Getting the Business Case Right
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The document provides guidance on developing an effective business case for IT investments. It defines a business case as a document that assesses present and future business value and risks of an IT investment opportunity from the perspective of executive decision makers. The document outlines a process for developing a business case that includes defining the scope and criteria, aligning the criteria to business strategies, assessing costs and benefits through calculations and evidence, and delivering the business case through storytelling and presentations. It also identifies common reasons why business cases fail, such as including too many technical details without explaining the business relevance.
Getting the Business Case Right
- 1. Getting the Business Case Right A COMPLETE GUIDE TO CREATE COMPELLING PRESENTATIONS THAT ALIGN IT TECHNOLOGY BENEFITS TO ENTERPRISE VALUE INITIATIVES. - Making Technology Investments Profitable: ROI Roadmap from Business Case to Value Realization by Jack M. Keen
- 2. Definition of a Business Case 2 A document written for executive decision makers, assessing the present and future business value and risks related to a current IT-enabled investment opportunity. The purpose of a business case is to guide management in making the investment decision, from a business value point of view. A business case primarily consists of cost and benefit calculations, assumptions, rationale, evidence, and support – all recapped into a narrative “value story.” - Making Technology Investments Profitable: ROI Roadmap from Business Case to Value Realization by Jack M. Keen
- 3. Getting the Business Case Right 3 INPUTS Defining Decision Needs -Who expects what? -Who cares about what? Scope Criteria Align Align Criteria to Enterprise Business Strategy & Values OUTPUTS Project Plan Aligned Criteria - Making Technology Investments Profitable: ROI Roadmap from Business Case to Value Realization by Jack M. Keen
- 4. Getting the Business Case Right 4 Defining Scope (Who expects to see what?) • • • Define business case drivers and boundaries. (Address issues of concern to business sponsor, identify what is and is not included in the business case: business areas involved, systems impacted, people and resources consulted). Identify deliverables, team, and schedule. (Enlist members of the business case evaluation team responsible for development and delivery of the business case, create a final report and specify detailed project timelines). Solidify executive sponsorship. (Provide a confident level of accuracy in estimates to sponsor +/10%) Criteria (Who cares about what?) • • • • Define decision participants. (Sponsor, BSA, PM, SME, Enterprise Architect, DEV, DBA, Hardware & Software Managers). Identify decision criteria. (These are your benefits, costs, and risks). Specify intangibles. (Target business results, not system features). Filter business value criteria. (Reduce Cost, Increase Profit, Reduce Risk, Regulatory Compliance) Align (Connect the dots.) • Align criteria to enterprise business strategy. - Making Technology Investments Profitable: ROI Roadmap from Business Case to Value Realization by Jack M. Keen
- 5. Getting the Business Case Right 5 INPUTS Assessing Aligned Criteria Determine Proof Needs Provide Evidence Calculate Prove Analyze Payoff Explanations OUTPUTS Calculated Payoffs ROI Computations - Making Technology Investments Profitable: ROI Roadmap from Business Case to Value Realization by Jack M. Keen
- 6. Getting the Business Case Right 6 Assessing Calculate Construct explanations. (Business importance, solution drivers, evidence, references). Define formula sets and variables. (Display all components used to calculate benefits). Identify metrics and calculate. (Show formula, time period, % change, KPI, input data). Prove Determine “proof” needs. (Market comparisons, audit report, financial reports, survey s). Provide evidence and references. (Research docs, vendor quotes, estimating spreadsheets, context diagrams). Analyze Review alignment and compute final ROI. (IRR, NPV, ROI, payback period, etc.). Identify key themes. (“Reduce operating cost”, “Provide better service to customers”, “Security Compliance”). Determine recommendations. (Explain factors of decisions made, summarize results Say it all in 50 words or less! - Making Technology Investments Profitable: ROI Roadmap from Business Case to Value Realization by Jack M. Keen
- 7. Getting the Business Case Right 7 INPUTS Delivering Story telling ROI Computations 75% Test Build Deliver OUTPUTS Final Business Case Define - Making Technology Investments Profitable: ROI Roadmap from Business Case to Value Realization by Jack M. Keen
- 8. Getting the Business Case Right 8 Delivering Story Telling • Construct graphics and narratives. (Convert key themes and data to visuals when possible). • Write ROI stories. (Improve understanding of the business case findings and rationale). • Define and deliver presentations. (Build on sequence of topics, speak the audience language, show visuals). - Making Technology Investments Profitable: ROI Roadmap from Business Case to Value Realization by Jack M. Keen
- 9. What makes business cases FAIL 9 50 pages of data and no pages of why it matters! Abundant use of technical terminology to which the audience cannot relate Details about systems features, but little explanation of how they help the enterprise Unclear reasoning behind the conclusions offered A writing style that does not communicate well to an executive audience - Making Technology Investments Profitable: ROI Roadmap from Business Case to Value Realization by Jack M. Keen Presented by Sheldon McCarthy, BA at Farm Credit Bank of Texas
- 10. Supporting Documents 10 Mind Mapping Diagram of Business Case Report POLDAT Questionnaire List Process, Organization and Location (Business Architecture) and Data, Applications and Technology (Systems Architecture) Detail cost estimating spreadsheet (show calculations) Business Case and Feasibility Study Templates are available online at the IIBA Austin Chapter website www.austin.iiba.org/professionaldevelopment/template-library Presented by Sheldon McCarthy, BA at Farm Credit Bank of Texas
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- 12. DETAIL COST ESTIMATING SPREADSHEET PROJECT NAME: ABC Project TIMELINE: May -2013 until Feb-2014 BUSINESS SPONSOR: Cash Management Services PROJECT MANAGER: PROJECT PHASE: DEFINE PROJECT RESOURCES NAME COSTCENTER AVG RATE PM NAME 435 125 BA NAME 334 75 QA NAME 334 75 SME 709 125 DEV 1 560 150 DEV 2 560 225 DBA 560 150 CONTRACTORS Resource 1 Resource 2 225 150 MAY BUILD JUNE 80 120 20 80 80 80 20 60 170 0 80 80 80 170 170 170 170 JULY 40 25 25 15 170 170 170 170 ASSUMPTIONS $ WORK YR AVG MO MONTHS $ 2080 173.3333 10 $ TRAIN DEPLOY SUPPORT TEST AUG SEP OCT NOV 170 AVG HOURS PER MONTH 40 40 40 40 15 15 15 130 15 10 160 160 40 170 170 80 60 170 170 80 40 65 65 65 170 170 170 170 170 170 DEC JAN 40 40 80 40 FEB 60 1,007,750.00 733,800.00 1,741,550.00 TOTAL HOURS HR*RATE 170 170 WHEN INCURRED? 300000 200000 100000 SOFTWARE&LICENSE License purchase costs ANN. Maintenance costs WHEN INCURRED? 54000 12000 RACKS/CABLES/PORTS List items WHEN INCURRED? 1800 ALLOCATI ON % 60,000 40,875 36,000 50,000 128,250 192,375 54,000 561,500.00 10 48 9 61 9 53 7 57 9 95 9 95 7 51 TOTAL FTE RESOURCES 267,750 178,500 446,250.00 7 170 98% 7 170 98% TOTAL CONTRACTORS TOTAL ALL RESOURCES 300,000 200,000 100,000 600,000.00 54,000 12,000 66,000.00 1,800 67,800.00 TOTAL OTHER COSTS 733,800.00 25000 12 173 28% 35% 31% 33% 55% 55% 30% 480 545 480 400 855 855 360 1,007,750.00 HARDWARE (3) Virtual Servers (2) Application Servers (2) Database Servers COUNT AVG HR MONTHS MONTH 1190 1190 45 25 20 40 80 40 15 45 80 25 25 25 TOTAL RESOURCE COSTS TOTAL H/W, SW, Other TOTAL PROJECT COSTS TOTAL H/W, SW, Other TOTAL HARDWARE TOTAL HARDWARE
- 13. References 13 IIBA Online Library Book: Making Technology Investments Profitable: ROI Roadmap from Business Case to Value Realization, Second Edition by Jack M. Keen IIBA Austin Template Library Business Case Template Feasibility Study Template Risk Assessment Template Presented by Sheldon McCarthy, BA at Farm Credit Bank of Texas
- 14. 14 Thank You for Viewing
Editor's Notes
- #4: Scope (Who expects what?)1. Define business case drivers and boundaries. <address issues of concern to business sponsor, identify what is and is not included in the business case: business areas involved, systems impacted, people and resources consulted>2. Identify deliverables, team, and schedule. <enlist members of the business case evaluation team responsible for development and delivery of the business case, create a final report and specify detailed project timelines>3. Solidify executive sponsorship. <provide a confident level of accuracy in estimates to sponsor +/- 10%>Criteria (Who cares about what?)4. Define decision participants. <Sponsor, BSA, PM, SME, EntArch, DEV, DBA, Hardware&Software Managers>5. Identify decision criteria. <these are your benefits, costs, and risks>6. Specify intangibles. <target business results, not system features>7. Filter business value criteria. <Reduce Cost, Increase Profit, Reduce Risk, Regulatory Compliance>Align (Connect the dots.)8. Align criteria to enterprise business strategy.
- #5: Scope (Who expects what?)1. Define business case drivers and boundaries. <address issues of concern to business sponsor, identify what is and is not included in the business case: business areas involved, systems impacted, people and resources consulted>2. Identify deliverables, team, and schedule. <enlist members of the business case evaluation team responsible for development and delivery of the business case, create a final report and specify detailed project timelines>3. Solidify executive sponsorship. <provide a confident level of accuracy in estimates to sponsor +/- 10%>Criteria (Who cares about what?)4. Define decision participants. <Sponsor, BSA, PM, SME, EntArch, DEV, DBA, Hardware&Software Managers>5. Identify decision criteria. <these are your benefits, costs, and risks>6. Specify intangibles. <target business results, not system features>7. Filter business value criteria. <Reduce Cost, Increase Profit, Reduce Risk, Regulatory Compliance>Align (Connect the dots.)8. Align criteria to enterprise business strategy.
- #6: Calculate9. Construct explanations. <findings, definitions, business importance, solution drivers, evidence, references>10. Define formula sets and variables. <display all components used to compute tangible value of each benefit>11. Identify metrics and calculate. <show formula, time period, % change, KPI, input data, still best guess>Prove12. Determine “proof” needs. <market comparisons, audit report, financial reports, survey or expert opinion> 13. Provide evidence and references. <research docs, vendor quotes, estimating spreadsheets, context diagrams>Analyze14. Review alignment and compute final ROI. <IRR, NPV, ROI, payback period or other computations requested>15. Identify key themes. <“Reduce operating cost”, “Provide better service to customers”, “Security Compliance”>16. Determine recommendations. <explain factors of decisions made, summarize results, say it all in 50 words>
- #7: Calculate9. Construct explanations. <findings, definitions, business importance, solution drivers, evidence, references>10. Define formula sets and variables. <display all components used to compute tangible value of each benefit>11. Identify metrics and calculate. <show formula, time period, % change, KPI, input data, still best guess>Prove12. Determine “proof” needs. <market comparisons, audit report, financial reports, survey or expert opinion> 13. Provide evidence and references. <research docs, vendor quotes, estimating spreadsheets, context diagrams>Analyze14. Review alignment and compute final ROI. <IRR, NPV, ROI, payback period or other computations requested>15. Identify key themes. <“Reduce operating cost”, “Provide better service to customers”, “Security Compliance”>16. Determine recommendations. <explain factors of decisions made, summarize results, say it all in 50 words>
- #8: Story tell17. Construct graphics and narratives. <convert key themes and data to visuals when possible>18. Write ROI stories. <improve understanding of the business case findings and rationale>19. Define and deliver presentations. <build on sequence of topics, speak the audience language, show visuals>
- #9: Story tell17. Construct graphics and narratives. <convert key themes and data to visuals when possible>18. Write ROI stories. <improve understanding of the business case findings and rationale>19. Define and deliver presentations. <build on sequence of topics, speak the audience language, show visuals>