A Business Case is the key document for obtaining approval for funding before starting on a new venture. Work on the document begins once business needs, including problem and opportunities, are clearly identified and elaborated upon.
Who prepares it?
Stakeholder: At times she or he actively contributes to reviewing and validating solutions based on the business case and requirement documents.
Business Analyst: Actively writes the Business Case or facilitates a person working on it.
Project Manager: Facilitates writing of the document by providing data to calculate development and maintenance costs of the end-solution.
Finance Department: Actively participates in creating the Business Case when funding is from an external source/s. It is also involved in reviewing and validating the same to examine feasibility of any new initiative before approving funds.
Business Owners: Proactively work on new initiative when funding is through external sources such as bank or investors.
Executive: A person seeking approval for internal or external funding for a new initiative.
Time for a quick look at what matters and what doesn’t while preparing a Business Case:
Purpose: Most importantly, understand the rationale behind your Business Case in order to remain focused while hard selling it. When you do that, it helps you in presenting and convincing management on investment on new projects or initiatives.
What should you focus on?
- Identifying genuine stakeholders in order to obtain accurate data from to prepare the Business Case;
- Never lose sight of your initiative;
- Check feasibility;
- Calculate and validate Cost vs. Benefit analysis, and
- Be prepared with supporting documents related to your previous projects in order to consolidate you case.
Stakeholder Analysis:
- Identify your stakeholder.
- Document stakeholder information such as their roles, responsibilities, skill sets, special attributes, authority level, attitude regarding project and influence within their organisation. Such information will come in handy when you proceed to both define scope and collating data from respective roles in order to validate your Business Case.
Such stakeholders will contribute to reviewing and validating solutions through development and implementation, as well as creative successful collaboration among various teams.
Correct picture of Initiative
More colours can be added to the Business Case as per requirements of business data and stakeholders.
Thereinafter, it’s over to the project manager, who provides total cost of the project and its ownership including:
- Development Cost;
- Maintenance Cost, including technical support required to sustain the project that could either be outsourced or handled by an internal IT team;
- Hardware and software costs;
- Staffing cost, and
- Operational cost, which includes infrastructure for running a project.
Check Feasibility:
- Strategic fit for the organisation in-line with its vision statement or overall organisational culture.
- Technical fit, and if not, how much additional cost it would that entail.
- Financial fit in terms of being economically viable for the present organisational status. And if not, what options does the organisation have within reach?
Cost vs. Benefit Analysis
Cost
Tangible Costs
- Developing an existing project or working on new initiatives
- Employee training on a product or new initiative
- New user cost
- Hardware and infrastructure costs
- Software (operating system, security licenses, etc.)
- Relocation cost, as and when required
- Operational cost
Intangible Costs
- Disruption caused to any existing process or business while implementing a new solution.
- Recruitment and induction of new users.
- Any additional cost not covered here.
Benefits
Tangible
- Reduction in staffing cost
- Reduced in rental and operational costs
- Automation helps in improving quality by bringing down possibility of human error and enhancing turnaround time.
- Reduction in inventory
- Reduction in miscellaneous costs
Intangible
- Enhancement in business image with improvement in quality of products and services offered
- Increased customer satisfaction with better products and faster response
- Rise in employee satisfaction with reduction of repetitive work.
- Better management information system
- Improvement in presentation
- Better and faster corporate communication
Risk Analysis
- Identify risk based on previous success rate in similar projects or initiatives.
- Identify risk mitigation strategies
- Explore all viable options before short listing prospective vendors
- Update Cost vs. Benefit as well as Risk Analysis documents throughout projects to mitigate risk.
Based on the above strategies, a business analyst or business owner can factor in ROI (Return on Investment), PV (Present Value), NPV (Net Present Value), FV (Future Value), NFV (Net Future Value) and breakeven point to support her or his Business Case.
In summary, the proposal must be factual, logical, doable and profitable.
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