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Six steps to your best business case
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Often, there is one obstacle that stands in the way of a new initiative: a well-constructed, comprehensive business case. A good one should take you from the broad idea and objectives of what you want to do through to a clear, robust and measurable case for doing it. We provide six of the key steps you’ll need to take to help you build a solid business case and put you on the right track for delivering successful business change.
A business case is there to ensure that the project delivers what is important to the organisation and to help prioritise and justify the investment needed to get it off the ground. The business case should be built on real facts and detail and forge a practical path of action, so you can see exactly what the benefits will be, how much it will cost and how you are going to go about it. In short, it should be the foundation for a confident, informed decision to go ahead.
However, good business cases can be difficult to construct. You need to get all the stakeholders on board, and get their buy in, often in a complex environment where people may have different and even conflicting priorities. It can also be a challenge to get people onside when the true costs and benefits still need to be clarified, and all the relevant decisions have yet to be made. Addressing the quality of thinking and rigour that goes into business case development, along with the tracking of committed benefits, is becoming a higher priority for many organisations, but doing so successfully can be far from straightforward.
Whether you’re about to put pen to paper for the first time, or just want to benchmark something you’ve recently written, here are six factors to help you build robust business cases and put you on the right track for delivering successful and measurable business change:
1. Consider the business case part of your project mobilisation. It’s important to bring the same structure and rigour to developing a business case as you would to a project mobilisation. The danger is in seeing the business case as an administrative hoop you need to jump through to get started with the real work. The business case should actually be seen as the start of the project. You’re under pressure in these early days because you’re establishing the basics and starting key relationships – laying the essential foundations and setting the direction, often from scratch. The trick is to combine the appropriate structure and rigour with the right know-how, passion and political nous to sail through the approval process and set the project up for success.
2. Create a detailed and accurate picture of what you are trying to achieve. A great deal of detail needs to be built into the business case to get a project off to a good start. Every situation is different but most business cases will need to cover a number of core areas. To gain the necessary accurate and detailed view on costs, you’ll need to start work on areas such as business requirements, the target operating model and sourcing strategy. To quantify the benefits you might need to undertake financial analysis and modelling. If you don’t drive out this level of detail at this early stage, and instead rely on very high-level assumptions, you run the real risk of either having your business case rejected, due to lack of confidence in your numbers, or of suffering significant cost overruns during the course of the delivery. No project sponsor ever wants to have to go back and ask for more money!
3. Build the scope that delivers the best return on your investment. It sounds simple but aligning with the various stakeholders on what will and won’t form part of the project delivery is critically important. It is this agreement as much as the objectives themselves that will drive adoption and avoid significant complications and overruns during project delivery. Each component of scope will have an associated cost and an associated benefit. Value engineering - which uses rational logic and the analysis of function (i.e. what something does rather than what it is) to identify relationships that increase value - can be useful to construct the scope that delivers the best return on your investment. Carelessly including scope which is high cost and low value can significantly dilute the overall benefits and ultimately sink an entire business case.
4. Take people with you. It’s vital to gather the facts and figures for a business case but that’s only part of the story. There’s also a huge amount of work to be done around the people. Even a perfectly constructed and articulated business case will fail without sufficient buy-in and sponsorship. You need to ensure that all stakeholders, not just the project sponsor, believe in it. If they don’t, this could undermine the initiative and you risk not achieving the desired benefits. Each set of eyes that look at your business case will ask themselves ‘What’s in it for me’ and it’s this prejudiced view of the business case that provides a strengthened understanding of the benefits, costs, and risks of the project — and ultimately ownership of the results. The key outcome from a successful business case exercise is therefore not just the creation of a detailed and thorough business case, it is also a set of stakeholders who feel they have contributed to the development and fully believe in its content.
5. Ensure you’ve captured all the costs. It goes without saying that you need to have confidence in the costs presented. And to do this you need to go to the right level of detail across all areas of scope, without investing too much before you’ve even got the go-ahead to proceed. This can be a tricky balance and will clearly require judgement depending on your particular situation. However the most important point is to ensure you’ve thought about all the potential costs. For example, if you are implementing a new IT system then have you considered the costs of decommissioning the old one? Have you thought about the application support model? Have you considered the impacts on service management? Have you included any potential redundancy costs related to headcount savings? Any of these could be substantial elements of the total cost over five to ten years and put a big hole in your numbers further down the line if you leave them out. Additionally, you need to think carefully about your risks, budgeting specifically for mitigations planned up-front and calling out very clearly the levels of contingency you’re including for those that you don’t yet know about.
6. Define the benefits in detail and ensure they are tracked. We often see clients struggle to commit to hard benefits on the basis that it’s difficult to do this so far in advance. However a good business case will be underpinned by a compelling, rock solid benefits model built from the ground up which has been shared and refined across the stakeholders so that you have the necessary commitment and ownership. The latter is essential so that individuals feel accountable for realising the benefits for the business and don’t feel that their job is done when the project delivery is complete – the reality is that’s only half of it. You should be continually tracking the project against the identified costs and benefits as well as reviewing these as time progresses and the surrounding world inevitably evolves – once approved a business case should be a living guide that is constantly reviewed and refined.
When constructing your business case it is vital to consider the factors outlined above. Otherwise the project will be under pressure from the outset. Building a business case is about building confidence in the project – turning a good idea into a great solution with real numbers and a clear implementation path. That way the stakeholders see not only how much they will gain but also how much it will cost and how they can achieve the results. And that will significantly enhance your prospects of delivering on your overall objectives.