Business Case Management

The definitive source for understanding the best practice approach for business case construction and evaluation

Organizations of all sizes use business cases at some level to assess proposed projects that will require capital–whether financial, human or otherwise.  Depending on the size of the organization and the markets it serves, business case management can be an ad hoc process or part of a broader discipline designed to manage the full life-cycle of strategic initiatives that may span multiple years.

The world’s largest organizations commit billions of dollars annually to a range of strategic initiatives.

Annual spending on IT infrastructure alone can top $1 billion for major organizations in service-intensive segments, such as banking, brokerage, insurance and health care.

Most corporations spending billions on initiatives are subject to complex annual processes while assessing proposed projects on an ongoing basis, as well.  In any case, the traditional approach across organizations of all sizes shares one thing in common: A manual, off-line methodology for business case management.

For companies of all sizes, spreadsheets, slide presentations, and email are the most common business case tools. The result is an ineffective and inefficient process that leads to poor decisions and increased risk.

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Inpensa has focused exclusively on delivering turnkey solutions that address the problems and existential threats that can challenge organizations trapped by manual, off-line business case processes.  Project owners can find a best practice framework for meeting the business case challenge head-on outlined here. As a quick reference, please see the FAQ section for more help.

Digital Business Case Management

Companies seeking to maximize the impact of capital deployed on strategic initiatives and reduce the risk associated with today’s typical business case management process should focus first on implementing a digital framework.

Digital Defined

A spreadsheet or slide deck created on a computer does not define a digital business case. In fact, it is an offline process that is manual and labor intensive.

A digital business case platform provides key capabilities found only in a purpose-built system, designed from the ground up to deliver the fundamental building blocks for digital business case management.

  • Collaboration to allow business, finance and IT stakeholders to work on a business case simultaneously
  • Real-time access to data that are entered in one place, centrally with instant visibility to all collaborators
  • Audit and change control that makes it easy to understand how vital information evolves over time
  • Security to ensure only authorized users can access, add, modify and view information
  • Version control that enables users to capture and track higher-level changes as part of an overall process
  • Scenario capability that makes it easy for users to explore robustly different approaches to achieve the desired business outcomes

A Larger Framework

Organizations implementing a digital business case framework now have the means to accelerate the creation and assessment of proposed initiatives.  A digital business case platform provides users with opportunities to automate the review, revision and approval process.

Management at all levels can add fidelity to the overall process through a range of analytic opportunities available in a digital environment.

These capabilities can include things like comparisons of different business case scenarios, side by side assessment of business cases, and groups of proposed initiatives into programs or portfolios across a range of criteria.

Digitization of the business case

Business Case Template

Specific Templates for Several Reasons

Digitization of the business case process drives organizations to consider and implement a template approach to defining the information essential to characterizing a proposed initiative so decision-makers can evaluate it along with competing projects and other alternatives.

For many organizations, a template approach does not mean one size fits all. Different types of business cases require specific templates for several reasons.

  • The extent of capital commitment that would be required
  • Type of initiative; for example, IT compared with real estate/facilities
  • Associated business unit or region
  • Regulatory or compliance-oriented contrasted with discretionary investments

A digital business case management tool presents users with the appropriate template automatically as the author makes initial selections that define specific attributes of a proposed investment.

Components of a Business Case

The components of a business case are like a mosaic that comes together to create a picture that tells a compelling story in a feasibility study format.

Collaborators assembling the business case structure come from different disciplines in the organization–the operational line of business, finance, technology and other shared services groups.  Organizations may have different groups of executive stakeholders, as well, but the CIO and the leader in the financial planning and analysis (FP&A) area typically drive this process.

Each company’s standard business case template(s) should include several significant elements that, when assembled, create a clear vision for a proposed strategic initiative.

Fundamental Components of a Business Case

Benefits and Key Metrics
Strategic Alignment
Strategic Value and Risk

How to Write a Business Case

Most often, it is the owner/sponsor of the potential project that begins the process of writing a business case. A business case template comprising the components summarized above provides a helpful outline in terms of required data and related information.

The initiative sponsor can use these tools to understand how to build a business case as they contemplate the following considerations.

Clarify Business Need

Confirm the business need from the perspective of both the problem the initiative would solve and the benefits that would be delivered. This is important to understand how the project would provide a solution to a problem worth solving and deliver a difference that matters.  A candid assessment of whether addressing the issue is critical or simply desirable adds a greater context.

Also, it is helpful at the start to determine whether the project is related to running the business (RTB) or changing the business (CTB).

Conduct Root Cause Analysis

Understand at a fundamental level why the need for the project exists and why it has gone unaddressed thus far.

Perhaps new technologies make a solution more feasible, or other priorities took precedence earlier and are no longer at issue, for example. Project owners should directly explore this topic to ensure a proposed initiative targets the root cause of the problem, as opposed to symptoms.

Below are examples of fundamental root cause analysis (RCA) conducted using the simplified “Five Why’s” approach.


Five Why’s Iterative Approach to Uncovering Cause-and-Effect

Example 1

  • Problem: Customers are complaining that the new ATMs the bank installed are challenging to use.
  • Why? They are unable to withdraw cash in small increments quickly.
  • Why?  Because customers need to navigate to a dedicated screen that is not available in the main interface.
  • Why? Because that capability wasn’t part of the UX and UI shortlist of critical functions.
  • Why? Because it was assumed customers don’t need it.
  • Why? Only Regional Managers have access to the cash withdrawal data, and the design team didn’t receive this information.
  • Solution: Create a team to design and develop a solution quickly. Update the internal process to make sure the proper data is available to the groups designing the UX.  Validate, test and release to all ATMs.

Example 2

  • Problem: Critical customer eCommerce application is running slow.
  • Why? Because there are too many users.
  • Why? Because the data center design is for fewer applications than have been installed in the past two years with no change to infrastructure.
  • Why? Because the data center is nine years old.
  • Why? Planned migration to the cloud resulted in physical data center investment deferral.
  • Why? Customer data privacy concerns delayed migration to the cloud.
  • Solution: Accelerate migration to the cloud with a solution that secures customer data and has the scalability to expand to accommodate increased use dynamically.

Stakeholder Alignment

Assess initiative in terms of alignment with senior leaders critical to project approval. Independently, verify synergy with the affected business unit or geographic region and evaluate relative to overall corporate objectives.

Estimate Costs

Outline the types of costs required. For example, to stand up a new application on-premise, charges would be incurred for the software license, hardware, and support for both.

If possible, estimate the costs that would occur as capital expenses as opposed to operating expenses to get an early view of whether the project will have a cash flow view very different from impact to balance sheet.

Characterize Benefit

Despite common belief, the primary reason why up to 80% of projects fail is not due to execution during the project set-up period.  The frequent reason cited for failure is the inability of project sponsors to characterize the benefits of an initiative accurately.  This results in a poor mapping of benefits realized compared with benefits contemplated at the time of approval.  At the outset, outline benefits by type–revenue increase, cost savings, or cost avoidance–relative to the expenses for the program.

Early in the process, project sponsors should be guided by how these data present in terms of ROI, NPV, IRR and other significant corporate financial metrics.

Consider Alternatives

Savvy initiative sponsors take time at the outset to explore whether there is more than one alternative to delivering a project.  For example, the case of migrating an on-premise system into a hosted environment may benefit from considering starkly different options. Providers offering full-service cloud solutions compared to those offering platform as a service (PaaS) or functions as a service (FaaS) packages can create dramatically contrasting financial profiles.

Business Case Analysis

Once project owners outline high-level benefits and costs to develop an understanding of preliminary financial metrics, it is essential to complement this view with an understanding of the likely ranking of an initiative relative to others vying for limited resources.

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For example, perhaps projects driving more than $10m in incremental revenue are assigned the highest level in terms of strategic value.  In contrast, it is crucial to evaluate the ability to execute, as well.  This view creates an inverse of risk. For example, perhaps the execution of a project with no more than 10% outside resources receives the highest ranking for the likelihood of successful implementation.

A project sponsor can use the combination of these perspectives to understand how an initiative is likely to be prioritized relative to others.

Frequently Asked Questions

What is a business case?
What is the purpose of a business case?
When is a business case needed?
What is a business case in project management?
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