Business Case Analysis
Business Case Analysis
Proposed SoftShoeStyle PLM System
Cost and Benefit Projections for 2011 – 2013
By
Company Product Development
Group
For
Your CFO or Capital Review
Committee
{DD} {MONTH} {YEAR}
Business Case Analysis
Presentation Overview
A. Introduction
A. Introduction
B. Methods
C. Projections
D. Risks &
Sensitivity
E. Recommendations
& Conclusions
•
•
•
Proposed action
Business objectives and motivation
Opportunities threats & constraints
B. Business Case Methods
•
•
•
•
•
Scope and boundaries of the case
Scenarios analyzed
Major assumptions
Cost model
Rationale for benefits
C. Cost and Benefit Projections,
2011 – 2013
D. Risk and Sensitivity Analysis
E. Recommendations and Conclusions
Slide Footers
Replace on Slide Master with your own date and name.
DD Month Year
Company Name
Slide 2
Business Case Analysis
A. Introduction
Case Subject: Proposed Action
• Subscribe to and implement the SoftShoeStyle
system, as proposed by global trading
systems, inc., {Month, Year}.
• Proposal includes:
– XX concurrent user licenses of the SoftShoeStyle
system paid on a monthly subscription basis
– Download of MySQL database and license
– Training for designers/product developers
– Purchase of training/installation and/or integration
services
– Additional hardware purchases during the second
and third years of implementation.
DD Month Year
Company Name
Slide 3
Business Case Analysis
A. Introduction
Case Subject: Business Objectives
• Reduce costs in targeted areas in product
design and manufacturing
• Meet the more complex needs of
footwear/retail industry customers
– Quick generation of custom design details
– Faster response to change requests
– Better support customer requirements
• Reduce product development lead time (time
to market)
• Have all design data in one corporate database
DD Month Year
Company Name
Slide 4
Business Case Analysis
A. Introduction
Opportunities
• Market Share: Reaching design process
improvement objectives will enable {Company}
to increase market share by XX% within three
years
• Cost savings: Greater productivity and shorter
design times will save:
– Concept design phase costs(XX%)
– Detail style-spec phase costs (XX%)
– Spec change reduction and improved change
management (40%)
– Manufacturing costs (35%)
– Raw materials costs (30%)
DD Month Year
Company Name
Slide 5
Business Case Analysis
A. Introduction
Threats and Constraints
• Design downtime and disruption during
transition to the new system must be negligible
• R&D budgets for 2011 – 2013 cannot rise more
than XX% above current (2010) level
DD Month Year
Company Name
Slide 6
Business Case Analysis
A. Introduction
Business Case Purpose
• To provide {Company’s CFO or Capital Review
Committee} with the necessary financial
projections, financial metrics, and assessment
of contingencies and risks, to support a
decision either to accept or not accept the
SoftShoeStyle proposal.
• Decision will be made {at the Capital Review
Committee meeting, DD MM Yr or by DD MM
Yr.}
DD Month Year
Company Name
Slide 7
Business Case Analysis
A. Introduction
Case Purpose: Financial Metrics
• The {CFO/Capital Review Committee} requires
financial projections and financial metrics:
– 3-year total cost of ownership (TCO)
– Projected 3-year net cash flow including cost and
revenue impacts
– 3-year net present value (NPV)
– 3-year return on investment (Simple ROI)
– Projected market share impact
• Risk and sensitivity analysis will identify:
– Critical success factors and contingencies
– Risk factors that might change results
DD Month Year
Company Name
Slide 8
Business Case Analysis
B. Methods
Analysis Scope and Boundaries
• Time
– Analysis period: {3 Fiscal years, 6 Seasons (=3
years), 3 Calendar Years??}
• Organizations impacted
–
–
–
–
Design/Product Development
Overseas office(s) and/or Suppliers
IT
Customer service
• Geography
– Headquarters site only; Headquarters and {Country}
or {Agent} office(s)
DD Month Year
Company Name
Slide 9
Business Case Analysis
B. Methods
Scenarios Analyzed
1. Business as Usual
Assumes no SoftShoeStyle implementation
2. Proposal Implementation
Assumes implementation as proposed
3. Incremental Impacts
Incremental impacts =
Proposal scenario – Business as Usual
DD Month Year
Company Name
Slide 10
Business Case Analysis
B. Methods
Major Assumptions
• Implementation begins {MM YY}
• Learning curve complete in 2 weeks
• Implementation and transition to the new PLM
system have no negative impact on product
development process times
• Salary increases average no more than X%
annually for 2011-2013
• SoftShoe Style’s monthly subscription rate
remains the same
• Market size continues to grow X% per year for
2011-2013
DD Month Year
Company Name
Slide 11
Business Case Analysis
Cost Model
B. Methods
Cost impacts
under all
scenarios
Life-Cycle Phase
SSStyle’s Acquisition
and Start Up
Year 0 and Year 1
SSStyle’s
Operational Phase
Year 2 and Year 3
 Monthly
Subscription
- SoftShoe Style
-
 Monthly Subscription costs
Hardware
 Server system upgrades
 Client system (desktop) purchase
 Server system upgrades
 Client system (desktop) purchase
Personnel
 Initial training
 Designer productivity
 Continuing training
 Designer productivity
 SW installation and integration
services
 SW integration services
Software
Resources
SSStyle’s
Services
Optional
DD Month Year
Company Name
Slide 12
Business Case Analysis
B. Methods
Benefits Analyzed
• Objective: Reduce costs
– Lower cost of design/pd collaboration
– More efficient change management
– Increased personnel productivity
• Objective: Meet the more complex needs of
footwear industry customers
– New design customization possible
– Faster response to customer change requests
– Better support of customer requirements
• Objective: Reduce product development time
– Fewer changes, earlier changes
– Simultaneous design and development phases
– Earlier sampling
DD Month Year
Company Name
Slide 13
Business Case Analysis
Data Sources
B. Methods
•
•
•
•
•
{Company} 2010– 2013 Business Plans
SoftShoeStyle web site www.softshoestyle.com
Vendor Proposal for services
2009 capital and operating budgets
30 day trail evaluation and feasibility study
conducted at headquarters site MMYY
• Published industry averages and “best-inclass” figures
DD Month Year
Company Name
Slide 14
Business Case Analysis
C. Projections
DD Month Year
Financial Projections
Company Name
Slide 15
Business Case Analysis
C. Projections
DD Month Year
Projected Cash Flow
Company Name
Slide 16
Business Case Analysis
C. Projections
DD Month Year
Cumulative Cash Flow
Company Name
Slide 17
Business Case Analysis
Cost Savings Example
C. Projections
SoftShoeStyle’s Impact on Change Costs
% of Total
Changes
Now
% Total
Changes
with
SoftShoe
Style
Average $
Per Change
Net Difference per
Year
Concept
Design Phase
41%
51%
$ 200
($ 10,000)
Detailed
Design Phase
30%
26%
$1,200
$ 54,000
Testing and
Prototype
Phase
19%
19%
$ 9,600
0
After Start of
Production
10%
4%
$ 24,000
$ 120,000
Annual Savings: €$ 164,000
DD Month Year
Company Name
Slide 18
Business Case Analysis
E. Recommendations
& Conclusions
Recommendations & Conclusions
Based on the business case analysis
presented here:
We recommend that the {CFO/Company
Capital Review Committee} vote to fund the
SoftShoeStyle Proposal from global trading
systems, inc.
DD Month Year
Company Name
Slide 19
Business Case Analysis
D.
Risks
DD Month Year
Risks
Company Name
Slide 20
Business Case Analysis
E. Recommendations
& Conclusions
Recommendations & Conclusions
•
•
•
•
DD Month Year
In order to minimize risks and maximize returns from
{Company’s} investment in SoftShoeStyle, we further
recommend that {Company}:
Begins working with GTS consultants immediately to
plan the ERP integration project
Ensures that {Company} IT staff and resources are
committed to the SoftShoeStyle installation and
integration
Appoints a transition manager responsible for ensuring
that existing line projects are completed on time without
disruption during the transition
Requests and reviews quarterly reports on the financial
measures outlined in the business case report and
progress toward the important business objectives
outlined earlier in this presentation
Company Name
Slide 21