Four Steps to Building a Robust Business Case

Author by Concurrency Blog

1.       Define Business Drivers and Investment Objectives

The business drivers are nothing but the current issues the organization is facing. It is essential to identify what exactly are the different business drivers that is making the client invest heavily in the IT. The identification of business drivers is not easy. For example, a retail chain like Walmart might say that they want to install a new self-checkout technology to provide a quicker checkout option for customers who carry less number of items with them but Walmart’s hidden business driver might be to reduce the manpower. Sometimes clients are reluctant to share the real business drivers or sometimes they might not even know why they are opting for a new technology. Therefore, it is essential to link the investment objectives to all the business drivers. The investment objectives must clearly address all the identified, unknown as well as hidden business drivers.

2.       Identify Benefits, Measures and Owners

The business representatives must have a detailed discussion on the expected benefits and each expected benefit must be explicitly noted down. It is very essential during this phase to let the client dictate the terms rather than our business representatives focusing on the product sales pitch. If the benefit expected by the client is beyond the scope of the new technology, it must be addressed right away. Once all the expected benefits are identified, the metrics on which the benefits could be measured should be decided. This is utmost important because different organizations use different metrics for measuring the same benefit. For example, let’s assume that the benefit is ‘increase in sales’. The increase in sales can be measured by different parameters like – increased sales in non-potential market, increased sales in new market or increased sales in the competitor dominant market etc. Finally, the benefit owner should be identified. For example, in self-checkout system project, the Marketing VP is most important benefit owner but we should not ignore the other benefit owners like operations VP and finance VP. A self-checkout system may also affect the petty cash management issues and even finance VP might be interested in the project!

3.       Structure the Benefits

In this phase, we must use a business framework to plot the benefits and the expectations. I have already discussed the framework in my previous blog. You can refer to it by clicking on this link. http://www.concurrency.com/blog/business-case-framework/

4.       Identify Costs and Risks

The costs that client might have to incur might of various types. The initial purchases required to start with the project can be one type of cost. These cost can be easily identified by knowing the set of requirements which the client doesn’t have. The initial purchases costs depend on the readiness of the client. The next type of investment is the developmental costs i.e. the raw materials or the costs that client needs to incur as the project progresses. Sometimes a project might require some infrastructure investment too before even starting with the actual project.  Project completion does not always mean that there will be no further expenditure. We must also consider the cost of business change i.e. the money organization has to spend after the project completion like training the personnel, hiring consultants for new technologies and cost of technology adoption and technology diffusion within the organization. Finally, we must also try to address the cost of maintenance of the new solution that we are proposing to the client.

It is not enough to address only the quantitative aspects of the business. We must also take into consideration the qualitative aspects of the decision making like the type of risks associated with the implementation of the project. It might not always be a good idea to talk about the risks of the solution that you are going to propose to your clients but if the risks are too obvious, there is a good chance that your clients are already way about those risks. It is therefore a good option to address some of the key financial, technical, business and change management related risks to get the decision makers completely immersed into the business case. It must be taken care that you must also mention the remedies of the most obvious risks that you are going to address in the business case.

Please leave your comments and I will get back to you soon. In my next blog I will be discussing about ‘Key Features of Microsoft Dynamics Marketing’. Thanks!

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