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The case for business case (…no pun intended)

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 the 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? 

The process
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 

Component Description 

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 realized. 

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 realized 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!

Footnotes
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, 7.3.4.1, page 126
• The ITSM Hub Pty Ltd, 2020. Contents are protected by copyright and cannot be reproduced in any manner. • ITIL® is a registered trademark of AXELOS Limited, used under permission of AXELOS Limited. All rights reserved. • BRMP® is a registered trademark of the Business Relationship Management Institute Inc.

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