How do I elicit measurable business objectives in the real world?

Question

A very common theme in project management/software engineering resources is that goals should be SMART. This question is targeted to the "M" in SMART: Measurable.

The examples commonly found in literature or lectures often times seem unrealistic and far fetched to me. See for instance this example:

Analyst Question: How much would you like to reduce your chemical expenses?

Executive Response: By 25% within one year.

Wiegers, Karl; Beatty, Joy (2013-08-15). Software Requirements (3rd Edition) (Developer Best Practices) (Kindle Locations 2180-2181). Pearson Education. Kindle Edition.

So a business objective is to reduce chemical expenses by 25% within one year. That's a great measurable goal. But it sounds extremely unrealistic to hear such a thing from a customer. The customer does not want to reduce expenses by 25% in one year, he wants to eliminate the costs altogether and he wants to do so immediately.

This would sound somewhat more realistic to me:

Executive Response: Within 10 years the software must have saved us as much money as we invested to develop it. Because if it does not we would better have invested our money in another project.

How do real projects get to those numbers?

Answer 1

The general process I've seen work is:

1. ID Ownership. Figure out whose neck is on the line for achieving project benefits. These are the benefit owners.
2. ID Metrics. Work with the benefit owners to determine valid metrics for measuring each of the project's benefits. Every one of the benefits (even soft beenfits) must map back to a valid metric, if it can't then remove that benefit from the business case.
3. Define Your Plan. Again working with the benefit owners, for each metric establish who will measure, when/how often it will be measured, how it will be measured, and how/to whom the benefits will be reported post-project.
4. Set Targets. Now the hard part - get the benefit owners to establish realistic (in their minds) targets for each of the benefits based on the metrics that have been defined.

You now have a benefits realization plan for which you can obtain approval from your project's steering committee (or other appropriate executive body).

Answer 2

You are mixing up Goals and Objectives.

Goals are not required to be SMART, they are high level, possibly visionary, descriptions of the desired end state.

Objectives, on the other hand, need to be SMART. These are the statements that define exactly what the project is tangibly delivering that contributes to achieving the Goals.

So the Goal of your project might be to reduce expenses to zero as quickly as possible and analysis at the time of the Business Case might have shown that this can take place over a three year period, with 50% reductions expected from "quick wins" in the first year. So an objective of the project would be "Reduce expenses by 50% within the first 12 months".

In terms of how you get the "right" measures and targets in objectives- This is where you work and help the business to determine their goals and objectives for the project at the pre-initiation stage (sometimes call the Feasibility stage by old-school organisations :) By doing that you end up with achieveable Objectives and more importantly, Acceptance Criteria.

In essence, for the stats and measures you take what is both appropriate for the project and agreed to be the "right" level between the project and the business.

Answer 3

Aiming for Measurable objective is very good. As you mentioned "targets" as stated by stakeholder are all too often either vague or apparently unrealistic. However if you are told that the project ought to "reduce waste by 25% in a year" or that "productivity will double upon completion" it is up to you to analyse how realistically that objective will be reached and to document your findings. There is no point in dismissing an ambitious target unless you have rigorous evidence. Furthermore you may be able to identify pertinent metrics and refine the objectives.