Which would you rather do: write a business case for
your latest project or spend a few hours in the dentist's
chair?
Most IT directors hate everything about business cases - from
the internal politics to the financial lingo. But these days, the
ability to put together a clear and compelling business case is a
core competency for all IT executives.
So, how do you know if your business cases are up to scratch? If
you have been turned down for more than one major project in the
past year, the chances are that your business case was the reason,
says Bob Devall, a project practice leader with Computacenter. The
good news is that effective business cases are more science than
art - developing a good business case is simply a case of getting
the right information in the right order, in front of the right
audience.
The first lesson to learn is that business cases are read by
business people. Use too much technical terminology and your
audience will simply assume you are trying to trick them into
buying something they do n0t need. Business cases written by IT
executives frequently rely on acronyms, performance statistics and
product features rather than business outcomes, says Devall. "In
any business case you need to distinguish between IS outcomes, such
as better performance, and business outcomes, such as greater
agility."
The second lesson is that the most important work on a business
case happens before you start to type. Before you can start to
build your business case, take some time to assess the
organisation's strategy and financial position. "There may be some
corporate messages that the company is trying to promote, or
particular markets it is looking to break into, and linking your
project to those messages will put you on the right side of the
board," says Teresa Jones, a senior research analyst with Butler
Group. "They may be investing in other IT projects that will affect
your proposal, or make it more or less attractive."
Consider speaking to the financial director to find out if bidders
face a "hurdle rate". This is the rate of return on investment
required by the company to fund any new initiative. If your project
has a solid business case and shows an ROI above the hurdle rate,
then it is in the shareholders' best interests to pursue the
project.
Once you have done your homework, it is time to start working on
the actual business case. Begin by outlining the current situation
and its limitations. This should include a detailed description of
the current process, with metrics to show the cost to the business
of not making a proposed change. It is important not to skimp on
this section - if your analysis of the current situation is not
detailed enough, any benefits outlined for the proposed project
will be less convincing as a result.
Once you have outlined the current situation, the business case
should present a snapshot of the future, describing the broad
benefits of the project. All benefits should be phrased in language
that the board will understand - this usually means financial or
customer-focused terminology. "The board doesn't care that your new
server will increase uptime by 20%," says Jones. "They care that
the uptime means they can serve an extra 10,000 customers and
generate £1m in sales."
If you are not sure exactly how your improved IT will benefit the
business, then ask. "If you are proposing new technology to the
business, ask the business what difference it will make - it is
obvious, but so few people do it," says Dixit Patel, director of
technology with consulting group Sapient. "The IT manager might not
know exactly what difference a new customer relationship management
system will make to how the sales team works, but the marketing
director will."
Speaking to business leaders about your business case at this stage
has several benefits. It is an opportunity to get an early reality
check on your predictions, but it also provides an opportunity to
secure buy-in from executives who will eventually decide the fate
of your proposal. If your business case says that new finance
software will reduce headcount in the finance department, make sure
the head of finance agrees to make those cuts or redeploy those
workers. If not, the organisation will never realise the value you
have promised in your business case and the IT department will get
the blame.
It is smart to talk to all the stakeholders at an early stage -
they can help pinpoint problems that could derail your business
case later, says Patel. Stakeholders might include business
executives, board members, user representatives, regulators or
anyone else who has a stake in the success or failure of the
project.
"The last thing you want is to be presenting your business case to
the board and for someone suddenly to raise something you had not
considered," Patel says. "It only takes one query from someone you
have not met with beforehand and you are looking at another three
months' work and your credibility is down the toilet."
Stakeholders will also tell you what metrics you will need to
provide to convince them of the project's value. This can help you
to produce targeted ROI statistics that will convince the board you
have not forgotten any costs involved in the project. The very best
business cases will include ROI statistics from independent
sources, preferably other organisations that have already deployed
the technology.
"That information is not always easy to come by, but that does not
mean you should give up and rely on the ROI statistics that the
supplier has given you," says Jones. "Consider talking to industry
analysts, who will have anonymous reports on the costs of deploying
certain technologies, or ask your supplier to put you in contact
with reference customers."
Cost benefit is an important element of any business case, but it
is not the only thing the board cares about. Soft benefits might be
intangible and difficult to measure but they can still provide
value to the business. For example, in the early days of the
internet, there were no metrics to measure the value of creating a
website. Companies simply believed the internet was the future of
business.
Whatever the benefits, the most important thing is to remember to
phrase them in business terms, says Devall. Although it might be
tempting to include detailed descriptions of whizzy new features
and functions, the chief executive only really cares about the
bottom line and the customer experience, Devall says.
Finally, be sure to include some alternative scenarios in your
business plan to take account of changing circumstances. For
example, if your business case hinges on sales increasing by 10%
thanks to a new website, you need to consider the possibility that
the increase will only be 5%, or may not materialise at all. If
your projected benefits do not materialise, you will need to
explain how you will cope and what additional work will be
needed.
After all this, you could still fall at the final hurdle - even the
best business plan will fail if you cannot present your case
effectively. "Presenting to the board can be really nerve-wracking,
and it is easy to get it wrong," says Jones. The worst mistakes?
"Reading a script, relying on hundreds of detailed Powerpoint
slides, or slipping into jargon - people will drift off, and you
have lost it," she says.
To make the most of your opportunity, Jones advises using no more
than 10 slides, and try to come up with some real-world examples to
illustrate your point. "Try to come up with a visual aid to explain
the improvement you want to make, even if it is using the coffee
cup," he says. "People think putting things into general terms is
somehow dumbing down, but if anything it is the opposite."
If your business case is rejected, ask those involved for some
feedback. It may be that the company does not have the resources to
fund your project at the moment, but it is possible that your
figures were not convincing or you did not take account of another
project. "It might be that you need to do some more work, or just
that there are lessons to be applied to your next business case,"
says Jones. "But you should never just give up and go away."
Business case top tips
A good business case should have the following core
elements:
- The introduction summarises in one or two pages the entire
document. This is all the chief executive will read, so make it
snappy, persuasive and easy to follow.
- Chapter 1 describes the current situation, complete with its
limitations. This should include examples of how the system is not
delivering its full potential, explained in business terms.
- Chapter 2 is a vision of the benefits that will be achieved.
Use the metrics in chapter 1 to justify the benefits outlined in
chapter 2. Check your predicted benefits with business leaders to
see if they are achievable.
- Chapter 3 talks about the issues around the delivery of these
benefits. What does the company need to do to achieve the vision?
What should it buy? What processes will change?
- Chapter 4 should describe the project activity. In other words,
who will be responsible for each of the steps in the project, who
will need to be trained, who will be redeployed?
- Chapter 5 details all the solutions from the project and
includes a cost benefit analysis. It is a more granular version of
chapter 4, and details all the technology that will need to be
changed and how, explaining the stages of the project.
Case study: Manchester United launches MUTV
As head of IT at Manchester United Football Club, Mark
Hargreaves wrote dozens of business cases. "It was not something I
really worried about," he says. "We had a well-defined set of
guidelines from the board of directors and there was a five-year IT
roadmap. So long as the business case followed those and
demonstrated the right return on investment, there were not really
any problems."
However, when Hargreaves moved to Manchester United Interactive,
a new division of the club set up to explore new media services, it
was a different matter. "So often in new media, you are doing
things for the first time, there is no track record and it is
harder to look at things purely based on the ROI figures," he
says.
When the club partnered with Didata in 2003 to launch MUTV, an
online video highlights service, Hargreaves still created a
business case for the board's consideration, however. "We were
already running an online video service that had been developed by
Sky and launched in 2001, but there we had problems with the design
and the usability of the service," says Hargreaves. "The business
case was to justify the investment in a completely new site and
upgraded service in partnership with Sky."
Hargreaves began by working with Mori on a poll of supporters,
which revealed a high number of overseas supporters with broadband.
"Our research showed that broadband in Korea and Japan was
proliferating and even in Europe, adoption over the next five or
ten years would increase dramatically," says Hargreaves.
The technology involved in the site was new to the club, so
Hargreaves asked other clubs to share information on the cost of
developing similar services.
"We have good relationships with Celtic and Liverpool and share
information on projects," he says. "Although we may not have used
something, the chances are that somebody has used it and being a
brand like Manchester United often means people are happy to
help."
Most importantly, the business case looked at soft benefits from
the project, and this was what tipped the balance and persuaded
Manchester United to launch MUTV. "We have a powerful brand and
people expect something fresh and up-to-date, so although we could
have waited a couple of years, we would have lost that brand
value," says Hargreaves.