Wednesday, February 18, 2015

Business Case Overview And Essential Elements

#Wikipedia

A business case captures the reasoning for initiating a project or task. It is often presented in a well-structured written document, but may also sometimes come in the form of a short verbal argument or presentation. The logic of the business case is that, whenever resources such as money or effort are consumed, they should be in support of a specific business need. An example could be that a software upgrade might improve system performance, but the "business case" is that better performance would improve customer satisfaction, require less task processing time, or reduce system maintenance costs. A compelling business case adequately captures both the quantifiable and unquantifiable characteristics of a proposed project.

Business cases can range from comprehensive and highly structured, as required by formal project management methodologies, to informal and brief. Information included in a formal business case could be the background of the project, the expected business benefits, the options considered (with reasons for rejecting or carrying forward each option), the expected costs of the project, a gap analysis and the expected risks. Consideration should also be given to the option of doing nothing including the costs and risks of inactivity. From this information, the justification for the project is derived. Note that it is not the job of the project manager to build the business case, this task is usually the responsibility of stakeholders and sponsors.


Reasons for creating a business case
Business cases are created to help decision-makers ensure that:

  • the proposed initiative will have value and relative priority compared to alternative initiatives based on the objectives and expected benefits laid out in the business case.
  • the performance indicators found in the business case are identified to be used for proactive realisation of the business and behavioural change.
Development and approval process
The business case process should be designed to be:

  • adaptable - tailored to the size and risk of the proposal.
  • consistent - the same basic business issues are addressed by every project.
  • business oriented - concerned with the business capabilities and impact, rather than having a technical focus.
  • comprehensive - includes all factors relevant to a complete evaluation.
  • understandable - the contents are clearly relevant, logical and, although demanding, are simple to complete and evaluate.
  • measurable - all key aspects can be quantified so their achievement can be tracked and measured.
  • transparent - key elements can be justified directly.
  • accountable - accountability and commitments for the delivery of benefits and management of costs are clear.
Key Elements of the Business Case Report
A good business case report, which brings confidence and accountability into the field of making investment decisions, is a compilation of all information collected during enterprise analysis and the business case process. The key purpose is to provide evidence and justification for continuing with the investment proposition. Here is a recommended structure:
  • Preface
  • Table of Contents
  • Executive Briefing
    • Recommendation
    • Summary of Results
    • Decision to be Taken
  • Introduction
    • Business Drivers
    • Scope
    • Financial Metrics
  • Analysis
    • Assumptions
    • Cash Flow Statement (NPV)
    • Costs
    • Benefits
    • Risk
    • Strategic Options
    • Opportunity Costs
    • Conclusion, Recommendation, and Next Steps
  • Appendix
Review and approval
At various stages in the project, the business case should be reviewed to ensure that:

  • The justification is still valid,
  • The project will deliver the solution to the business need.
The result of a review may be the termination or amendment of the project. The business case may also be subject to amendment if the review concludes that the business need has abated or changed, this will have a knock on effect on the project.

#Tech Republic


6 essential elements for a winning business case

The vast majority of unsuccessful projects fail not because of poor project management, but because of poor decisions with respect to the choice of projects. A good business case helps to make right decisions and avoid horrible waste.

What's a business case?
There is a fallacy that a business case is a thick tedious manuscript, written by professional consultants in an incomprehensible language. It's printed on high-quality paper stock and placed onto the top shelf of an executive's office to be used as a breeding ground for dust bunnies.


This is not a business case; this is a disaster.

The sole role of a business case is that of a communication tool, composed in a language that the target audience understands and with enough detail to facilitate decision making on his or her part. There's no magic formula when it comes to the size of a business case. The size is irrelevant. What is relevant is that the business case provides all the necessary information to make the job of the decision maker possible. Brevity is always a virtue.

As a matter of fact, a business case does not have to be a written document at all. It could be in the form of a verbal message, but the structure and the content is, nevertheless, the same as if it were written up.

Think about it, you present and hear business cases all the time, with your children, parents, significant others, friends, and colleagues. Did your teenage daughter convince you that she can't possibly survive without an iPod? ("I can listen to class notes and presentations and will improve my marks.") How on Earth did you agree to go on that Mediterranean cruise with your in-laws? ("It will make me happy, dear. Besides, Dad naps all the time anyway.")

This is it, no mystery, just a communication tool.


Structure
I have been asked so many times about the best structure for a business case that we have placed a template onto our corporate website (www.bizvortex.com). It consists of the sections I will describe here, and you'll find that it is quite flexible. Nothing is really set in stone, including the headings. This is an important point, because flexibility is what you need to put a truly convincing case together. A business case is not a government form in which you tick boxes as you answer a gazillion questions; it's a medium for your brilliant business thinking.


...

1. Executive Summary
Always written last, the Executive Summary presents the essence of the business case, in a condensed format. Pick the most important points that allow for a coherent picture, but strive to keep it concise: it should not be longer than one or two pages. Certainly include objectives, proposed solution, benefits and costs, risks, and key dates.


2. Objectives
Describe why this case has come about. Typically, the reason is one of the following:

  • An opportunity that generates revenue, cuts costs, or deliver some other benefit 
  • A mandatory change, something that needs to be complied with.
  • A correction of a wrong
This section can be structured in a few of ways. The first approach is appropriate for cases that deal with correcting a wrong. Describe the current situation and explain what the adverse impact is, be it of a financial nature or otherwise.

The second approach, more suitable for cases that deal with new opportunities or mandatory changes, where the status quo is not necessarily deficient, is to use the following structure:

  • Current state. Describe how the world is today. 
  • Future state. Describe how the world will look tomorrow, when the proposed change is implemented.
The third approach, most appropriate for new opportunities, is to state what the case is proposing and describe why it is being considered. Why now?

Use the structure that works for your situation.


3. Project alternatives
List several alternatives you considered, complete with benefits and costs, and risk assessment. Show how they align with such considerations as corporate and business unit strategy, vision, current priorities and other factors discussed in the blog I mentioned at the start of this piece.

How many should you list? Three is a good number, five is too many, but never just one.

You should use your judgment and include the appropriate amount of detail so not to overwhelm the reader and yet provide enough information for effective decision making. This is the old "know your audience" maxim, and it rings especially true here.


4. Preferred alternative
Always state what the preferred option is and explain why it is preferred.


5. Implementation plan
It's usually appropriate to provide some ideas on how the implementation of the preferred solution should proceed, to show that you're presenting not a pipe dream but a carefully thought through solution. Rarely is it necessary to create an exhaustive plan, unless specifically required by the decision makers.


6. Appendices
Include all supporting information, such as cost benefit analyses, reference materials, calculations, and charts.


... 
The case for business cases
The importance of a business case to its author is enormous. Present a solid business case, and you have positioned yourself as knowledgeable thinker and innovator. If noted by the decision makers, a promotion is certainly possible. In a case of a consultant, there will be repeat business. On the other hand, a weak business case is a career-limiting move. Sadly, I see a lot of business cases that are not worth the paper they're written on, and I always wonder how many careers are cut short as a result. I can't even fathom why this keeps happening in this day and age, when excellent resources, such as coaching, are available.

From the perspective of the organizations, the stakes are equally high. A solid business case leads to well-informed decisions that are most appropriate in a given business setting, while the one that fails to provide adequate level of detail, or disregards relevant data, or makes incorrect inferences, or does any number of other things wrong, leads to suboptimal decisions that are very expensive to any organization, in terms of the time, money and lost opportunities.

I'm convinced that the vast majority of unsuccessful projects fail not because of poor project management, but because of poor decisions with respect to the choice of projects. A good business case helps to make right decisions and avoid horrible waste.


By : Ilya Bogorad

2 comments:

  1. You re in point of fact a just right webmaster. The website loading speed is amazing. It kind of feels that you're doing any distinctive trick. Moreover, The contents are masterpiece. you have done a fantastic activity on this subject! recruitmentagency burnley

    ReplyDelete
  2. After reading your article I was amazed. I know that you explain it very well. And I hope that other readers will also experience how I feel after reading your article. new company names

    ReplyDelete

Share Your Inspiration...