Output vs. Outcome vs. Benefit
There's a classical explanation in AXELOS products, including PRINCE2®, that helps a lot in understanding the use of different standards and the management systems required for the whole organization, shown in the next figure and explained afterward:
There are three levels of achievement:
- Outputs, products, or solutions are created by the project work.
- The output(s) result in outcomes, and
- The outcome(s) create benefits and business value
As an example, in a project designed to implement a document management system:
- The implemented document management system that users can actually use is the output
- This output results in certain outcomes, such as:
- faster and easier access to the documents
- fewer mistakes in archiving and retrieving documents
- ability to control versions and having access to the latest revisions
- ability to have reports that help us find solutions for other business problems
- And finally, those outcomes create benefits, or in other words, business value:
- 2% cut in operation costs
Management of Layers
There are different ways of handling each of those three layers:
- A project is mainly focused on creating the output
- A program is mainly focused on creating the outcome
- A portfolio is mainly focused on increasing benefits
And consequently, project management, program management, and portfolio management systems are used. A good option is to use PRINCE2, MSP, and MoP methods respectively.
A portfolio management system tries to increase benefits and to maximize the business value by defining, selecting, and resourcing multiple programs and projects. A program tries to achieve the outcome by defining and directing multiple projects; the combination of the outputs created by the projects will realize the desired outcome.
While the main focus of the project management system is on the outputs, it still has to pay enough attention to the two higher levels to make sure the product is realized effectively. It should also support the higher levels of program and portfolio management by tracking the realization of outcomes and benefits.
While this concept is still valid in Agile environments, differentiation of layers is much harder, since we are not sure about the product (output) in Agile environments and let it evolve by focusing on the outcomes and values instead. This situation makes it hard to separate the project management system from the program management system.
The Approach from PRINCE2 Agile
- Benefit vs. Value
- Business Case Theme
- Business Case Management Product
- Starting up a Project Process
- Initiating a Project Process