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Business Case Basics 101
The most obvious reason for putting together a business case is to justify the resources and capital investment necessary to bring a change project to fruition. This may imply that a business case is simply a financial document but please don’t be mislead – business cases need to include financial justification but more importantly, they need to link all of the relevant facts in a cohesive story outlining the what, when, where, how and why for investing resources into a project. The purpose of a business case is to capture the reasoning for initiating a project or task. It is often presented in a well-structured, written document but may also come in the form of verbal argumentation. The logic of the business case is that when resources such as money or effort are consumed; they should support the business. Upgrading a given piece of kit (hardware, software etc) to improve system performance is a good example because the “business case” is that better performance would improve customer satisfaction.
Essential elements of a business case include:
- Reasons why the project is necessary.
- How the project or results generated by the project will solve given issues or capitalize on specific opportunities facing the organization.
- Focus: Exactly what ‘problem’ or ‘issue’ does the project address or solve?
- What is/are the recommended solution(s)?
- What are the benefits to the business?
- What will happen to the business if the project is not undertaken?
- Timing: When will the solutions be deployed?
- Resources such as money, people, and time needed to deliver the solution and realize the benefits?
The Business Case Process should ensure that:
- The required issues and concerns have been thoroughly considered and documented
- Both the value and risks inherent in the proposed project are clear
- The project is sponsored by, and has the commitment of an executive with the capability and authority to deliver the benefits
- The delivery of the outcomes and benefits can be tracked and measured.
Your Business Case should contain some or all of the following information types (depending on the size, timing, scale and availability of information):
- Reference; project name/reference, origins/background/current state
- Context; business objectives/opportunities, business strategic alignment (priority)
- Value Proposition; desired business outcome(s), outcome roadmap, business benefits (by outcome), quantified benefits value, costs/ROI financial scenarios, risks/costs of not proceeding, project risks (to project, benefits and business)
- Focus; problem/solution scope, assumptions/constraints, options identified/evaluated, size, scale and complexity assessment
- Deliverables; outcomes, deliverables and benefits planned, organizational areas impacted (internally and externally), key stakeholders, dependencies
- Workload; approach, phase/stage definitions (project (change) activities, technical delivery activities, workload estimate/breakdown, project plan and schedule, critical path)
- Required resources; project leadership team, project governance team, team resources, funding
- Commitments (required); project controls, reporting processes, deliverables schedule, financial budget/schedule
While one of your primary goals may be to get funding, your chances of success will be greater if you keep the following goals in mind as well:
- Make it interesting; remember someone will need to read it.
- Keep it clear and concise.
- Minimize jargon and conjecture.
- Provide the reader with a clear vision of the end state.
- Communicate all facts as part of the overall story – if you’ve done your homework, here is the chance to prove it.
- Demonstrate the value the project brings to the organization, Customer(s) and financial bottom line of the company.
After preparing your business case you and your team will likely experience some positive side effects including:
- CLARITY: Organization of thoughts, activities and knowledge
- REALITY CHECK: An objective review of the ideas and facts related to the project
- STRENGTH: The ability to identify holes, inconsistencies or weaknesses in the effort
- ELEVATOR PITCH: An improved ability to communicate the purpose of the project
- ROI: Financial justification for the effort
Below we offer an outline that includes many of the above recommendations. Remember that your business case should describe to the reader the problem or opportunity that exists. Then, the business case should describe how the problem will be solved or the opportunity exploited. The outline presented below shows you how to effectively tell the entire story of your project and concludes by demonstrating the expected ROI and financial impact you expect to achieve.
Executive summary:
Pretend that you have two minutes to tell someone about the project and justify your requests for resources and funding.
Each paragraph in the executive summary should succinctly convey vital information about the project, and communicate the story to the reader. The information in each section of the executive summary is typically extracted from the detailed sections of the business case. We recommend creating the executive summary after you have completed the rest of the sections.
Current state assessment and problem statement:
The situational assessment or current state assessment refers to the details regarding the problem or opportunities facing the organization. It is a statement about what is happening in the organization today. Most projects are started by the original project stakeholder or champion because something is wrong, or a major opportunity is being missed. Every project usually has one or two key themes related to issues or opportunities. In one paragraph or less, clearly state the specific business problem.
Project Overview:
The project description section introduces your reader to the details of the project. This section should give your stakeholders confidence that your team will professionally, efficiently and aggressively seek the best processes, systems, and organizational elements to enable your company to overcome the issues presented above. There are two main components of the project overview section:
- description and scope
- objectives
Use a maximum of nine bullet points to state what the proposed solution is expected to accomplish. Some examples may include purchasing hardware and software or selecting a new vendor.
Solution Overview:
Summarize the solution that your team recommends to address the issues and opportunities presented in the current state assessment. Be sure to cover the following topics:
- Current Process and ‘fit’ into the big picture
- Requirements
- Alternatives
- Compare Alternatives
- Additional Considerations
- Action Plan
Current process: Identify the organizational processes that the proposed solution will likely affect, including the departments within your organization, relationships with Clients, external partners, and the competition.
Requirements: List the resources needed to complete the project, such as staff, hardware, software, print materials, time, budget, and so forth.
Alternatives. Outline at least three other options to implementing the proposed solution. Be sure to include basic requirements and an estimation of project risks for each, ramp-up time, training costs, and potential project delays.
Compare alternatives. Compare and contrast each of the alternatives with the proposed solution and the other alternatives. State similarities and differences, benefits and detriments, and costs associated with each option. Basically, answer the question: “What is the cost to get to the future state, and is it worth it?”
Additional considerations. List critical success factors other than ROI metrics; for example, affects on partnership agreements with specific vendors or the potential need for help desk or Customer support.
Action plan. Now that management understands the solution and the financial return that will be realized from implementing the solution, they will want confirmation that the solution can actually be implemented. Propose specific action steps. State your short-term (first three months) and long-term (three months to conclusion) action plans, including major milestones. This section will reassure management that your team has carefully and professionally considered all major issues of the implementation. A number of major elements are important to successful implementation. Your implementation section should address each area.
- Implementation components
- Implementation timeline
- Major milestones
- Major dependencies
Critical assumptions and risk assessment:
Most business improvement projects will make assumptions in order to develop the solution. It is vital that the business case documents these assumptions. You should test your assumptions with project stakeholders and operational managers prior to placing them in the business case. The statement of assumptions should be followed by an impartial discussion of the strengths, weaknesses, opportunities and threats (SWOT) that are associated with the recommended solution. It is also important that the business case discuss the risks associated with both implementing and not implementing a solution, the seriousness of the apparent risk should it occur and the probability of the risk occurring.
Conclusions and recommendations:
This section closes out the business case. It should reiterate the key themes that caused the project to be undertaken. It should restate the solution in at a high-level. It should identify the return on investment and the overall benefits of the solution. It should restate the risks of doing nothing and re-convey a sense of urgency. Finally this section should state the conclusions the reader should draw from the business case, and your recommendations for next steps.