Putting the case for e-business
Help! I don't know how to put together a business case for e-business. In order to ensure the buy-in of my organisation, I need to be able to predict the return on IT investment not just in terms of the efficiency, but also the effectiveness of a project. How best can I do this? Are there any models that would help me, and if so, where can I find them?
The business case needs to be put for all IT investment
Professor Dan Remenyi
There is no doubt that even the sexiest looking e-business projects need a convincing business case or value proposition to get and keep effective management buy-in. In fact if e-business is to be more than a short-term, flash-in-the-pan, disappointing silver bullet for your organisation, it had better make sure that all the important players buy into the business case. But, remember that there is really no difference between e-business projects and any other IT investment.
IT investment business cases are definitely strengthened by being able to predict a specific return on investment. But this is not the only dimension of a business case - improved business processes, higher levels of user satisfaction, strategic alignments and stakeholder commitment are just as important.
E-business will soon be the business
You cannot accurately predict or measure the return you will get from the investment ploughed into an e-business project. Don't forget the importance and growing influence of e-business within your market.
Depending on your sector and position, e-business will enable you to expand into new markets and ensure survival against your competitors. Another important factor is that the City is now seriously looking at whether companies have a robust e-business strategy before investing in them.
On a more technical level, an e-business strategy will enable your company to collect, store and manage customer information, allowing it to meet the needs of your customers. However, before launching into e-business, I recommend you hold a workshop with senior management to identify the priorities. Define the business benefits in terms of future strategic and business opportunities. For example, your company will become more effective if it is able to provide accurate customer data, has a well managed intranet and an electronic link to a key supplier.
Cut through the hype and fear
The key question with e-business is to cut through the hype and fear, and work out how to do it in your organisation. Forget the stories, theories and off-the-shelf solutions. Organisations using e-business to shape their futures are those that know where they are, what they wish to achieve and how to get from one to the other.
Three elements within this overall question are:
A business case for e-business is just like a business case for any new product, approach or initiative. What are the financial, customer and cultural benefits? There are many models around, all claiming extraordinary results. When you look around at what different solution providers have to offer, ignore the bluster and e-sales garbage and treat it like any other business purchase.
Also, e-business is becoming a bit like the emperor's new clothes - only smart people seem able to see it! That is garbage, most people are as confused as everybody else, including chief executives and financial directors. Approach it like you would any other proposal, focusing on increasing revenue, customer attraction/retention and internal morale and motivation.
Share best practice with peers
Business-to-business applications are vastly different from business-to-customer applications. B2B applications are more likely to respond to traditional business logic when formulating the business case, whilst B2C applications are going to require an approach based on supposition, which can often feel uncomfortable to rational minds. Detailed research by Impact suggests there is very little best practice in this area as yet.
For some the game has changed: we heard of one IT director being told by his CEO: "forget what IT is going to save us, tell me how much your activities are going to add to our market capitalisation over the next 12 months?" This IT professional is going to have to be adventurous - even though this means getting it wrong probably more times than getting it right. You are not alone in this challenge. Working with colleagues and peers to share best practice will help.
Establish criteria and give scores
In today's rapidly changing and often unsubstantiated e-business environment, serious questions must be raised about whether financial return on investment should be the primary driver for project acceptance. Indeed, there is evidence that top performing companies do not use financial methods for portfolio planning. Rather, they use strategic portfolio management methods where business strategy decides project selection.
Criteria should be established and the project scored against each of the criteria in turn, these may include: strategic positioning, probability of success, market size, customer needs, future trends, market exploitation and availability within the finite resource pool. Weighting should be assigned to the criteria according to how important that factor is to the strategy of the organisation. Exerting pressure on an individual project to produce high financial returns may result in the cannibalisation of other projects to the detriment of the overall business strategy. For this reason, project return may be determined by more than traditional criteria. By using criteria closely linked to business strategy, the process may be duplicated for projects until it is optimised.
Happy as I am in my current position, I do not intend to stay here indefinitely. I am therefore becoming conscious of the need to set in place a succession strategy. Doing so would seem to require that I earmark a staff member for special mentoring and grooming, but I am concerned this will get backs up across the department. What tips can you offer me for setting in place an effective - and diplomatic - succession policy?