In this article, I will discuss business case development and show you how to develop one for your project. A business case is used to justify a new project initiative is important for both agile and waterfall projects.
Why is a Business Case important?
In short, a business case helps justify if a project is worth the investment. It is a brief document that compares and illustrates the costs and benefits. The result is for decision makers to review and compare outcomes to determine if and where to allocate resources.
There are many benefits from a business case. Overall, understanding the projects Return on Investment is most important. After all, executives need to know what the company will gain as a result. Therefore, a business case should allow the following question to be answered – “What are the likely financial consequences if we make a particular decision?”
Business Case Development
There is no industry standard for writing a business case. Business case development depends on what management expects to see to approve a project. Here are some key steps you can take to make the message clear:
Step 1: Determine the Value Proposition
The first step when developing a business case is to clearly articulate the projects value proposition. A value proposition is the value your customers will gain from the product or service as a result of investing time and resources. Each project is different and therefore will have a different value proposition. For instance, is the value based on operational efficiency, cost savings, or increased market share? Not all projects are for financial gain. Some projects are needed to comply with a government regulation. The point is there should be a reason you are taking on the project.
Here is an example of a value proposition:
| Business Outcome | Benefit Areas | Value Drivers | Capabilities |
|---|---|---|---|
| – Increase lifetime value of the customer base | – Reduce cost per acquisition | – Reduce cost per acquisition of individual channels – Improve sales conversion rate | – Improved targeting – Improve sales conversion rate – Insight driven scripts / prompts – Attractive product propositions using dynamic pricing |
Thinking about these benefit areas allows the ability to create a business case to quantify the benefits, identify the required investments and calculate the overall net economic return.
Step 2: Develop the Business Case
So, let’s begin to look at business case development. There is no formal way to write a business case. However, we do recommend some common elements you should consider:
- Executive summary
- Firstly, the executive summary is a high-level overview of the project. It only needs to be a paragraph where management can quickly understand the proposed project.
- Business need
- Secondly, you will need to quickly articulate the business problem and why there is a business need for the project you are proposing. Someone within the organization or a customer may have requested a business need. Or maybe a business problem has to be addressed.
- Identify project stakeholders
- Surely the proposed project has stakeholders. Above all, to whom the project will benefit?
- Risks and assumptions
- Certainly every project comes with risks. For example, what are the risks for NOT doing the project? On the other hand, what are the risks if the project isn’t successful? Furthermore, are there any project assumptions?
- Financial overview
- Lastly, describe the financial benefits. By all means, provide a return on investment. Similarly, is there a payback period? Can you provide a Net Present Value (NPV)?
We have provided a Business Case Template to help you build a structure.
Step 3: Present the Business Case
Once you have a solid business case prepared on paper, it’s time to present to your business decision makers. By all means, proofread everything. Be sure to explain any financial information. Lastly, rehearse your presentation over and over.
In Summary
A business case is a must-have for most projects. In fact, most organizations require one for project consideration. In order to communicate it effectively, be sure you have a clear vision. Ensure the business understands why the project is needed. Certainly explain the return on investment. Lastly, rehearse before presenting to upper management.
Download Our Business Case Template
Check out our business case template. It will help guide you so your business case is successful:
Download Business Case Template: Business Case Template
I hope now you learned an approach to develop a business case. By all means please share this post.
Kind Regards!