Understanding the challenges of value realisation  

As economic pressures loom large, 80% of CEOs are ramping up their digital technology investments, seeking a lifeline amidst inflation, talent scarcity, and supply constraints (Gartner). The promise of digital transformation shines brightly, but the challenges in value realisation are stark. 70% of IT transformation projects stumble, with a failure rate ranging from 70% to a staggering 95% (McKinsey). The question of realising true value from IT investments has come to the forefront. 

For vendors and integrators, challenges in value realisation abound. While customers express eagerness to invest, negotiating prices can prove arduous if business value gets overlooked. The repercussions ripple into the long term, jeopardising customer relationships, renewals, and opportunities for upselling and cross-selling. A jaded journey of value realisation can transform customer success into a tale of disappointment, impacting not only customers but also the CIO’s goals. 

To compound matters further, even when projects do achieve success, the disheartening reality is that, on average, customers only secure 67% of the envisaged value, leaving a significant 33% unrealised. For less successful projects only 37% of value is captured on average (McKinsey). The post-implementation environment is full of risks. This is where a staggering 55% of the promised value vanishes into the ether. These statistics underscore the urgent need for a more effective and sustainable approach to value realisation. 

 

So, what are the driving forces behind these challenges in value realisation and how can we mitigate them?

    Misalignment of value definitions

    In many instances, when value realisation efforts falter, a conspicuous opening emerges between how vendors and integrators define value and how customers define it. This misalignment poses a critical challenge, as value should resonate with the customer’s business priorities and strategic objectives. When this harmony is absent, the consequences can be dire – customer implementation teams often lose their energy, enthusiasm fades, and precious resources may shrink, all contributing to the loss of potential value.  

     The determination of value must squarely rest with the customer (Gartner). Vendors, however, play a pivotal role by offering support in constructing a strategic business case. Success lies in synchronising the defined value with the customer’s strategic priorities and establishing a robust baseline. When sellers can align value with the customer priorities, and have created a proper baseline, keeping teams motivated to realise value is a far easier task.  

     

    Lack of ambition and clarity 

     Another obstacle in the path to successful value realisation, identified as a key culprit by McKinsey, is the absence of ambitious goal-setting and inadequate communication surrounding the imperative of a successful transformation. This deficit in ambition drives poor value realisation. 

     Here, the onus falls on vendors and integrators to push the decision makers to set out the precise value they seek. Furthermore, their role is to foster ambition and unwavering commitment to value realisation. In essence, they must inspire customers to dream big and then light the path toward achieving those dreams. 

     Drawing on a well of experience, vendors and integrators can play a key role in tempering doubts and instilling confidence in their customers. Once ambitions are defined and quantified, the next step involves ensuring implementation teams and users are acutely aware of the impact the software or IT deployment is having. This awareness should extend to both individual and collective contributions, to gain the knowledge of how to exert influence. 

     

    Short supply of dedicated resources 

    The customer not having the dedicated resources, with the requisite skills, stands as a significant roadblock. Frequently, the teams driving transformational endeavours find themselves juggling multiple responsibilities, such as other roles. Such a precarious balancing act results in delayed tasks and a loss of focus along the way.

    This dilemma has far-reaching consequences, as highlighted by Gartner’s insights. Over 50% of digital initiatives fall short of meeting the expectations of CEOs and leadership. Additionally, 59% of these initiatives extend beyond their expected completion timelines, while a concerning 52% take an excessive amount of time to translate efforts into tangible value.

     

    Challenges in value realisation statistics by Gartner

    Top-performing companies consistently boast the presence of well-aligned skillsets and committed resources. Vendors and integrators play a pivotal role here, serving as valuable guides throughout the customer success journey. Their responsibility extends to offering gentle guidance to customers, aiding in the formation of both an aspirational “dream team” and a simplified, minimalistic team. At the same time, they must outline potential risks.  

    Lack of robust processes and tools 

    Lack of proper processes and tools, as highlighted by McKinsey, can seriously impede project success. Without the right systems in place, it negatively affects value realisation and the vendor’s customer success programme. 

    Essential processes include effective project management, clear communication, robust change management, regular follow-ups, and team updates. Tools like baseline and progress tracking, along with brainstorming aids, help to identify issues and find solutions. These components feed successful projects and support value realisation. 

     

    Continuity challenges  

     Consistency is elementary, but it’s often missing in the customer journey. One common issue is a lack of continuity throughout the customer lifetime, with frequent changes in key players from both the support team and the vendor’s team. 

     Our roundtable discussion emphasised the significance of continuity in value realisation. Customers value this consistency, as it augments their chase of long-term strategic goals. Keeping a stable team in place ensures a smoother and more effective journey towards realising value. 

     

    Stakeholder involvement gap 

    Poor involvement from all stakeholders involved in the value realisation exercise is a common trap. Despite the manageability of a smaller group, often, the best solutions to the challenges in value realisation lie beyond those confines. A select number of workshop attendees makes discussions limited. 

    Promoting collaborative intelligence, where hundredsor even thousandsof contributors can concurrently share their insights in an orderly way, tends to yield superior results. This approach massively enhances value realisation while frequently leading to the discovery of cost-effective solutions and quick wins.  

    Challenges in value realisation - McKinsey and Company.

    Software vendors and integrators have a tough job. They must run customer success and value realisation programs for numerous clients, spanning many years over the customer lifecycle. It’s a long-term commitment that requires careful planning and execution to ensure consistent success and value delivery. 

    The main challenges here are… 
    •  
        • Value realisation programs yield superior results when there’s a complete alignment between the value-based sales case and the value realisation baseline. This alignment not only streamlines and expedites the process but also establishes a solid framework, leaving no room for discrepancies in value definitions or expected outcomes. Companies that consistently align their sales and customer success processes tend to perform better.
        • When managing initiatives for multiple customers, it’s important to scale efficiently while upholding quality. This requires standardised processes and extensive automation, particularly for routine tasks and data collection. Striking a balance between simplification, standardisation, and automation while retaining a high level of sophistication is essential for success.
        • Customers often allocate minimal or no resources to value realisation efforts. All while maintaining high expectations for value delivery. To address this, it’s essential to highlight the need for value realisation as early as possible in the process. Including an agreement for a dedicated team in the project proposal, or even specifying a certain number of billable hours for value realisation services, typically leads to better project outcomes and places projects closer to the top performers.

    In conclusion, the challenge in value realisation is significant, but not insurmountable. Organisations that navigate challenges adeptly will not only realise the promised benefits of technology investments but also build lasting customer relationships, ensuring sustained success in a competitive market.

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