Covid-19 turned the world upside-down, and inside-out. Businesses and individuals were not spared. Many countries went into lockdowns, businesses started to scale down and people started to work from home. We are in unprecedented times. As Eleanor Roosevelt has put it aptly, “You can often change your circumstances by changing your attitude.” Businesses and individuals must be agile and transform themselves to adopt a new norm in order to carry on the journey. The new attitude is one of turning a crisis into an opportunity.
Overnight, “zoom” became a new verb in the dictionary as our lives went online, from business meeting, training, cooking lessons, and even family gatherings. Businesses that use digital technology from food delivery, cooking lessons, to online fresh seafood sales bidding, were able to sustain, albeit with some difficulties. Digital technology is the new norm for businesses and life.
If you are working from home and working on a reduced workload, you may be wanting to learn a new skill, do a Marie Kondo, or maybe you are trying to clinch a business deal. If any, one good thing that comes out of Covid-19 is the pause button in our lives, allowing us to search ourselves, hear our inner voice and reflect on our priorities. As in the need for business to transform themselves into the new norm of doing business, the individuals must also think of upskilling himself in order to move forward.
You may be trying to clinch that business deal, get a project approved, or to attend that long-overdue training to upskill yourself, whatever it is you plan to do with a new resolve from Covid-19, business case may be just what you need to justify it.
What is a Business Case?
A business case is a decision support, planning and communication tool that provides justification for the expenditure of organizational resources, providing information about costs, benefits, options, risks, and issues.1 A business case enables informed decision-making for any investment any organizational wants to embark on.
Why must we have a business case?
The purpose of the business case is to establish mechanisms to judge whether the project or initiative is (and remains) desirable, viable, and achievable as a means to support decision-making in its (continual) investment.2
All projects or initiatives must have a documented business justification for it to start and continue, whether formally or informally.
A business case is to establish a foundation for informed decision-making, but it is based on assumptions. These assumptions are subject to uncertainty and often conflicting needs and interests. Whilst building a business case, it also allows the business analyst to clarify these uncertainty and conflicts, refine the business objectives and align them to the overall vision, thereby building a strong business case, before any decision is made regarding any investment of the organization resources.
When do we need a business case?
A business case can be used at the strategic, tactical or operational level. Every initiative whether at the strategic, tactical or operational level, requires agreement and support from the different stakeholders.
- Strategic level – during portfolio management when the executive management needs to decide if any investment is desirable, and if the investment is aligned to their strategic objectives and the overall organizational vision, in the longer term perspective
- Tactical level – at the service management level to decide if new services or products should be created or continue to be provided to the customers, in the medium term perspective • Operational level – for any improvement initiative or decisions on a day-to-day basis for eg as part of change management to decide if replacing a faulty hardware component versus upgrading the entire system is more desirable, viable, and achievable
Basically, we need a business case for any decision that we have to make every day.
Who is the business case for?
When building a business case, it is important to build it from the perspective of the approver(s).
If the business case is created to support the decision-making of a major project, then the level of information has to be aligned to the executive management overseeing the portfolio management. If it is to provide a justification for an operational IT change, then it has to be pitched to the perspective of the service owner stating the reasons why the change must be carried out and/or the risk of not carrying out the change and the impact to the business.
The business case must be well communicated to the stakeholders to allow for proper review and approval. This could be in line with any communication approach that is in place.
How do we create and manage a business case?
1. Build – Getting the right information so that informed decisions can be made
2. Verify – Assessing if the project is desirable, viable and achievable
3. Maintain – Keeping the business case updated
4. Confirm – Realizing the benefits
1. Build the business case
There is no standard format for a business case. While an alternative Business Model Canvas can be used, there is a list of information that you would want to include in a business case. Whether you include them in your final business case or not, it entirely depends on the considerations we discussed. However, I would suggest that you at least review every item in the proposed structure and contents and decide if there is a business-need to include or exclude any one of them, based on the perspective of the approver(s).
How formal or how detailed a business case is, is also dependent on the requirements of the organization, the audience and the context, whether there is a governance requirement to build a business case in a certain approved format. A formal business case would usually be required for a project where large resources are to be invested, while a small paragraph in an email would suffice for an operational change with minimal business risk and impact.
Building a business case requires collaborative efforts from all stakeholders to ensure that assumptions, risks and benefits are considered holistically. ITIL 4 advocates that the Four Dimensions3be considered when building a business case. This can be facilitated through workshops involving the stakeholders from the different functions.
While building the business case, the benefits management approach must be defined and agreed with the different stakeholders. A benefits management approach defines what, when, who and how the realized benefits can be measured.
Example: A business case structure
Introduction / Executive Summary Presents and summarises the business case. It highlights the proposal and the business objectives to be achieved, and the context.
Reasons Defines the reasons for undertaking the initiative or business action.
Methods and assumptions used Describes the methods used to create the business case, the organisational context and assumptions used to define the costs and benefits, and the boundaries of limitations, the scope of the business case.
Business options Analyse and compare the various options, doing the minimum or doing nothing.
Timescale The period over which the initiative is to take place, and when the benefits can be realised.
Costs The investment, direct or indirect, financial or non-financial. Include the upfront costs to start the initiative, and ongoing operations and maintenance costs.
Investment Appraisal The method and technique to aggregate the benefits and dis benefits. To finally determine if the initiative has achieved its objectives it has set out to achieve in the first place.
Business impact/outcomes Describes the expected outcomes of the business case, quantitative or qualitative. Expected benefits and dis-benefits. Common considerations – ROI & VOI.
Risks and contingencies Describes the risks associated with the business case, if action is taken, or if no action is taken. It describes the options for progressing, and mitigation plans to address the risks of failure.
Recommendations/Conclusion Describes the final recommendation to proceed or not with the business action or initiative based on all the information and balancing the positive and negative impact.
Introduction/Executive Summary – It is important to have a convincing executive summary to get the buy-in from the approver(s). The executive summary must clearly present the intent of the initiative.
Reasons – What is the motivation and justification to propose this initiative, and reasons enough for the stakeholders to approve it?
Methods and Assumptions – The method of implementation and measurement of the outcomes of the initiative must be stated clearly, including the resources and costs involved, any calculations and assumptions. The bigger the project or initiative, the more important it is to cover as many assumptions as possible to minimize the risk of unintended outcomes.
Business Options – What are the various options that have been considered before the most desirable, viable and achievable option is proposed?
Timescale – What is the start and end time of the initiative?
Costs – What is the investment required, in terms of financial and non-financial resources?
Investment Appraisal – How do we measure the outcomes and success of the initiative at the end of the defined timeframe?
Business Impact/outcomes – This forms the most important part of the business case. Both positive and negative outcomes, qualitative or quantitative must be specified to the best ability. Return-on-Investment (ROI) based on the financial returns has traditionally been a measurement factor. However, Management is increasingly more interested in Value-on-Investment (VOI) which includes financial and non-tangible benefits like reputation or the innovative ability of the organization to sustain growth and competitiveness (intangible in nature). The positive and negative outcomes can be referred to as benefits and dis-benefits.
Expected benefits – The desired outcomes to be achieved from implementing the initiative. Expected dis-benefits – The impact or outcome of the initiative that are deemed to be negative.
Risks and contingencies – What is the business impact if the initiative is carried out? What if the initiative fails? On the other hand, an often missed perspective is – what is the business impact if the initiative is NOT carried out, such that it is more beneficial to do it despite the risks involved?
Recommendations/Conclusion – overall benefits must be greater than the risks to give a positive recommendation.
A simple worksheet from the ITIL Practitioner Guidance containing a set of questions can be a useful aid to gather the information you need to build your business case.4
2. Verify and approve the business case
After all information has been gathered, the business case goes through a process of review and approval, according to any guidelines set up by the organization. If it is a project, then the review and approval must be in line with the project management methodology in use. If it is for an operational change, then it might have to follow a change management process. Regardless, it is common that a business case will go through more than one level of review and approval.
A typical business case approval roadmap is defined in the BRMP Guide to the BRM Body of Knowledge, 5.3 Value Management process. To find out more on how a business case can be used to define, measure, optimise and communicate the value of any investment over time, sign up for the next Business Relationship Management Professional (BRMP) certification course.
3. Maintain the business case
After the initiative has been approved and work has begun, it is important to note that the business case cannot be forgotten. It has to be maintained, updated and communicated to the stakeholders as required. The business case is and should be a live and dynamic document. When updated regularly, it plays an important role to ensure that the initiative is (still) on track. When objectives are changed, new risks and assumptions surfaced or are confirmed, or when any short-term benefits are realized, these must be updated into the business case. The business case must reflect the latest and current especially if the initiative spans across a longer period of time. Failing to do so would make the business case obsolete in no time.
4. Confirm the business case
Depending on the nature of the implementation of the initiative, the benefits can be realised and measured at the end of different stages, as in the case of a project with multiple stages; at the completion of the whole initiative ; or a period of time after the end of the initiative, as in the case of sales results of a new product one month after launch.
In this step, the objective is to confirm if the benefits and outcomes defined in the benefits management approach in the Build step have been achieved by considering the risks and assumptions during the period of the initiative, and finally the aggregated positive and negative, quantitative and qualitative outcomes at the end of the initiative. The results of this step define and confirm the success of the initiative. It may provide case and justification for the next phase of the same initiative or for future initiatives of a similar nature.
Common methods and techniques of measuring benefits include Return-on-Investment (ROI), Value-on Investment (VOI), Net Present Value (NPV), While-life costs etc.
Communicating the business case throughout the lifecycle of the initiative
Last but not least, it is utmost important to provide visibility of the business case to all those who have a stake and interest in the success of the initiative throughout the lifecycle of the initiative. The business case must be made available either on a common platform (pull) or must be communicated in an agreed frequency (push) to the various stakeholders. A communications management approach is recommended to ensure this.
If you are ready to sell an idea or request for the training budget you badly need, download the business case template to get started!
1. ITIL 4 Drive Stakeholders Value, 5.1.4, page 81
2. PRINCE2, Managing Successful Projects with PRINCE2, page 46
3. ITIL 4 defines the Four Dimensions as Organizations & People, Information & Technology, Partners & Suppliers and Value Streams & Processes. Together with the external factors of PESTLE, these allow a holistic business consideration.
4. Adapted from ITIL Practitioner Guidance, 220.127.116.11, page 126
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