So your department wants to buy some technology to undertake a business process transformation? Get in line and grab a number. Think of getting support and funding for your initiative as a competition in which you’ll likely be vying against ten or twenty other initiatives for the limited dollars available with in your company.
A lot of these initiatives will be tied directly to increasing revenue (and who doesn’t love that?), so to get the attention of the judges who’ll be awarding resources, you’ll need an airtight, executive-ready business case. In my experience, that’s easier said than done.
I’ve been a professional technology business case-builder for the past eight years. However, most people who need to build a business case are professionals in some other area, and building a business case is something that is learned on the job by trial and error. By error, I mean having your business case for a worthy initiative shot down and seeing resources allocated to other, maybe less worthy initiatives. Has this happened to you?
I’ve helped people build hundreds of successful business cases. When we first start talking, most people tell me they’ve got it under control, but when we start digging in I see the same three fatal errors over and over again: Myopia, lack of balance and unintelligible language. Here’s what you should do to over come these common errors and make sure your business case has a fighting chance of getting fair consideration and winning the day.
Address the big picture.
Most business cases I see are myopic. They are predicated on departmental goals and objectives and don’t take into account how their proposal impacts the overall goals of the company. Frequently they don’t even take into account that there are multiple stakeholders involved, such as Finance, IT, or other business units. Their whole case is based on their view of the world.
You know what’s top of mind for you department, but how up to speed are you on the goals and objectives for the business as a whole, or for other business units? Keep in mind there are always other issues unfolding at your company, a lot of them on the revenue side. Which ones will get most attention? Does your business case tie into the company’s goals, or even the CFO’s goals?
Some companies have the luxury of having people in IT or finance whose job it is to interface with other departments. These people are empowered to really know their internal customers, so that they can become proxies for their needs.
If your company doesn’t have people in these kinds of dedicated roles whose insight and realtionships you can leverage, you’ll need to build your own collaborative partnerships, primarily with finance but also with other stakeholders, so you can understand their view of the world and make sure your business case speaks to the bigger picture and not just departmental concerns.
Balance costs and benefits.
In most business cases I see, there is a lot of attention given to costs, with a very detailed cost breakdown, and a relatively cursory mention of the benefits. That’s a problem. Both are important, but you want to start with the benefits first, and articulate a picture of how you’re going to make everyone’s life better, instead of just showing how much more burden you’re going to have.
Sure, the costs are usually easier to come up with. You can beat vendors to death to give you every single line item of cost. A lot of companies also have their own internal models on what kind of support costs you’ll incur around integration, implementation and the fifty other things that need to happen to plug the technology in.
You don’t need to be that detailed. Executives don’t need precision to the second decimal place. A ballpark estimate with some presumed level of accuracy based on certain assumptions is what they’re looking for.
I see people spend so much time trying to get the data to do analysis to get to an excruciating amount of detail and in the end they land right in the same range as their ballpark estimate. It’s a lot of wasted effort, not to mention the opportunity cost of an extra two or three months doing analysis of analysis when you could get started sooner and get faster time to value.
Benefits can be harder to quantify than costs, especially if your initiative is related to process improvement or cost savings rather than to generating top line revenue. If this is the case, keep in mind you’ll be competing with revenue producing initiatives, so it’s essential that you do the work to quantify benefits in order to get equal attention from stakeholders.
There are two kinds of benefits and you need to address both. There are benefits that can be quantified, and then there are the intangibles, things like impact on customer satisfaction, or productivity or efficiency benefits which are very hard to quantify.
For quantifiable benefits, your numbers should be credible, defensible, and at the same time not too conservative. Again, you don’t need to be too detailed. Ballpark estimates are fine for a Go/No Go decision. But, you do need to provide actual numbers.
If the starting point for your benefits is something soft like “improved visibility” or “better control”, use the “So what?” test to put a ballpark number on it. Keep asking “So what?” until you end up with a value driver that can be quantified. For example, improved visibility into company-wide spending means better decision making which leads to improved sourcing of new contracts and more effective re-negotiation of existing contracts, which ultimately leads to some quantifiable amount of savings.
That said, not everything can be quantified. These intangible benefits count too, and they should be a part of the overall business case. For example, if your initiative makes your company easier to do business with for customers or suppliers, make sure that’s a part of your business case while acknowledging that it is hard to quantify the impact.
Ditto for productivity benefits. A lot of people look at productivity as a soft benefit—if I can’t fire anybody there’s no quantifiable impact. But, there is still an intangible benefit. If you are going to save a lot of time for different departments through automation and streamlining, make mention of all the strategic activities that these departments would now be able to focus on moving forward.
Nobody wants to over promise and under deliver, so people tend to make the benefits very dilute and wishy –washy and stay away from things they can’t quantify even if it’s likely they’ll have a positive business impact. Then the whole case is so weak that if pales in comparison to the other business cases being built. Make sure that in the effort not to overstate your case you don’t wind up selling your initiative shore.
Speak the native language of your audience.
If you want to communicate with a teenager, send them a text message or a snap chat. People under the age of 25 hardly ever pick up the phone, and they rarely leave or listen to voicemail.
Similarly, to prepare a winning business case, you need to communicate in a language that executives can understand. Too many business cases I see are written in language that is too detailed, too departmental, or both.
I’ve seen business cases with detailed diagrams of system architecture–this is how it will look, this is how it’s going to interact with the other systems, etc. IT and Procurement business cases are common offenders in this area. Don’t go there!
Executives don’t want or need to know the details, but they do need to know the takeaways. If you’re addressing system architecture for example, they need to know this is going to fit in seamlessly with what you’ve got and not cause a major disruption to the business. Technical diagrams might help you think through the process, but for the executive presentation you’ll need to net it out.
While you’re at it, stay away from acronyms and technical jargon that no one who works outside your department will understand. Translate everything into plain English, or better yet, into the language of your audience.
For example, CFOs are typically involved in funding decisions. If you’re pitching to them, talk about EBITDA (Earnings Before Interest, Taxes Depreciation and Amortization), margin impact, or EPS, (Earning per Share). Speak to impact on the bottom line.
CFOS also understand the language of risk and compliance. They love getting timely information and they love predictability. They love it when they predict how different parts of their business will perform so they can make very sensible decisions as they plan and forecast for the future.
These are big things that the finance organization cares about. If the business case doesn’t talk to those, a large part of it will be just noise. Here too, collaborative partnerships can help you do a reality check on whether what you’re saying can be understood by all of your stakeholders.
Putting it all together
As a departmental leader and expert in your departments needs, you own some of the building of your business case. But don’t build it in a vacuum—that’s the worst thing you can do, and when you get right down to it, this is the root cause of the three fatal errors.
Look to partner strategically and collaboratively with others who can provide insights you may not have and who can help you align your goals with organizational goals, identify and quantify benefits as well as costs, and translate your proposal into the audience’s languages.
When putting together your final business case, lead with the benefits. Shine a spotlight on what’s sexiest about your initiative—the value it will deliver. Be fair; don’t over or understate benefits, and try to end up with roughly the same amount of items, and detail, around both benefits and costs. Keep the numbers high-level, defensible and not overly conservative. If you can do those things, I guarantee your business case will be head and shoulders above 90% of the competition.