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at the
Title:
The influence and effective use of Information Technology
Faculty Supervisor:
(Approval Signature)
August 2009
i
Title of the thesis
in Japanese companies
By
Supervised By
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Acknowledgements
This study paper is a required part of my master program. During the time of research study, it
became obvious for me to take help from different people. In a word without their help, it would have
been very difficult for me to complete this paper. It is a pleasure for me to give my gratitude to them
in my humble acknowledge.
In the first place, all my sincere gratitude goes to honorable supervisor Professor Jay Rajasekera who
helped me lot from initial level to final level of this research study. Above all his encouragement,
guidance and support enabled me to build sound understanding of the research area. I am indebted to
I gratefully acknowledge the entire participant to whom I contacted over e-mail. Without their
information, it would not be possible for me to understand the current practice and perspective of
organization in Japan.
Finally, I remember and appreciate the contribution of some of my friends and seniors those who
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Abstract
In today’s world, IT is the major driving path for change. All the changes are driven by technology.
Almost all the organizations are using IT in their development and day to day business. And IT
Company is spending billions of money in development project. But most surprising matter is that
Deriving a sustainable value from technological change is the constant challenge for the
organizations. Harnessing the full power of systems, aligning with business perspective whilst
recognizing the importance of people, culture, and external drivers are toughest job. Six-sigma offers
such an approach.
Across the world many companies are considering their investments in business perspective to justify
their expenditure. Some companies also measure whether or not the benefits have been delivered. Yet
most companies still failed to achieve the full potential from their investments in change and IT. For
example, in US and UK the cumulative waste is around £58bn p.a. Now, more than ever, is the time
to realize that the old metrics do not work. A single fixed position doesn’t work for long time: the
world is changing too rapidly. In Japan, Fujitsu is one of the few companies started to use Benefit
Realization (BR) approach to make their initiative all the way from concept to cash.
The gap between what could be achieved and what is being achieved can be minimized by the
continuous and active management of benefits throughout the project or program life cycle. Business
Benefit Realization Management transform the change and IT focus from project-level to business-
level impacts.
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Contents
Acknowledgements........................................................................................................................iii
Abstract...........................................................................................................................................iv
Contents............................................................................................................................................i
Chapter 1: Introduction....................................................................................................................1
1.1 Introduction............................................................................................................................1
1.2 Motivation and objective.......................................................................................................2
1.3 Thesis structure......................................................................................................................2
Chapter 2: Present IT Management: Global and Local Perspectives..............................................3
2.1 IT investment trend: global and local perspective.................................................................3
2.2 Alignment of IT with corporate strategy: pros and cons.......................................................4
2.3 Alignment of IT with corporate strategy: global and local perspectives...............................5
2.4 Current IT investment management in Japan........................................................................8
2.5. HR Aspects of IT in Japan .....................................................................................................11
Chapter 3: Benefit Realization Approach......................................................................................13
3.1 What is Benefit Realization (BR)?......................................................................................13
3.2 Frameworks for benefit........................................................................................................13
3.3 Benefit Realization model....................................................................................................15
3.3.1: Cranfield process model of benefit management........................................................16
3.3.2: Active benefit realization (ABR) approach.................................................................17
3.3.3: A conceptual model for evaluation of IT project:........................................................18
3.3.4: Project Appraisal Method (PAM)................................................................................18
3.3.5: The DMR model for benefit realization......................................................................19
3.4 Utility with BR model..........................................................................................................21
3.5 Issues related with the adoption of BR model.....................................................................21
Chapter 4: Research Methodology.................................................................................................23
Chapter 5: Findings and Analysis..................................................................................................26
5.1 IT mangers’ approach towards BR strategy:.......................................................................27
5.2 Business mangers’ approach towards BR strategy:.............................................................28
Chapter 6: Linking current practices with BR approach...............................................................29
6.1 BR vs. Strategy Map............................................................................................................30
Chapter 7: Conclusion and Future directions.................................................................................32
7.1 Conclusion and Recommendation:......................................................................................32
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7.2 Future research direction:....................................................................................................34
References.......................................................................................................................................iv
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Chapter 1: Introduction
1.1 Introduction
Ongoing developments in information systems (IS) and information technology (IT) have resulted in a
growing need among organizations to build, integrate and acquire the most suitable applications that will
enable them to achieve their corporate strategy more efficiently and effectively (Lin and Pervan, 2003;
Peppard and Ward 2004). This potentially demands huge financial commitment and high risk exposure
which organizations need to recognize and manage in order to justify, prioritize and carry out their
investment in IS/IT.
Organizations have difficulty in justifying their investment in IT because they primarily consider capital
return by using financial evaluation techniques. But many researcher (Farbey, Targett, and Land 1994;
Shang and Seddon 2002) have asserted that IT investment should be considered on the basis of business
benefits derived from the project not only capital return. The logic behind this argument supports current
incidents like ongoing incidence of project failure, budget overrun, project cancellation and delay in
project delivery.
All those factors clearly indicate that organization needs to use one or more non-financial techniques that
look beyond purely quantifiable IT benefits. The recent study by Lin and Parven 2003 indicate that it is
rarely an organization using any formal Benefit Realization (BR) model for justifying IT investment.
However it is also noted that organizations using some kind of BR approaches have achieved a significant
level of satisfaction from IT investment. So there is a positive perception on the use of BR methodologies.
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1.2 Motivation and objective
In the IT field competitive advantage, task efficiency and effective information management are the key
points to consider prior investment. Evaluating and realizing the benefits are the complex job for the
company. Project failures, budget overruns and cancellations are common phenomenon in IT investment
sector. Many researchers argue that some non-financial techniques can be more valuable in business
Benefit Realization is such a type of approach to facilitate organization to derive benefits from IT project.
It appears, however, that most organizations in Japan have failed to change their practices in part due to
My objective is to look into the underlying models that exist in Japanese companies and relate to the BR
models developed by some of the UK companies. Fujitsu Japan is already in its way to implement a fully
functional BR model. I also would like to have an overview on the current BR strategies being employed
by some major companies in Japan and try to propose a better model for the same.
This thesis is organized in seven chapters. The next chapter reviews current IT management practices
throughout globally and locally in Japan, and then the chapter 3 describes Benefit Realization
Approaches. These two chapters outline the potential significance of this study from the business point of
view. The survey method, sample selection and associated information are discussed in chapter 4. Chapter
5 represents comprehensive results with respect to the research objectives. A correlation between current
IT management practices and BR approach are being discussed in chapter 6 and final chapter presents
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Chapter 2: Present IT Management: Global and Local
Perspectives
2.1 IT investment trend: global and local perspective
It is already clear that all the technological developments happened mostly for the growing needs of the
also increasing. This growth is basically in order to keep up with technological advancement. In recent
time common applications are internet-based system, mobile technology applications, enterprise resource
planning, supply chain management, customer relationship management, decision support systems,
information portals, data warehousing and others. All these applications are mainly intended to shape the
Today’s organization is much more information driven, so the predetermined perspective to gain financial
benefit from IT applications is also gradually changing towards business benefit. IT innovations and
applications are usually involve huge financial commitment and cost cutting, so improved task efficiency,
improved productivity, availability of timely business information for effective decision making, and
either to gain/sustain competitive advantage, or to maintain business agility are the major drivers for IT
investment from an organizational perspective. But these concepts are gradually changing. Now a day’s
organization not only invests in IT just for a competitive advantage, though for some it is primary for
The widely claimed paradox of IT productivity arises mainly when IT project fails to deliver any or some
of the expected business benefits. Most commonly identified causes are as follows:
• Improper alignment of the organization’s business objective with IT project objective, leading to
• Organizations’ impatient to wait for long term and yet to be realized IT benefits
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• Use of financial techniques to evaluate IT returns, consider only monetary return ignoring the
intangible benefits of IT
The financial techniques like return on Investment (ROI), Net present value (NPV), Internal Rate of
return (IRR), Cost-benefit analysis and other similar payback approaches for calculating return of IT
projects are failed to consider the long term and intangible benefits accrued from an IT investment.
Researchers, therefore, suggest that organization needs to look beyond such financial techniques in order
to effectively justify their investment. This paper will address the above mentioned issues whether
Japanese organizations’ can utilize any non-financial techniques which are more suitable for IT
investment project evaluation from both business mangers’ and IT managers’ perspective.
‘Aligning IT with business’ or ‘Aligning IT with corporate strategy’ depends on better understanding of
corporate strategy and selection of suitable technology that may enable the organization to achieve its
corporate strategy. Therefore a clear understanding of corporate goal and IT needs are a must to secure
The key factors of gaining success from IT investment are to have a clear business strategy & model, and
an information strategy that supports those. The success of the business and information strategy depends
heavily on the use of technologies. The organization who fails to realize the above mentioned issues leads
Based on the review of relevant literature, there are several factors that underlie ineffective IT-business
alignment, like:
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• Difficulties in defining role of IT and Information in organization
As a result, sometimes IT manager “oversell” the IT project to organization that ultimately bring lower
return from investment. Sometimes unrealistic high expectations results lower level of perceived benefits
than those organizations’ that are associated with realistic benefits. As a result at the end of the day
business manager failed to gain expected benefits and start to consider IT as a cost & utility center, and
So making IT manager aware about the organization’s strategy is extremely important and critical to
overall success of organization. Basically organizations who highly welcome IT participation in overall
business planning produce better result than those organizations with less participation.
In fact IT and business are equally responsible for making an IT project successful. Making right
investment decision is an important factor. Apart from the financial measures, pre-investment appraisal
technique like Technology Acceptance Model (TAM) can be used to consider the pros and cons of any
proposed project.
Based on the literature review in this arena, prioritization of IT initiatives is influenced by two
interdependent factors-economic and human factors that can lead to ineffective decision on IT
investment. The economic factors encompass the financial situation of the organization and its ability to
• Organizational culture
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• User groups competence to use a particular technology
To select the appropriate IT project, developing a sound business-IT strategy by collaborating IT and
business management is the key. In addition stakeholders’ knowledge, attitude, and experience are also
crucial factor.
Peppard and Ward (2004) developed a new model that incorporates a new component called ‘IS
capability’ emphasizing the influence of IS capability across a range of strategic and operational activities
Figure 1: The new IT alignment: IS capability and organizational performance (Source: Pappard & Ward,
2004)
The model extends the view of aligning IT with business and suggests proliferation of IT value
throughout the organization. Performance of IT in each area contribute to create new business avenue,
provide support, contribute to the business strategy and in turn produce better organizational performance.
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This model may not guarantee the success of evaluation of IT but to avoid the failure complication
organization needs to monitor the IT value chain closely and consistently by creating a paradox of IT
productivity. To monitor & manage the IT project effectively and to mitigate the potential risk, it is
important to understand the different categories of IT project and their role in every phase.
• Strategic
• High Potential
• Key operational
Figure 2: The Application Services Portfolio and IT Infrastructure (Source: Pappard, 2003)
The infrastructure depicted in this figure indicates the impact on the infrastructure by the capabilities of
those IT applications in the four areas. Commonly finance manager and others at the board level in an
organization are responsible for IT spending and to maximize productivity that eventually improve the
financial performance of the organization. But collaboration between high level business and IT
personnel can enable them to understand each other’s objective, problems and limitations.
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A popular press article “Connecting IT investment to Value, 2003,” instantiates a common problem faced
in US organizations with regard to evaluating IT investment. It is reported that not even 12 percent of
organizations are able to provide information regarding technological spending. Furthermore it also
reported that 72 percent of organizations do not effectively tie IT investment with business strategy and
goals. So still it is a big problem for organization to collaborate IT strategy with business strategy
effectively.
Japan is already known as knowledge based society and a R&D hub. It’s even applicable for almost every
organization regardless the sector. ICT is considered as most dynamic, largest and prospective sector in
Japan in terms of market scale having annual average growth rate by 5.4% and total IT investment market
by 120 trillion yen in 2005 (source: JETRO market overview 2005). ICT sector is playing a key role to
align business with IT regardless the sector and contributing to create a ubiquitous network society.
Having high rate of technological advancement, Japans’ competitiveness underlie in IT investment mostly
known as R&D. The following figure (figure 3) represents a general picture of ICT industry that enable
us to understand the area and the scope of IT investment & its importance in Japan. The Economist
Intelligence Unit reports that overall index report of Japan is 72.7 that is still behind of US by 4.7 but
Solutions Terminales
-Food traceability -Digital TV
-Home security -Mobile phones, PHS
-Online shopping -Car navigation Systems
-B2B electronic marketing -Wear able terminales
-Online games -Information Appliance
-E-mail, video mail -Ubiquitous terminal
-E-government and e-municipalities -Electronic tags
-Video and music delivery -DVR, video
-Distance education -Game machines
-Electronic books -PDA, mobile
-ERP (Enterprise Resource Planning) -Phone, Fax
-SCM (Supply Chain Management) -Network robots
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-CRM (Customer Relationship -PCs
Management) -Sensors
-Videophones
-Telemedicine
-ITS (Intelligent Transport Systems)
-Disaster monitoring
-Employment systems
-Electronic data exchange
Platforms Networks
-Digital rights management -Cable Internet
(DRM, etc.) -Cable TV
-Authentication -Optical fiber
-Accounting, accounts settlement -Home networks
-Time stamping -Fixed line networks
-Security -Wireless LAN
-Privacy -Bluetooth
-Systems infrastructure -Terrestrial digital broadcasting
-Positional information -Transport related systems
(DSRC, etc.)
-Satellite broadcasting
-Satellite communications
-Electronic tag networks
-Sensor networks
-Next-generation mobile phone
Networks, DSL
Figure 3: Structure of Japan’s ICT Industry (Source: “Advisory Body for the Realization of a Ubiquitous
Network Society - Final Report, “Ministry of Internal Affairs and Communications, Japan)
The scale of the market is enormous, and it is still growing steadily. It is also expected to grow in a
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Online billing/payments 222.0 456.2 15.5
Information security 369.2 548.7 8.2
Wireless broadband 13.1 382.6 96.4
Figure 4: Projected market scale of main ICT fields (Source: “Japan’s Major IT Markets: Scale and
Note: *1: The forecast for Internet advertising is based on calendar years, rather than on fiscal years.
*2: CAGR (Compounded Annual Growth Rate) refers to the average annual growth rate during the period
The above-mentioned facts clearly indicate the potentiality of IT investment market in Japan. Unlike
global market, Japan is a fertile land for IT. So an organization needs to concentrate on project investment
to meet the business needs by creating fast value for organization. But gaining shareholders’ confidence
and credit situation of an organization are important factors for success. It is a constant challenge to sort
out the best opportunities in order to streamline the operation. It is also appears that both private and
public sector organizations are highly involved and interlinked with IT investment.
Similar to international organization, the main driver for IT investment in Japan is still cost reduction,
management, and to improve decision-making strategy. There are likely to be increased number of IT
applications, ERP, supply chain management, CRM, storage system and data warehouse. But keeping up
with the technology has become the main challenge for the organization. Increased competition, tougher
regulatory issues, and changing consumer demand have also put pressure on Japanese organizations. For
example, the mobile platform is heading to fourth generation technology; broadband platform using Wi-
max and all businesses is collaborating with these two platforms that require huge financial commitment.
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2.5. HR Aspects of IT in Japan
It is evident from the analysis that the trend towards investing to IT is to utilize the most appropriate tool
or IT innovation according to business strategy. Not all those aspects are beyond the risk. HR attitude is
A survey conducted by Fuji Xerox in 2004 addresses some ongoing challenges related to management of
IT projects (Caunce, 2004). Questions were put to 200 CIOs and CFOs from top 400 businesses intended
to identify the major causes of failure. It is reported that the major causes are unclear objective, high
expectations, lack of collaboration and failure to fulfill expectations. Around 50% of the respondents
agreed with the above mentioned causes. One-third of the respondents suggested that investment fails if
technology fails to increase competitiveness. The same study also suggested that the misunderstanding of
One of the key reasons to IT evaluation paradox is ineffective IT management. Davis and Thomson
(1995) identified critical issues in IT management according to IT manager, consultants and academicians
in an effort to benchmark them against international studies. The purpose was to inform IT community
about the key issues and to help them to prepare themselves to handle more effectively and efficiently.
These issues (figure 5) ranked from the IT community viewpoint mainly addressed the HR aspect of IT.
Issues Rating
IT and Business alignment 6.40
IT staff skills 5.70
Competitive advantage 5.57
End user computing 5.41
Telecommunications 5.39
Security and control 5.16
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Identifying projects 4.99
Measuring IT effectiveness 4.86
Open systems 4.71
Application proliferation 4.63
It also indicates the prominence of issues in Japan just as other countries in the world. Understanding the
impact of various factors identified by studies globally in managing strategic information system, the
current study will focus on identifying the link between current IT practices and organizations’
Therefore, the next chapter will address the effective IT management issues from non-financial
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Chapter 3: Benefit Realization Approach
3.1 What is Benefit Realization (BR)?
Most commonly, IT evaluation process falls under three categories. The first is to evaluate in terms of
cost, the second is in terms of benefit and the third & important one is to balance benefit against cost. BR
Benefit realization or benefit management is an approach used to identify, prioritize and optimize
business benefits arising from IT projects, which cannot be done effectively through traditional financial
Benefit realization is also defined as the process of organizing and managing such that potential benefits
arising from the use of IT are actually realized. Benefit realization model basically helps organization to
keep track of the processes involved in successful IT management and increase their ability to identify not
To cope up with the technological advancement and growing need of consumer, the investment in IT are
increasing for as organization but in most cases with low return on investment and more project failures.
A study cited by Thorp highlighted that 87% of the project were completed late, 57% were over budget,
and 45% failed to deliver expected benefits. Similarly In an average 70% of the IT projects ran either over
After reviewing literature in the respective area it is understood that management culture, experience,
technological expertise and size of the organization determines the perceived business benefit from IT
projects. Organization needs to be aware of what to expect, and how and when to harness those benefits
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from their projects (Shang & Seddon, 2002). To gain full potential, a widely suggested approach is the
targeted approach rather than generic approach because in most case benefits are being distributed
throughout the value chain of the organization (Mahajan & Vakharia, 2004). This can be done by one or
more benefit frameworks such as strategic, organizational, and technological framework (Farbey, 1994).
The use of these three frameworks can help organization to realize and prioritize the benefit at each
particular level. At the same time it enables organization to increase the benefit discovery scope even
after project completion it can help to extend the scope of obtaining unexpected benefits.
Having a similar objective, Shang and Seddon (2002) recommended a new benefit framework that
encompasses the views of several researchers. The framework focuses on five different dimensions that
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The given framework works like an indicator for finding the scope of benefit in order to develop more
relevant and accurate benefit charter. It also highlights the probable tangible and intangible benefits for
organization.
Despite the disadvantage of not having proper means to quantify the intangible benefits, this framework
can still be an effective tool to consider the value of IT from non-financial perspective. An enhanced
As just described, benefit framework creates a platform for benefit identification but to manage the
benefit realization (BR) model contributes to the effective IT management that encompasses a series of
activities and techniques based on the concept of total quality management (Ward & Peppard, 2002). In
fact, BR model is a descriptive approach for handling and obtaining perceived business benefits.
Several IT researchers (Gunasekaran et al., 2001; Ward & Peppard, 2002) have developed different
models that may facilitate benefit delivery. Most widely known BR models are:
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3.3.1: Cranfield process model of benefit management
The IS research centre of Cranfield School of Management in association with few industry experts from
some UK-based organization developed the Cranfield process model of benefit management. The
underlying purpose of the model is to identify the benefit of projects, to allocate responsibilities in proper
way, and to recommend tools and techniques in managing the projects in order to analyze the successes
Figure 7: Cranfield process model of benefit management (Source: Ward and Peppard, 2002)
The model describes six iterative processes beginning with aligning business and IT objective together by
analyzing probable benefits that technology can bring. It aims to help constant checking of gaps between
expected and delivered benefits at every stage and also helps to take required changes in action plan if
needed. Users’ and other stakeholders’ perspective are also taken into consideration in stage four enabling
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3.3.2: Active benefit realization (ABR) approach
The ABR model for IT project designed by Remenyi & Sherwood-Smith (1998) aims to increase business
benefit delivery from information system as well as reduce waste & ‘time to market’ of appropriate
Validation
5 6 7
Decision to 2 3 4
1 2 2 2
proceed 2 2 2
Review Development
Production System Evidence
Initialization Agreement & Of updated
of development collection
of Project to proceed Learning Pictures
Picture
Key
involves Determination of
Involves ie. Installation
business opportunity
phase
etc.
Figure 8: Active benefit realization approach (Source: Remenyi & Sherwood-Smith, 2002)
The ABR program includes seven major activities enabling organization to record all activities
throughout the lifecycle of a project starting from the very beginning of the project implementation and to
make informed decision about the implementation of the project by making a correlation between
delivery capacity and required action for corporate strategy with a solid consideration of financial impact
on organization. It helps organization to check the project performance continually so that the project can
be terminated before reaching to worst situation. This model also emphasizes active participation of
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3.3.3: A conceptual model for evaluation of IT project:
A group of experienced academics in the IT and management arena developed and successfully
implemented this model in a European multinational organization. They claims that this model considers
strategic direction of organization, intangible benefits and non-finance performance measures that was the
Figure 9: Conceptual model for evaluation of IT project (Source: Gunasekaran et al., 2001)
Hence this model was developed to address such perceived limitations. It comprises five dimensions of
evaluation; utilizing strategic, tactical, operational, financial and intangible investment appraisal
techniques. The prime difference with other models is that it suggests specific benefit measure enables
PAM is another set of tools having three main dimensions of evaluation of IT investment project,
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• Strategic and intangible benefit appraisal
Three main outcomes of this approach are a financial model of the cost & benefit, a risk management plan
and a benefit profile incorporated into an IT project development lifecycle. The financial model enables
and encourages sensitivity analysis of investment project by calculating measures such as the project
payback period, the internal rate of return, and the net present value. The risk management plan helps to
estimate the probability of risk and to calculate their potential impact by identifying main risk based on
the feedback of users or stakeholders. The benefit delivery plan highlights the intangible benefits
compared to main organizational objective after assessing the initial business process.
It’s a product of DMR consulting group designed to address the issues of IT benefit realization and
benefit management suggesting that business process may have to undergo a series of iterative changes
and actions. This is needed because unless organizations are not putting best efforts to retrieve expected
business benefits the greater value from IT investment project cannot be obtained (Thorp, 1999, 2001).
The challenge goes to IT manager combining on time action and budget requirement.
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According to Thorp (2001), the main aspects of DMR’s BR approach are as follows:
• In order to link all IT projects with business objectives it is necessary to group all projects under
• While grouping deferent projects, probable series of changes in process should be managed
• It focuses on managing individual project in single portfolio to ensure its contribution to strategic
goal.
• Further, a full cycle business governance approach is emphasized to manage each project,
program and portfolio in order to obtain business benefit from each one of these.
The result sought: to achieve the ultimate benefits it is necessary to sort out
intermediate outcomes in the chain
Outcomes
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The most challenging part of the implementation of DMR approach is to implement a full fledge business
program. A business program is different from technology project. It’s a combination of various projects
and involves people in each project. So it is necessary to establish a relationship between each project and
people who are involved. Cultivating a different mindset of taking technology change as an organizational
change is another challenge. To address this issue DMR developed a result chain by utilizing four main
elements- outcomes, initiatives, contributions and assumptions (figure 11). A business program developed
by using these core elements provides a guideline for manager to locate benefits and encourages them to
proactively think in different ways of obtaining benefits and deciding whether they are doing right thing
in right way.
After reviewing the literature in respective arena, it is clear that BR is considered as an iterative process
that requires clear understanding of business needs, identifying both tangible and intangible needs,
selecting appropriate technology, managing execution and exploiting innovative business opportunity that
technology can bring. The BR techniques logically link the process associated with benefit identification,
prioritization and so on to better optimize the outcomes from a particular IT project by ensuring benefit
delivery.
The models discussed in previous section are the same fundamental concept. There are some differences
in details however. The most common element in all models is the ongoing need to take stakeholders’
perception into consideration and making the BR a part of organizational strategy. The integrated BR
strategy can create a link between business and IT. As a result the collaboration between IT and business
Even though formal benefit realization techniques are available however organizations are not happy with
the efficiency & effectiveness of existing models and organizations in UK & US expressed a mixture
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perspective about BR process such as complicated to implement, confirmed by few international studies
(Gunasekaran et. al., 2001; Lin & pervan, 2003). Some organizations also think that BR was simply waste
The situation regarding BR in Japan is not so popular like US & UK. This is relatively a recent
phenomenon in Japan. Though there is nothing called “Benefit Realization of IT” except few cases
however we can see some practice closely related to BR like measuring IT effectiveness, identifying
project, competitive advantage etc. The important job is to create awareness about BR approach in Japan
since BR approach can combine several functions into a single entity rather than spreading it across a
range of activities.
Few studies highlighted some factors related with the adoption of BR strategies in organization and most
of them are related with organizations’ varied perception towards using particular model (Thorp, 2001;
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Chapter 4: Research Methodology
A full context of the study has provided in the previous chapters highlighting the relevance and the
importance of BR from holistic view point but it is relatively a new phenomenon in Japan. The ultimate
objective of this study is to analyze the Japanese organizations’ perspective regarding Benefit Realization
strategy and to create awareness among them by showing the relative advantage of Benefit Realization
This study previously discussed different factors having significant influence on the adoption of BR
model worldwide. Among them particularly awareness, use and effectiveness seems to be the key factors
in Japan. Therefore this study focuses on analyzing the impact of these three factors from IT and business
managers’ perspective.
The research paradigm chosen for this study is explanatory and descriptive. Understanding the present
situation regarding Benefit Realization approach in Japan and analyzing their perspectives from general
viewpoint is the ultimate objective. Since not many companies in Japan are using BR strategy so it
becomes difficult to analyze its effectiveness and also their perspective. Therefore, supporting documents
have been collected from company websites, articles and different blog posts. As for the pilot survey, e-
mail has been sent to some selective organizations but it suffered from low response rate and unclear
thought about BR strategy. So this study attempted to fulfill research objective depending on different
It is observed that a significant portion of employment in Japan has been provided by SME sector. This
portion is also as important as large organization. Since Japan is technologically advanced country, most
of the company has somewhat technology orientation. But surprisingly still they perceive IT as a
technology issue. Most of the case SME does not make the effective use of IT due to inappropriate plan
and lack of knowledge of what IT can do in terms of deriving business benefits. They usually fear of
losing market share and wasting money to integrate IT and business for long term benefits. It is also
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observed that usually project failure rate in SME sector is higher than the large organizations just because
of inadequate knowledge of IT project management keeping align with business objective. Therefore this
study also targets to build awareness among SME along with large organizations regardless the industry.
Different conceptual models have been discussed in previous chapter after reviewing extant literature.
Later on it also has been discussed what are the main hindrances of adoption of BR models that started
with organizations’ attitude towards implementing BR model. In order to analyze these issues this study
tries to draw an overall pictures regarding BR and current practices that are given below based on which
3. Business value
Crucial factor with current
Business
practice
Benefit from
Business benefit of IT
IT
4. BRM
5. Recommendation for BR
Awareness, usages and
Issues related with BR
effectiveness
Suggestion to use BR
Use of BR models
As mentioned previously the objective of this study is to understand and analyze the current business
practices and their perspective towards BR strategy. So the target population (figure 13) has been chosen
among organizations that are using IT in their business regardless the industry. It was not so easy to find
secondary information however this study tries to focus on the following industry sectors:
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Industry sector No of organizations
IT, Business 3
Automotive and manufacturing 2
Finance, Banking 3
Communication and Media 2
Total 10
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Chapter 5: Findings and Analysis
As I discussed before the main objective of this survey is to analyze the factor that influence the adoption
of Benefit Realization models in Japan after assessing the current practices and perspectives regardless
the industry. To meet the study objective this chapter discussed IT managers’ and business/finance
managers’ view on their current practice and BR awareness & interest in obtaining business benefits from
IT project.
In Japan most organizations are seeking best uses of their IT investment. In line with this trend a long
back only Fujitsu and IIB bank implemented BR strategy in their overall business practice contributing
significant improve of their business performance as well as derived business value. They considered
large scale IT investment as a capital investment and implemented BR model in their practice in order to
convert all concepts into cash. It is already proved that BR takes an organization far beyond from
• Change management
• Accountability
The benefit management approach replaces the traditional cycle and gives a bigger perspective
throughout the result chain. To implement this approach they altered four key areas and adopted a new
approach;
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• Investment program management
Though they have a long success history however this kind of practice still is not common in Japan. The
interest for BR is just growing for the low success rate of deriving overall business benefits from IT
investment project. Most of the case they consider IT from technical viewpoint and evaluate IT
investment project from traditional approach like ROI, cost-benefit analysis etc. rather than counting
Generally, IT managers think that IT investment is a strategic decision for the organization and it has a
significant role in the organization. But unfortunately justifications of the IT investment proposal are
always being done by the business manager. Business management is also doing the reviewing of the IT
project. In most case, IT manager works as an implementer of an already taken decision. Business
management consider IT project from the standpoint of cash return rather than considering its’ overall
business value. They implement it to improve the process efficiency and to satisfy information needs of
the organization.
On the other hand, IT mangers think that the derived perception need to change and it should be
considered as strategic decision & integral part of Business Process Re-engineering. Therefore, it is
important to adopt a constructive approach to determine the business value from IT investment project.
Also management process need to link up with business value to IT. So it’s all about the perception of
organization. Therefore changes require to current thinking process of the organization towards
measuring IT project.
27
5.2 Business mangers’ approach towards BR strategy:
Generally business manager evaluate and review the IT investment project. They usually think that IT
takes a big portion of organizational budget. So it has to produce quick cash return. Though they think
that it has a significant contribution to improve the business process however, it needs to be justified from
immediate cash return rather than counting overall impact on business value. So the main bottleneck of
implanting BR model belongs to the attitude towards using it. Integrating IT investment appraisal &
justification with overall business value measurement is often considered as wastage of time & energy. IT
is just for process improvement and to satisfy information needs of the organization. It is also noticed that
some of their current practices is also more or less similar with BR model but in a small scale.
With the discussion of both viewpoints, it seems that there is a need to link up current business practice
with BR approach. The next chapter discussed the need and process of linking current practice with BR
approach.
28
Chapter 6: Linking current practices with BR approach
In 4th chapter, this study used a framework to analyze the current practice of organization and what need
to be done in order to gain maximum business value from IT project (Figure - 12). This study also
Based on the discussion it is clear that the key factor for the adoption of BRM in Japan are awareness,
effectiveness and use. Organizations are not yet fully aware about the potential benefits of using BRM. It
is not like that the organization has given lower status to BRM than other traditional approach, they are
simply unaware. IT not only improves operational efficiency but also bring business value to
organization. The important factor is connecting IT with business from holistic viewpoint. It is just like
value creation chain throughout the entire organization. Recognizing the contribution of IT in all areas is
necessary in order to change their attitude towards BRM. Since the awareness level is low, ample
opportunities are waiting in the market depending on awareness creation. To derive full business value,
Selection of
IT project
Evaluation
based on
derived Monitoring
Effort benefits
benefits
Business Goal
Figure 14: Tasks need to accomplish in order to gain benefit from IT project
But before going to implementation stage every organization needs to improve their learning about other
metrics that can ensure business delivery. If organizations’ start learning about BR models they can
29
realize their effectiveness and side by side it will increase awareness followed by use. The main theme
Awareness
Knowledge Knowledge
increase increase
Increase Effectivenes
Use
s
BR models have already been discussed elaborately in chapter 3. In essence, the main purpose of BR
strategy is to create business value from IT investment. To gain business value, BR should be in the par of
organizations’ overall strategy. Given the focus on BR models, organization needs a path to go for BR
practice. Strategy map can be a process to create awareness for BR strategy. It describes how organization
can build strategic themes based on growth and productivity (Kenneth W. Witt). It creates a way for
organization to describe and communicate strategies. It represents the visual picture of the whole
organization that represents overall organization concisely. The fundamental of a strategy map includes
six iterative processes that are determining objective, determining dominant value proposition, key
financial strategies, key customer related strategies, key internal business process strategies, and key
learning & growth strategies. It mainly converts intangible assets into tangible outcomes.
30
Figure 16: A Strategy Map (source: Robert S. Kaplan and David P. Norton)
Strategy map gives a clear path to derive value and BR is the execution of value deriving process. Given
this comparison, it is clear that strategy map creates an avenue for BR strategy to connect and derive
31
Chapter 7: Conclusion and Future directions
7.1 Conclusion and Recommendation:
The ultimate objective of this study was to identify key factors influencing on the adoption of BR strategy
in Japan. To achieve the objective this study came across the evaluation of current practice, their
awareness level and perception. From the whole discussion and analysis, it is apparent that the approaches
generally used in Japan are inapt. They failed to quantify business delivery form IT investment often
resulting to project failure. It is also noticeable that most of the organization in Japan are using IT and
spending huge for IT project but still lacking from formalized approach. They still consider IT as a tool to
improve process efficiency. It is also observed that most of the organization does not use any systematic
approach to increase perceived benefits. But all those factors are indirectly related to gaining business
benefit. Here BR strategy is a solution for aligning IT and business strategy effectively. But despite of
low awareness level regarding BR approach most of the organization in Japan depends on traditional
approach that is not enough to derive whole business value. Even though some of their techniques are
similar with BR model such as periodic meeting, feedback, and implementation review however it needs
Considering the current situation it is recommended for the organization to use an organized approach
like:
It is also observed that organizations are seeking a formalized approach for IT investment appraisal. Here
any of BR models can be the solution of deriving full business value from IT investment. But awareness
32
level inside the organization is the bottleneck of implementing BR strategy. So it becomes evident to
increase awareness. Attending seminar, talking courses can be the solution for them to increase
awareness regarding BR approach because they need to understand clear position of IT and business
strategy in an organizational framework, and which factors need to consider to integrate those two
strategies. So in light of discussion of BR models, awareness level, and perceptions, this study
recommend organizations to use the following framework that will help them implementing a full fledge
BR model:
External environment
Business + technology
33
7.2 Future research direction:
The current study can be considered as the baseline research for the adoption of BR model. It identified
First, this study can be extended with extensive survey with different organizations by interviewing of IT
Second, it can be done from different category of organization like large, SME, private, international etc.
Finally, developing hypothesis and conducting research can be another direction. This research can be
34
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