It is very essential to draft a business case for IT Projects as it often requires huge budgets, complex decision making and involves multiple stakeholders from both business and technology. Every project is (MTO) i.e. Made-To-Order and hence business case becomes a pre-requisite for almost every project that company undertakes. Essentially, the company needs a strong business case to convince the client and justifying the benefits associated with the project. This calls for a solid framework on which we can build a business case and get the buy in from the decision makers.
Let’s take a look at one of the framework that we can apply for IT projects at Concurrency
In this framework, the type of business change required by the client is plotted against the benefits degree of explicitness. The X-axis i.e. the type of business change helps us to understand why the client wants to undertake this project and Y-axis helps us to know what benefits the client seeks after successful completion of the IT project.
The type of business change can be of three types: First type of change is 'DO NEW THINGS' i.e. that the organization can go for adopting a new technology to gain competitive advantage over their competitors. These companies want to be always one step ahead and continually update themselves to keep abreast with the latest technology. The second type of business change is 'DO THINGS BETTER' i.e. improving the ‘status quo’. These companies are generally seeking improvement in efficiency or reduction in costs and look for IT solutions to achieve these business improvements. For example, a company may have more than 5% billing errors and it might be looking for an IT solution to reduce its billing errors down to 1%. The last type of business change is 'STOP DOING THINGS' i.e. to stop doing something which has proved ineffective or outdated.
The benefits can be classified into 4 types depending on their explicitness.
Most of the clients are interested in the financial benefits and hence these benefits must be carefully identified and presented to clients. Financial benefits like Payback, ROI and Cost Reductions etc. play a very important role in drafting a business case. The benefits can be classified into financial benefits category only if they could be explained completely by using the financial formulae.
An example of financial benefits would be -> 20% reduction in call servicing costs for a call center company.
These benefits cannot be completely explained by financial metrics but the benefits can be quantified using certain calculations.
For example, if we are talking about a call center company, then IT system which reduces the waiting time of a customer can lead to savings towards operations of a call center and reduce the service time by 2 minutes/customer.
These benefits can be measured generally after the implementation of the project and depend on how successfully the project has been implemented at the client. An example of the measurable benefits would be a call center reducing the increase in customer retention one year after the implementation of new IT system.
These benefits are generally the soft benefits which can be measured by factor analysis. For an example, a call center company may find that the customers’ satisfaction has been increased and they found that the CSI has been improved by 10% after the implementation of new technology.
In the next blog, I would like to discuss about the roadmap to implement this framework at an organization.
I would like to hear your feedback on this model. Please feel free to comment.
Friends, you can also SUGGEST me any topics that interest you and I would be happy to blog about it. Thanks! And hope to discuss about something interesting the next Tuesday. Bye!