (quantity is important here, does not matter how realist) - Assess and prioritize (select the key drivers with the group) - Design transformation scenari (we need several options here) - Refine and select the ideal one - this helps with the quantification of the benefits, as they are tied to the transformation you take (not only the ideal future state !)

Discounted costs of initiatives need to be compared to discounted baseline costs so that the financial benefits (or costs) can be captured. Net present value is often calculated, along with ROI and payback period. /use monte carlo simulations to get a range of expected benefits and costs with a sensitivity analysis. When presenting NPV or expected ROI, best practice is to use a confidence level, usually 50 or 80% to notate the expected ROI. If you don't have monte carlo tool, you can use scenarios to look at a general range. Benefits also need to be compared between the to-be and the status quo. This may be an improvement in a benchmark or some other set of performance metrics. Net benefits should be compared to net costs.

The desired future state will happen only if all involved stakeholders have something to gain from it / a nice experience of the transformation. If you fail to picture the experience your employees / clients will go through, you will not take this into account when you design your transformation, it will be a pain for them, so they will hinder (willingly or not) the value realization. If you properly thought about what they gain from it, their experience while going through the transformation ... That's what you need to communicate to them ! ;)

Estimating costs and benefits for a proposed change initiative involves a nuanced evaluation that extends beyond mere financial numbers. Consider the intangible aspects often overlooked but crucial in decision-making. Factor in the ripple effect on organizational culture, employee morale, and customer satisfaction. Similarly, the human element, often underestimated in cost-benefit analyses, warrants attention. Assess the emotional impact on employees, considering training needs, and support structures to facilitate a smooth transition. A holistic estimation considers both tangible and intangible facets, ensuring a comprehensive understanding of the initiative's true costs and benefits.