Impact Calculator Guidance Notes

Impact Calculator About the Impact Calculator The aim of the Impact Calculator is to assist in measuring the actual impact of a change initiative. Impact in this instance can be defined as a comparison of the measurable benefits, generally efficiency savings or gains brought about by a change initiative, and the costs incurred by implementing it. The Impact Calculator supports the collation of information relating to measurable benefits that can be quantified in both monetary and non-monetary terms.

The Impact Calculator uses process redesign as its focus for measuring the impact of a change initiative. The introduction of a new student record system, a move to the centralised storage of records, or a move to use collaborative tools in the workplace, are different examples of change initiatives that can occur within an institution. Although these examples are very different they will all, to varying degrees, have an effect on the administrative processes within the institution.

Focusing on the changes in these processes provides a mechanism for identifying the impact that such change initiatives have on the institution, whilst also placing the changes in its appropriate broader institutional context.

Impact Calculator

The impact of a change initiative can be experienced by the institution in a number of ways: for example reduced staff costs, reduced consumables costs, or reduced storage costs.

Here a methodology of deconstructing the process before and after the change initiative has occurred provides a systematic way of identifying the different ways and degrees that the change impacts on the institution.

Deconstructing the process and comparing the before and after states assists in determining individual discrete areas of change. These areas can then be assessed for their potential for measurement. However, without a consideration of the costs incurred to achieve the benefit realised it is impossible to fully appreciate their significance, so the Impact Calculator allows you to record costs too.

The Impact Calculator provides a template of prompts to assist in identifying and recording the efficiency savings and costs of a process redesign. The Impact Calculator compares ‘benchmark’ information which is defined as the performance of the process before the change has taken place (or the ‘as is’ process described in the tool), and compares this with the performance of the process after the change has taken place (or the ‘to be’ process), to calculate the efficiency savings of the process redesign. As mentioned

Impact Calculator above, this efficiency saving is compared with the costs of bringing about and maintaining the process redesign to determine if and when a return on investment (ROI) either has been, or will be realised.

The template of the Impact Calculator allows performance information relating to the process change to be captured on an annual basis for up to 5 years. The information relating to the ‘to be’ state will be predictive in the first instance, with confirmed performance information being obtainable after the first year of the process design being in place. This allows the Impact Calculator to be used to both predict future ROI figures as part of the formation of a business case, as well as measuring the actual savings made as they occur over time.

Using the Impact Calculator to assess the impact of a change initiative is primarily an exercise in collecting and recording information to quantify the various resulting efficiency savings and the costs of implementing such an initiative. Depending upon the scope or reach of the initiative assessing the impact could, therefore, involve a significant amount of effort. Although there is a minimum amount of data required without which the Impact Calculator simply cannot function, we have also tried to design the tool to be flexible, allowing the user to define the level of granularity of data they wish to capture and subsequently generate via the tool depending upon their specific requirements.

When collating the information for quantifying efficiency savings in monetary terms or identifying the appropriate costs to be included in the Impact calculations, it is advisable to consult with experts within the institution such as estate managers, IT managers or finance managers. Not only will this hopefully ease the burden of producing the information required, it will also add a level of credibility to the information used within the impact calculations.

Table 1: Summary of the main sections within the Impact Calculator and their function

Impact Calculator Section 1: Business Process Information relating to the business process that is subject to a change initiative is recorded here. This includes an outline of the ‘As Is’ and ‘To Be’ processes.

Section 2: Measurable Benefits 2.1 Metrics - Identified measurable benefits By comparing the ‘As Is’ and the ‘To Be’ processes discrete areas of change or metrics can be identified and assessed for measurement. The descriptions of the identified metrics are recorded here 2.2 Benefits data capture For each metric identified, information relating to its performance before the change initiative provides a benchmark against which the actual performance after the change initiative is compared.

2.3 Benefits summary This section provides a summary of the information provided in Section 2.2 Section 3: Comparative Costs The costs associated with bringing about and maintaining the change initiative are recorded here.

Section 4: Impact Calculator This section compares the monetary values assigned to the measured benefits and costs, to provide a monetary impact for the change initiative. A graph showing the monetary benefits, costs and resulting impact is also included. Where applicable details relating to those metrics that have non-monetary values is provided in summary form.

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Impact Calculator Impact Calculator Section 1: Business Process The first section of the Impact Calculator captures details of the business process that is the subject of a redesign. Wherever possible the entire process should be captured from ‘end to end’; as isolating parts of a process for measurement may provide a skewed picture.

By looking at the full process the overall efficiency gains to the organisation will be observed, not just those achieved within one particular department, which may be offset by additional costs or burdens incurred elsewhere along the process chain. For example, changing the process for the distribution of papers for a committee meeting from hardcopy form to electronic form may provide savings in terms of the printing costs of such materials for the department organising the committee meeting. The burden of printing the papers however then becomes a local one, thus passing the costs from the committee organiser to committee members. The ‘Defining your process’ section of the Process Review infoKit provides further guidance in this area.

Section 1 - Information to be captured 1.01 Process title The title should provide a means of identifying the process which is to be the target for redesign.

1.02 Process redesign objective Here a brief description of the objectives to be achieved by the process redesign should be noted.

JISC infoNet recommends that both the institution’s stated strategic objectives and (wherever relevant) the benefit to the learner, are key considerations when considering a process redesign.

These considerations will provide pointers as to how to convey the benefits of the process redesign and suggest possible metrics for measuring efficiency savings.

1.03 Process outline ('as is') It will be necessary to provide an outline of the process under review in its ‘as is’ state, this is an honest portrayal of the process in its current state before the change initiative has taken place. A brief description of the process should be entered in the field 1.03. As the process outline can take many forms, there is a field available to link or reference the appropriate documents.

There are a number of methodologies for outlining a process, some of which are discussed in the Process Review infoKit. The outline needs to be to a sufficient level of detail so that it assists in the identification of areas of change that can be used to measure benefits or efficiency savings.

1.04 Process outline ('to be') The requirement for this field is similar to 1.04, but should describe the ‘to be’ process, that is the process in its redesigned state after the change initiative.

1.05 Change initiative If the process redesign is one of a number of processes affected by a wider change initiative, the implementation of a student record system for example; details of such a change initiative can be recorded here. This will provide a reference to ease the collation of multiple impact calculations for the wider change initiative.

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Impact Calculator Impact Calculator Section 2: Measurable Benefits This section has three parts: 2.1: Metrics - Identified measurable benefits

Details of each identified measurable benefit or metric are recorded and assigned an identifier here.

2.2: Benefits data capture

Data relating to the measurement of the performance of each measurable benefit or metric both before and after the change initiative are recorded here.

2.3: Benefits summary

This final part provides a summary of the information captured in Section 2.2.

Section 2.1: Identified metrics By comparing the ‘as is’ process to the ‘to be’ process, discrete areas of change or efficiency savings can be identified. These discrete areas of change can then be assessed as to whether there is a robust measurement that can be captured to quantify the change.

The description of the metric should include: an action, for example increase, decrease or eliminate; as well as a measurable area of change, for example time taken to enter data from a form or floor space required to store hardcopy records.

Section 2.1 - Information to be captured 2.1.01 Metric ID The Metric ID is automatically assigned providing a unique reference number for the measurable benefit or metric.

2.1.02 Metric description The description of the metric is used throughout the Impact Calculator and should therefore be a concise reference of the area of change that is being used to derive the measurable benefit. An example would be ‘A reduction in the time taken to enter information from one application form into the central student record system’.

2.1.03 Add additional metric The Impact Calculator template has provision to record performance information for one metric, with the facility to add as many further metrics as required.

To add additional metrics, click on the ‘Additional metrics’ button, this will add the appropriate data capture fields throughout the rest of the calculator. Feel free to add as many additional metrics as you require to accurately reflect the impact of the change initiative.

Section 2.2: Benefits data Capture

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Impact Calculator Information relating to the performance of each measurable benefit or metric identified in Section 2.1 is recorded in this section. The performance of the process prior to the change initiative is measured and provides a benchmark against which the actual performance of the process after the change initiative is compared. This comparison provides the main mechanism for quantifying the benefits of the change initiative.

The Impact Calculator makes provision for measured benefits to be expressed both in monetary and nonmonetary terms.

Section 2.2 - Information to be captured Benchmark & Actual measurements The Benchmark measurements relate to the performance of the process as it would have been had the change initiative not taken place. Then for each year Actual measurements of the performance of the process after the change initiative has taken place. These two sets of data are compared to quantify the actual measurable benefit of the change initiative. There is a column to capture Benchmark and Actual measurements for each year; this is to allow the information being compared to be updated to reflect changes over time (e.g. salary costs, prices or levels of demand).

The main aim of the Impact Calculator is to provide empirical data relating to the actual impact a change initiative has had on an institution. Although this is the case the data captured within these fields could either be predictive (i.e. indicating the level of improvement you are anticipating as part of a proposed change initiative – perhaps as part of a business case) or retrospective (i.e. representing actual changes that have been realised as the result of a completed change initiative).

2.2.01 Metric – Area of change The metric ID and the description of the metric entered in Section 2.1 are automatically displayed.

2.2.02 Unit of measurement The unit of measurement used to capture current and improved process performance. For example, if the metric concerns the reduction in the time taken to enter information into a database from a form, then the unit of measurement would be ‘minutes’.

2.2.03 Area of change This is a description of the discrete area of change for which performance is being measured. For example, in the above example the area of change would be minutes per form.

2.2.04 Performance This is the measurement of performing the area of change task recorded in field 2.2.03 in terms of the unit of measurement stated in 2.2.02 above. So if we were to continue with the above example the number of minutes taken to complete the data entry for one form should be recorded here.

The first Performance figure to be recorded is the Benchmark figure for Year 1; this is the performance of the metric in the process before the change initiative has occurred. This performance figure will provide the Benchmark comparison figure for each of the 5 years.

The second Performance figure to be recorded is the Actual figure for Year 1; this is the performance of the metric in the process after the change initiative has occurred. This information is then

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Impact Calculator required for Years 2-5 (or for as many years as you may wish to capture, up to a maximum of 5 years).

For example, in the process prior to the change initiative occurring the time taken to enter data from one form is 15 minutes; this provides the Benchmark performance for Year 1. Had no change initiative occurred this value would have remained constant over the 5 year period, therefore the Benchmark performance for each of the five years is 15.

Once the change initiative has taken place the time take to enter the information from one form into the database has been reduced to 8 minutes; this provides the Actual performance for Year 1. In this example it is assumed that this performance level is maintained throughout the five year period; therefore the performance figure for the Actual process would be 8 for the 5 years. However, different values can be included within Years 2-5 to reflect any continuing changes in performance (for example if staff become even quicker at entering forms in Years 3-5 due to familiarity with the system, thereby reducing the time taken to say 6 minutes per form).

2.2.05 Annual multiplier The overall efficiency savings are calculated on an annual basis, therefore a multiplier that can be applied to the figure recorded in Performance, field 2.2.04, to provide an overall annual performance is required.

For example, If 22,000 forms requiring data entry were received and completed in Year 1, then this figure should be recorded as the annual multiplier for Year 1. This value is used to represent both the Benchmark and Actual annual multiplier as the same number of forms for data entry are received and completed regardless of whether the change initiative has taken place or not. Whereas if we were using storage space in M2 as the metric being measured this multiplier would be ‘1’ as there is only one instance of that space being saved over the course of any one year.

2.2.06 Performance change % The Performance change is expressed as a percentage and is automatically calculated by comparing the values recorded in ‘Benchmark’ and ‘Actual’ for the field 2.2.04 Performance. It is calculated as follows: 2.2.04 Performance: ((Benchmark – Actual)/Benchmark)*100 2.2.07 Conversion of unit to £ This is the cost of the performance recorded in field 2.2.04 and should be expressed at an appropriate level to match the ‘Unit of measurement’ stated in field 2.2.02.

For example, the unit of measurement used in the previous example is ‘minutes’, as it is a measurement of the time taken to complete the data entry from one form. An appropriate conversion factor would be the average salary (including on costs) of the staff completing the task.

Care should be taken to calculate the conversion factor at the correct level. The unit of measurement stated is minutes, but salary costs are generally quoted per hour so an additional calculation is required to convert this to a measurable unit of salary costs per minute (by dividing the hourly figure by 60). For this reason a description of the Conversion of Unit to £ should be recorded to ensure that the level of this field matches that of the unit of measurement.

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Impact Calculator The Impact Calculator makes provision for the conversion of Unit to £ to be different year on year as costs are subject to change over time. In most cases the conversion of unit to £ will be the same for the Benchmark and Actual process within a particular year, although the Impact Calculator does make provision for these to be different.

In the example of data entry of the contents of a form, the salary costs applicable to both the Benchmark and Actual process within a particular year will be the same, but may be subject to change from one year to the next as salaries increase. Whereas an example of the Conversion of Unit to £ figure for the Actual performance of the process being different from the figure quoted for the Benchmark within the same year could be where, if due to the redesigned process a publication was now made available online resulting in fewer hardcopies being produced. As design and print costs for such materials tend to be based on the volume requested, if the number of hardcopy publications requested was reduced significantly then the cost per individual publication may actually increase as a result of the redesigned Actual process and it is important that this is taken into consideration accordingly.

2.2.08 Annualised performance (£/pa) This automatically calculates the annual cost of the performance of the metric being measured. It is calculated as follows: (2.2.04 Performance) * (2.2.05 Annual multiplier) * (2.2.06 Conversion of unit to £) 2.2.09 Monetary benefits experienced from redesigned process This automatically subtracts the Actual annualised performance recorded in field 2.2.08 from the Benchmark annualised performance figure recorded for field 2.2.08 to give an indication of the benefit being derived for this metric or area of change.

If this figure is positive it indicates a cost saving, if the figure is negative it will be displayed in red and will represent an increase in costs. It is this figure that will be taken forward to Part 4.

The Impact Calculator also makes provision to quantify those measurable benefits that may not necessarily result in a monetary saving. For example, if an institution makes available an online application form for non-UCAS courses, this would reduce the number of hardcopy application brochures and forms required, if not eliminate it altogether. This would result in freeing up floor space where the boxes of application brochures would have been stored. The resulting square metres that are made available would not result in savings related to the costs of renting the floor space, but may equate to an equivalent floor space required for an operational workstation. Such a benefit may support an institutional objective to better utilise accommodation.

2.2.10 Conversion of unit in no- monetary terms This field provides the opportunity to convert the unit of measurement stated in field 2.2.02 to a more meaningful measurement, say for example a measurement that can be linked directly to an institutional objective. In the first field a description of the conversion factor should be recorded, so in the above example the conversion factor would be workstations per square metre. The appropriate conversion factor should be recorded for both the Benchmark and Actual, in most cases these values will be the same. In the example of the workspace the conversion factor would be the number or proportion of workstations that fit in a square metre. It is likely that the conversion factor

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Impact Calculator year on year is unlikely to change, although the Impact Calculator does make provision if this is the case.

2.2.11 Annualised performance (non-monetary) This field is automatically calculated and represents the annual performance of the metric being measured. Two values are generated for each year, a Benchmark and an Actual value. It is calculated as follows: (2.2.04 Performance) * (2.2.05 Annual multiplier) * (2.2.08 Conversion of unit to Non-monetary) 2.2.12 Non-monetary benefits experienced from redesigned process This automatically subtracts the Actual annualised performance recorded in field 2.2.11 from the Benchmark annualised performance figure recorded for field 2.2.11 to give an indication of the annual benefit being derived for this metric or area of change. It is advisable to record the final unit of measurement for this field to assist in the interpretation of the values derived. In the above example the final non-monetary unit of measurement is workstation to represent the number of workstations that could be sited on the amount of floor space saved.

Section 2.3: Benefits Summary This section provides a summary of the measured benefits data captured in Section 2.2 There is no data entry required in this section.

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Impact Calculator Impact Calculator Section 3: Comparative Costs Information The purpose of this section of the Impact Calculator is to ascertain the costs that are required to bring about the change initiative and the additional costs that will be experienced on an ongoing annual basis as a result of the change initiative.

Section 3 is deliberately less prescriptive in its structure as we are aware that the types of costs attributable to a process redesign and how they are defined will vary considerably from institution to institution.

The aim of this section is to provide a figure for: a) Implementation costs the total additional costs identified in completing the initial implementation of the process change; and b) Additional annual costs to maintain the 'To be' process these are the additional ongoing annual costs incurred to maintain the process change.

The Impact Calculator does not require a complete set of costs to carry out the process but requires the additional costs incurred by changing from running the process ‘as is’ to how it is ‘to be’. For example, if the new process required an element of staff training, it might be that in the first year initial training would take place to enable staff to carry out the new process, but any subsequent annual training for the new process may thereafter form part of the organisation’s standard annual training programme as it is replacing the training based around the old process. In this case only the initial training is part of the additional costs of the process change, as the annual training is replacing an activity that already existed.

As a guide the following table provides a checklist of some of the major cost headings and suggests issues to think about when trying to cost those items.

Cost Heading

Issues to consider

Staff Time

Include recruitment costs e.g. advertising or agency fees.

Include employers on-costs e.g. pension and National Insurance.

Where staff are on incremental pay scales allow for annual increments.

Allow for annual pay increases.

Do you need to allow for overtime working?

Do you need to reimburse other departments for staff time assisting the project e.g. porters moving equipment, IT staff overtime, staff attending meetings/training?

Hardware

Include maintenance agreements.

If purchasing will you pay upfront or enter into a financing agreement?

Software

How many licences are required in each phase of the project or change initiative?

Are future annual increases capped?

Equipment

Is it more cost effective to buy or lease?

Do you need maintenance agreements for printers etc?

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Impact Calculator Consultancy

Are consultants paid a daily rate or a fee for the job?

What are their daily travel and expenses limits?

Where will they be travelling from and how often?

Staff

What training is required at each stage of the change initiative and for how many people?

Development

Are there any additional online training materials that have been purchased?

Office

Include any chargeable items such as heating, telephones, security, postage etc.

Overheads Travel

Include travel to meetings, conferences and training courses.

Hospitality

Will you be required to provide catering for meetings or training events?

Consumables

Stationery, printer cartridges etc.

Contingency

What is a reasonable contingency estimate given the amount of risk and uncertainty in the change initiative?

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Impact Calculator Impact Calculator Section 4: Impact Calculator This section displays the Impact of the change initiative in both monetary and non-monetary terms.

Monetary Impact The overall yearly monetary savings calculated from the measured benefits information submitted in Section 2.2 are displayed, alongside the overall monetary costs of implementing and maintaining the change initiative submitted in Section 3. These two sets of figures are compared to provide an overall yearly monetary impact figure.

As a change initiative may require a substantial initial outlay in terms of costs to implement, the impact for the initial year (and perhaps beyond) may be negative. If this is the case the figure will be displayed in red.

A cumulative impact figure is calculated to indicate at what point the change initiative has a positive impact on the institution. This will be the point where the cumulative impact or return on investment first becomes positive.

Two graphs are included, the first shows a comparison of the monetary benefits and costs of the process redesign and the second shows the cumulative monetary impact or return on investment.

Non-monetary Impact The Impact Calculator also makes provision for benefits to be quantified in non-monetary terms. A statement indicating the number of metrics where a non-monetary benefit has been identified is included in this impact summary sheet.

A link to a pivot-table, summarising the metrics and the nature and extent of the benefit is provided.

Please note that the pivot-table does not update automatically and will need to be refreshed if data entered in Section 2.2 relating to non-monetary benefits is changed.

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