Building a Benefits Management Framework within IAG Natalie Pritchard October 2013 I have worked in the financial services industry in various disciplines over the past 25 years, including operations, business analysis, retail, quality, project management, and is Six Sigma certified.  I am accountable for the management of benefits for a major cross functional strategic change initiative in IAG.

Introduction IAG has a portfolio of general insurance businesses with leading and established brands across its home markets of Australia and New Zealand, and a growing presence in Asia. IAG underwrites around $9 billion of insurance premiums each year and employs over 13,000 people Direct Insurance trades nationally under the SGIO, SGIC & NRMA brands Core lines of business include Motor, Home, CTP and Business insurance Direct Insurance initiated a major strategic change program last year More than 70 projects will deliver significant Customer, Staff and Financial benefit over 5 years Benefits Management is one of the key controls employed to ensure that the change program is delivering successfully

Benefit Management in IAG DI Guiding Principles Every Project is responsible for delivering or improving one or more business capabilities in line with the End State Design Delivery/improvement of capability triggers Benefit Drivers that deliver Benefits. Project success measures are defined and accountability for delivering Benefits is agreed prior to business case approval. Benefit Owners sign up to benefit estimates included in business cases. Benefit realisation is tracked throughout the project lifecycle and for a period of time after project completion as a measure of sustainability. 2. A Benefit Driver is a lead indicator, directly attributable to the project, that drives realisation of project benefits. A Benefit is a measurable, sustainable improvement in business performance. 3. Important to involve benefit owners during the development of the business case

Benefit Management in IAG DI Guiding Principles Every project is able to be linked directly or indirectly to the success of the change program The PMO facilitates the application of the benefits frameworks and provides tools and support Estimating and tracking benefit realisation is an art not a science - we cannot do it with complete accuracy but we must make best effort The Benefit Framework will continue to evolve and will be reviewed regularly– it will start simple and increase in sophistication over time 5. Important to lock in success measures, metric, target, ownership

Governance Program Governance Structure Project Roles & Responsibilities Benefit Owner: Accountable to validate and sign-off on benefit estimates as well as their achievement Project Manager: Responsible for the delivery of the project and agreed business capability measures Project Sponsor: Accountable for delivery of the overall project benefits and business case PMO: Accountable for quality assurance over benefit management (end to end)

Benefit Management End to End Consult with project teams Maintain consolidated benefit register Benefit Management End to End   What does the business / project do? Tool / Artefact What does GO Benefit Framework Manager do? Propose Identify, categorise and quantify benefits Value Driver Map Feasibility Identify Benefit Owners Validate or refine benefit estimates Benefit Analysis Tool Business Case QA the business case Initiate Plan for benefit realisation Benefit Register Create and pre-populate Benefit Register for project Incorporate into cost and revenue centre budgets Facilitate the inclusion of benefits in budgets Build and Implement Revalidate benefit estimates and follow change control process if material variance Facilitate the change control process if applicable Realise Benefits Track realisation of benefits Agree rationale and corrective action for material variance Report on benefit realisation to PMO Update benefit actuals into consolidated Benefit Register Report to ECC on benefit realisation for the program Feasibility. Validate or refine benefit estimates including type, amount, baseline and forecast values Initiate. Plan for benefit realisation: identify data sources, accountabilities and frequency of tracking, validate baseline and forecast values. Complete the population of Benefit Register Realise Benefits. Track realisation of benefits Agree rationale and corrective action for material variance with relevant governance forum Report on benefit realisation to PMO

Value Driver Map

Benefit Analysis Tool

Business Case Quality Assurance Review Overall Assessment (reviewer name) Alignment to DI Strategy and GO roadmap Solution design alignment to the Design Principles Capability delivery clearly articulated Overall cost/benefit outcomes (inclusive of non-financial and intangible benefit) Appropriateness of any trade-off decisions Recommendation Delivery Assurance (reviewer name) Costs (reviewer name) Benefits (reviewer name) Technology (reviewer name) Recommendations: <Provide summary of Risk recommendation assessment with commentary> <Provide summary of Financial recommendation assessment with commentary> <Provide summary of Benefits Management recommendation assessment with commentary> <Provide summary of Technology recommendation assessment with commentary> Key Findings: Risk / issue identification and management Resourcing Scheduling Interdependencies and constraints Appropriate documentation and confidence All costs estimated Reasonable estimation of costs with appropriate level of variance Suitable contingency Availability of funding on current GO slate All tangible benefits specific, measurable, plausible Due diligence applied to benefit estimates Identification of benefit drivers and contribution to GO Success Targets Sign-off of benefits and impact to budget Net Present Value, Payback Period, Internal Rate Return Architectural goals met Complexity reduced or managed etc Program Sponsor - Program Manager – Project Manager - The following documents were reviewed: <Business case name including version number> <Name and version of other documents reviewed e.g. DCF> LEGEND One or more evaluation criteria has not been met, with a material impact on the validity of the Bus Case One or more evaluation criteria has not been met, without material impact on the validity of the Bus Case All evaluation criteria has been met

Benefit Realisation Register

Transition benefit realisation to BAU Handover to BAU criteria: Full quantum of financial benefit has been reflected in operational budgets Majority of benefit actuals have been within 10% of target for at least 3 months Capability has been embedded into BAU A minimum of 6 months has elapsed since commencement of benefit realisation Confirmation received from relevant governance forum (as per delegated authority levels) that benefits no longer need to be tracked for the project specifically

Conclusion What does good look like? Where are we now / lessons learnt 1. Projected benefits for all GO projects are endorsed by Benefit Owners, recorded centrally by project and benefit type, and aggregated In place Traceability and audit control 2. A schedule is in place for business case development and assistance is proactively offered to business case authors Position PMO as ‘value add’ rather than ‘policeman’ 3. All benefit projections are incorporated into operational budgets Partially achieved Unambiguous sign off of benefits

Conclusion What does good look like? Where are we now / lessons learnt 4. Benefit Realisation Benefit Registers are in place for all projects / business areas In place, requires maintenance Measurable benefits 5. Benefit realisation is tracked and addressed at appropriate governance forums and informed decisions made to manage variance Culture change 6. Benefit management applies to financial and non financial benefits In place for financial benefits Work in progress for non financials Relationship management