Business Case Overview

From Wikipedia, here is a good definition of a business case and how it should be developed:

A business case is the concept of having a non-technical reason for a project or task. The logic of the business case is that any time resources such as money or effort are consumed, they should be in support of the business. An example could be that a software upgrade might improve system performance but the "business case" is that better performance would improve customer satisfaction.

Business cases can range from comprehensive and highly structured, as required by formal project management methodologies, to informal and brief, such as the example above. 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.

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.

Formal Business Cases

Formal business cases are evaluated to ensure:

1. the investment has value
2. the project will be properly managed
3. the firm has the capability to deliver the benefits
4. the firm's dedicated resources are working on the highest value opportunities
5. projects with inter-dependencies are undertaken in the optimum sequence.

Objectives

The principal purposes of the formal business case process are:

- Introduce a way of thinking that causes people with the authority to recommend projects to firstly consider their value, risk and relative priority as a fundamental element of submitting the project proposal - Require those proposing a project to justify its value to the firm and to self-cull any proposals that are not of demonstrable value
- Enable management to determine if the project proposed is of value to the business and achievable compared to the relative merits of alternative proposals.
- Enable management to objectively measure the subsequent achievement of the business case's benefits.

The Business Case Process should ensure:

1. the required issues have been thoroughly considered and documented
2. sufficient information to facilitate fair evaluations of different proposals is available
3. both the value and risks inherent in the proposed project are clear
4. the project is sponsored by, and has the commitment of, an executive with the capability and authority to deliver the benefits
5. the delivery of the outcomes and benefits can be traced and measured.

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 - accountabilities and commitments for the delivery of benefits and management of costs are clear.


Generating a business case

Generation of the Business Case should not be mechanical. Indeed, the case must demonstrate that: the issues have been thought through, the full benefits will be realised on time, any technical aspects have been thoroughly evaluated and costed, and track and measure their achievement. For any IT project it is unlikely that any significant proposal would be submitted to the Executive Management Team for approval without both the business sponsor and the head of IT agreeing on the merit of the proposal.

A business case should contain some or all of the following information types (depending on the size, timing, scale and availability of information:

> Reference - Project name/reference, Origins/background/current state
> Context - Business objectives/opportunities, Business strategic alignment (priority)
> Value Proposition - Desired business outcomes, Outcomes roadmap, Business benefits (by outcome), Quantified benefits value, Costs/ROI Financial scenarios, Risks/costs of not proceeding, Project risks (to project, benefits and business)
> Focus - Problem/solution scope, Assumptions/constraints, Options identified/evaluated, Size, scale and complexity assessment
> Deliverables - Outcomes, deliverables and benefits planned, Organizational areas impacted (internally and externally), Key stakeholders, Dependencies
> Workload - Approach, Phase/stage definitions (Project (change) activities, Technical delivery activities, Workload estimate/breakdown, Project plan and schedule, Critical path)
> Required resources - Project leadership team, Project governance team, Team resources, Funding
> Commitments (required) - Project controls, Reporting processes, Deliverables schedule, Financial budget/schedule

Instilling Business Case Discipline Into IT

Found a great Power Point presentation from Forrester while doing a search on benefits realization. I was surprised it was available for free, but happy that it was. Here is the link:

http://www.forrester.com/Events/Content/0,5180,1738,00.ppt

Some highlights are:

- When someone asks the question why do business cases, here is a good answer from the presentation title, "Business cases enable governance, bring discipline, and prove the value of IT"

-  There are a number of graphs, surveys, tables and figures to back up the value of a business case and why it is needed. With appropriate references you could use this in management presentations.

-  Provides some good ideas for the key content to include in a business case through 7 core components to include in a good business case.

-  And finally it provides the linkage between business cases and the benefit realization process in the section titled "The business case — tracking business benefit realization"

All in all a very informative presentation which can be used as a basis for generating ideas and selling the business case concept. I have added to my list of references.

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Best Practices for Managing IT to deliver business value

Forrester Research has come up with a comprehensive list of best practices you can use today to get better results from IT that add value to the business. In an effort to help CIOs struggling to justify IT's business value to their bosses while, simultaneously, reducing waste and cost, Forrester Research analysts Phil Murphy and Andrew Bartels decided to put together a list of the best practices they, and their peer analysts at Forrester, think would offer the most help.

Here are some that I think are relevant from a benefits/value standpoint - reducing costs and/or increasing revenue:. Note - I have left the original ranking number so you can see where it rated in the Top 20 List. Below the list is a reference to the full article. You can use some of the ideas here to build your next business case.

1. Adopt ITIL and other frameworks like COBIT and ISO 17799 to bring discipline and efficiency to IT operations. Having efficient and transparent operations will significantly reduce costs (and add value) to the organization.

2. Use IT systems performance management audits and software to increase application throughput and manage costs.

4. Implement data center automation to reduce operating costs.

5. Install server virtualization to lower hardware costs and reduce administrative burden.

6. Embark on application rationalization to help IT shed duplicate applications and infrastructure.

8. Use application portfolio management (APM) tools to develop metrics to drive maintenance effort and cost reductions.

10. Undertake IT asset management initiatives to optimize usage of software and hardware.

12. Employ enterprise architecture groups to drive standardization of the software portfolio.

13. Use your vendor and contract management teams to squeeze more value from vendors.

14. Utilize contract life-cycle management tools to help optimize the savings from supplier contracts.

15. Use formalized and aggressive IT sourcing practices to cut ongoing depreciation and maintenance fees.

16. Employ eSourcing and services procurement tools help secure more competitive vendor bids.

17. Keep selective outsourcing options on the table that may lower costs and improve IT.

18. Implement IT operations scorecards to track and drives improvements and reduces cost.

19. Give IT leaders dual roles as business relationship managers and IT activity managers.

The full article can be found at : http://www.cioupdate.com/insights/article.php/3710291

Benefit Definition Workshops - Ideas on how to manage them,

One method I have found very useful to try and determine the benefits for a particular project is to have a Benefit/Business value workshop where you invite the relevant stakeholders to brainstorm about the potential benefits from implementing the proposed change. You will be amazed at what you can get out of these sessions. The key for these sessions as the Project Manager or Business Analyst is to provide structure and a strong agenda to keep the meeting on track and to get the information you are seeking. Also for preparation have a few ideas of your own incase of those "silent" moments.

The key things to keep in mind are:

1. It is a brainstorming session so everyone can have their opinion. You are to take notes, encourage discussion but not make judgements. When all the information is gathered you can then analyze, ., prioritize and make recommendations. Ensure you set Ground rules at the beginning of the meeting.
2. Make sure you involve the right people and the relevant people.  Avoid too many executive type people. It is the people who do the day-to-day work that have the best ideas at times.
3. People will more likely complain about what is wrong. Use this as a basis to work out the benefit. Ie, The benefit would be what would arise from fixing the problem. It will be your role to quantify this.
4. Provide some background reading prior to the meeting and have a quick recap at the beginning of the meeting.
5. Have a follow-up meeting to discuss your recommendations and to solicit feedback and get buy-in. Make sure you send out post meeting minutes/action items as well.
6. Encourage discussion and ideas but stay on the Agenda. You want to get the most of the meeting in the limited time you have.
7. Lastly, provide some refreshments for the meeting. It is amazing how some chocolate or muffins get the ideas and conversation going.


Let me know if you have any more ideas?

Benefits Management Frameworks and the Importance of Sponsorship

Just completed putting together the benefits management framework for my current client. It has now gone to senior management for approval and endorsement. This is probably the most critical part of the entire process. Without senior management sponsorship for the framework, it will most likely fail when it comes to adoption. I have seen this happen many times and now I tell my clients, that getting management sponsorship or "buy-in" for a benefits or any governance framework should be done from the outset and should be actively managed throughout the development and implementation process.

Here are the Three key stakeholder items to keep in mind  when considering the implementation of a Benefits or Governance management framework:

1. Seek appropriate senior management sponsorship before starting the work effort. Make sure you have a strong advocate (C Level is the best) who will be able to influence others and assist in getting over the resistance you will most likely encounter when trying to implement the framework. To get sponsorship you need to also show why the framework is adding value to the organization - ie make sure the business case for implementing the framework is tight. Don't do it just because it is the "latest" trend or a competitor is doing it.

2. Make sure you have regular meetings the sponsor and department/division area champions to let them know your process. You should have executive presentations available to summarize what, why and how you plan to do things in 2-3 Power point slides. Use company specific examples or areas for improvement to make the presentation more effective.

3. Do not spend months coming up with a framework. It should take you 5 - 8 weeks to come up with a working Benefits Management Framework, depending on the size of the organization. Leverage the extensive information available on-line - this blog has a lot of good references on the right pane - and tailor it to the company needs. If you take too long, you will lose momentum and sponsorship. It is important to solicit opinions from the stakeholders or people impacted, but do not expect consensus. You want to ensure senior management and the sponsor are happy with the value the framework and it will be their role to manage middle management resistance over its adoption.

There are various other factors to consider around implementation and adoption (eg start small with a pilot), but sponsorship and stakeholder management are key. Let me know your comments.