Developing a Business Case

A business case is developed during the early stages of any opportunity/capture from two perspectives: collaboratively with the customer to validate the opportunity, and within your own organization to validate that the solution can be delivered successfully and profitably. In both, the business case should provide the why, what, how, and who necessary for the sponsors and stakeholders to decide if it is worthwhile to continue.

Introduction

The business case is first developed during an initial investigation. It should provide an outline and be reviewed by the key internal and external sponsor(s) and stakeholders before being accepted, revised, or refused. The scale of the business change required will drive how much further development and/or refinement is required as part of a detailed investigation.

Therefore, it should be developed incrementally so that time and resources aren’t unnecessarily wasted on the impractical.

Best Practices

1. Business cases should provide a formal summary of all the value propositions.

Value propositions summarize the business case. Perhaps the greatest benefit of a value proposition is as a collaborative opportunity/capture tool. You can’t build a value proposition without customer participation. By collaboratively focusing on the quantified and unquantifiable benefits of potential alternative solutions, the customer will come to understand the business case for selecting your solution.

Value propositions establish the quantified value basis for the business relationship. Executives, users, and technical buyers have different issues and values. Prepare different value propositions for each type of buyer and work them into your presentations and meetings, based on the customer participants, and into your proposals and other customer-targeted documents. These, as part of a business case, are the heart of the opportunity/capture plan and your opportunity/capture strategy sessions. Unless the customer can articulate the business case within his or her organization, your solution is not credible and validated.

When you’ve established good early relationships with your customer, the Opportunity/Capture Manager may manage the development of a business case document that the customer can use for internal approval of the solution. In all situations, the internal sponsors and stakeholders for the opportunity/capture are going to require a business case.

2. Prepare the business case.

Preparing the business case involves an objective assessment of:

  • Business problem or opportunity
  • Benefits
  • Risk
  • Costs, including investment appraisal
  • Likely technical solutions
  • Timespan
  • Impact on operations
  • Organizational capability to deliver the project outcomes

These are all important parts of the business case. They express the problems with the current situation and demonstrate the benefits of the new business vision. The business case brings together the benefits, disadvantages, costs, and risks of the current situation and future vision so that executive management can decide if the project should go ahead.

3. Know when to use a business case.

A business case is needed when resources or expenditure on a project or opportunity has to be justified. Approval is usually sought from the sponsor and other interested parties.

The purpose of the business case is communication. Therefore, each section should be written with the intended audience in mind. It should contain only enough information to help with decision making. When writing a business case, keep the following in mind:

  • Make sure the document is brief and conveys only the bare essentials
  • Make it interesting, clear, and concise
  • Eliminate conjecture and minimize jargon
  • Describe the future vision
  • Demonstrate the value and benefits the project/opportunity brings to the business
  • Keep the number of authors to a minimum to ensure consistent style and readability

All appropriate opportunity/capture team members should contribute to its development. Likewise, subject matter experts from other functions―finance, HR, IT, service delivery, and so on―can provide specialist information. Those writing the business case should have a thorough understanding of the customer’s aims and be able to merge the varied and potentially complex solution elements into one document.

A complete business case outline includes the following four sections:

  • Executive Summary
  • Finance
  • Solution Definition
  • Delivery and Organization

This outline can be amended to fit the type, size, and complexity of the business case that is required.

“Clear definition of goals is the key to success.” — Edison Montgomery

1. Executive Summary

The first section of the business case is the executive summary, a short summary of the entire business case. It should summarize the customer’s vision and business objectives and the benefits that can be achieved from the change. This can be successfully achieved by linking all of the customer issues to the different value propositions that the opportunity/capture team has developed collaboratively.

2. Finance

“Make no mistake, my friend, it takes more than money to make men rich.” — A.P. Gouthey

The finance section of an effective business case is primarily for those who approve funding. The finance function will be interested in this plus the first half of the project definition.

Financial Appraisal

When you prepare the financial appraisal, seek advice on content and presentation from the finance function. In the case of capital developments, consult subject matter experts.

The purpose of a financial appraisal is to:

  • Identify the financial implications for the solution/opportunity
  • Compare solution costs against the forecast benefits
  • Internally, ensure that the project is affordable and that every cost associated with the project is considered
  • Assess value for money by providing a summary of all value propositions using graphics and text
  • Predict cash flow

Sensitivity Analysis

Sensitivity analysis concerns risk and looks at alternative futures by measuring the impact on solution outcomes or assumptions of changing values in which there is uncertainty. In effect, sensitivity analysis lets you experiment with possible scenarios.

3. Solution Definition

This is the largest part of the business case and aims to answer most of the why, what, and how questions about your solution delivery.

Background Information

The purpose of this section is to give a clear introduction to the business case and expected solution. It should contain a brief overview of the reasons why the solution or business change is required: the problem, opportunity, or change of circumstances. If necessary, refer to related programs, projects, studies, or business plans.

Business Objective

This part describes the business objectives and answers the following questions:

  • What is the customer’s goal?
  • What is needed to overcome the problem?
  • How will the solution support the business strategy?

Benefits and Limitations

The benefits and limitations section describes the financial and nonfinancial benefits in turn. The purpose is to explain why you need a project—for instance, to:

  • Improve quality
  • Save costs through efficiencies
  • Reduce working capital—the difference between current assets and current liabilities
  • Generate revenue
  • Remain competitive
  • Improve customer service
  • Align to corporate strategy

The business case should also include any limitations, because they present potential risks to the project.

Alternatives and Selection

Identify the potential solutions to the problem and describe them in enough detail for the customer to understand. For instance, if the business case and proposed solution make use of technology, be sure to explain why the technology was chosen and how the technology is used, and define the terms used in a glossary.

Because most problems have multiple solutions, an option appraisal often is needed. This will compare and contrast the proposed solution with competitive alternate solutions and recommend the best option.

When writing an initial business case, you may include a number of alternatives in the option appraisal. As the opportunity/capture phase continues, the number of options will be refined either by the customer or by your own organization. The final business case for the customer may still contain two options―your recommendation and a do-nothing option. It’s often important to remind customers what they will not be able to do or achieve if they do not act.

Scope, Impact, and Interdependencies

This section of the business case describes the work needed to deliver the customer’s business objectives and identifies those business functions affected by the required solution. The scope, impact, and interdependencies section should provide a high-level overview of the full scope of the solution and boundaries. It should describe what’s included, what’s excluded, and the key customer interdependencies. It’s important for the business case to consider the failure of other interrelated activities and show how such dependencies affect the benefits.

Outline Plan

The outline plan provides a summary of the main activities and overall timespan―the delivery schedule. Ideally, this should be divided into stages, with key decisions preceding each stage. This outline plan lists the major deliverables and includes a brief description and accountabilities for each activity.

Market and/or Competitive Assessment: Optional for Complex Opportunity/Capture Management

The business case may need to provide a thorough assessment of the business context―the market and/or competitive assessment. Therefore, the market assessment and/or competitive assessment should show a complete understanding of the marketplace and/or competitors in which your business operates. A good starting point is the inclusion of a PESTLE―political, economic, sociological, technological, legal, and environmental―analysis.

Risk Assessment

The risk assessment summarizes the significant risks and opportunities and how they’re managed. The risks included should cover those that could arise from your solution and the customer’s ability to deliver change. This section answers the following questions:

  • What risks are involved?
  • What are the consequences of a risk happening?
  • What opportunities may emerge?
  • What plans are in place to deal with the risks?

Every project should include a risk log. When writing a business case, make sure this is included, because it explains how risk and opportunity will be managed both within your organization and for the customer.

4. Delivery and Organization

The delivery approach summarizes how the delivery will be tackled—that is, the way in which work will be done to deliver the solution. For instance, a solution with much of the work contracted out is likely to take a different approach to one that is developed in-house.

Purchasing Strategy

This section describes how the customer expects to finance the solution and discusses whether decisions to buy, lease, or outsource are required before purchasing. It should also describe the purchasing process the customer will use. A formal procurement process may save time and money and reduce project risk, whereas a protracted procurement process can require the bidding organization to commit time, effort, and money over a long period of time before award.

Project Organization

This section of the business case is of most interest to the customer’s Project Manager and project team. This section describes how the project team(s) will be set up to deliver the solution.

Project Governance

This section of the business case describes how the project will be structured and discusses the different levels of decision making. Usually, organizations have established project governance frameworks that support their delivery of customer projects through each stage. If your organization does not use a structured project management process framework, use this section to include:

  • Roles and responsibilities in the project (the project team and stakeholders)
  • The project tolerances
  • Any standards that the project should consider
  • Review points
  • How decisions are made

Progress Reporting

Finally, the business case should define how project progress will be recorded and how the project board will be updated on performance. Usually, this is achieved by preparing concise progress reports or highlight reports at regular intervals.

4. Manage the business case.

The completed business case provides a structure for the project and project organization throughout the project lifecycle. Therefore, it should be used routinely for reference and not consigned to the shelf. Accordingly, the project sponsor and project board should review and update the business case at key stages to check that the project remains viable and the reasons for doing it are still valid. Ideally, the review should take place before the beginning of a new stage to avoid unnecessary investment in time and money.

Summary

  • The Opportunity/Capture Manager is responsible for ensuring that an internal business case for the opportunity is developed and signed off on by appropriate stakeholders.
  • The entire opportunity/capture team should play a part in helping the customer write their business case for the solution.
  • A business case built collaboratively with the customer evolves over time.
  • A business case should be concise and to the point. For small projects, it may run a few pages. For larger projects and complex business change endeavors, the document will be large.
  • Keep the intended audience in mind when preparing each section, and include supporting information in an appendix. For instance, the option appraisal section may summarize each option, with the details contained elsewhere for reference.
  • The purpose of a business case is to outline the business rationale for undertaking a project and to provide a means to continually assess and evaluate project progress.

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