Building a Compelling
Business Case
Ken Fulmer
Information Workplace Solutions
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Learning Presentation Objectives
• 1. Understand the executive perspective about a business
case – what makes one compelling?
• 2. How to prepare a business case – the basic methodology.
• 3. Understand how to use the business case throughout the
project lifecycle.
• 4. Understand how a business case ties into the process of
Benefits Realization.
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Most business cases do not clearly define
investment benefits
Percentage of CIOs with no process to evaluate IT
investment against business strategy
51%
Percentage of CIOs who don’t compare actual IT project's
benefits to original targets
68%
Percentage of CIOs who do not track financial metrics after
making an investment decision
74%
Percentage of CIOs who say lack of financial skills makes
quantifying IT benefits difficult?
80%
Data: Gartner Group
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Why are Executives Frustrated with
IT Projects
• Many projects fail to achieve expected value
• Legacy of ROI business cases that are:
unrealistically high
unknowingly low
or unconvincing
• Feeling of broken promises
• Projects often proceed even when the business case
falls
4
Reasons for weak Business Cases
Lack stakeholder involvement
and commitment
Ignore major risks and
mitigation strategy
Lack alignment with
business objectives
Don’t identify all potential
benefits
Aren’t leveraged
Business
Business
Case
Case
Focus on technology,
not people and process
Aren’t focused on
achieving benefits
Don’t clearly and credibly
document the facts
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What most executives expect is a business case
process that is...
• Driven by the Business and collaborative
• Recognizes stakeholder issues and gains buy-in
• Focused on Business Outcomes and Change
• Able to STOP a project that no longer has value!
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Executives think about strategy and outcomes for
the business
• An organization’s strategy:
– Sets the vision, or framework for desired
accomplishments, with associated timeframes
– Defines how benefits will be quantified and
measured
– Provides the link between project output and
delivered benefits – aka – Better Business
Outcomes!!!
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What makes a business case compelling?
Compelling
Business
Case
Traditional
Business
Case
 Describes investment
opportunity
 Helps management
decide
Rational
investment
decision
+
•
•




Describes investment
opportunity
Helps management
decide
Owned by the business
Drives Results
Drives Subsequent Work
Considers Risk
Gets Proven
Results
8
Sample IT Project Process
Genesis
Initiation
Business Case review and elaboration / confirmation
at each Approval Stage gate
Planning
PreDeployment
Review
Execution
Controlling
Multiple ReviewsPer milestone
Close-out
Value
Achievement
Benefits Realization
Verified
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Genesis Phase
• Problem and Solution Options
• Current Situation and Do Nothing Case
• Identify and Evaluate Options
• Business Case – Feasibility
•
•
•
•
•
Business – Strategic, Market, Economics
Technical – Architecture, Security, Tech Options
Financial – ROI, Budgets
Impact Assessment – Organization, Customers, Suppliers, Partners
Risks – Business, Project, External, Internal Ops
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Ensure each stakeholder is involved in the
Business Case development process
Business unit
managers/Stakeholders
Executive
Sponsor
Chief financial
officer
Investment committee
(Number/type of stakeholder based on
organizational size/complexity)
Project manager
Chief technology
officer
Portfolio
management
committee
Chief information
officer
11
Project Types & Economic Targets
TYPE
Method
1.
Distinctive Business Line
ROI Economic Case
2.
Enabling Technology
Benefits Attribution
Example Business Intelligence
see next slide
to calculate
3.
Infrastructure
Depreciation Replacement
4.
Regulatory Requirement
Pork-Barrel Avoidance
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Benefit Attribution
• Select several areas and projects and do an assessment of potential benefit
• Have users establish a range of potential benefits (best guess - +/- 100%)
• Have owner assign a % of that benefit which is attributable to having the
new capability
• Take Composite of average benefit X Attribution = Derived Benefit
Attribution - in example below = 9.5 is the sum of the Derived Benefits
Project
Benefit Range
% Attribution
Derived Benefit
“A”
10-20
20%
3
“B”
50-80
10
6.5
60-100
----
9.5
Total
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Search exhaustively for potential benefits
and establish metrics for each UP FRONT
People
Process
 Improve
workforce
efficiency
 Increase span of
control
 Develop process
experts
 Centralize
customer service
 Improve partner
relations
 Reduce transaction
processing times
 Eliminate non-value
added tasks
 Minimize errors/rework
 Standardize processes
 Implement self- service
 Implement best
practices
Product
Business
 Increase reliability  Improve Market
position/share
and quality
 Reduce complexity  Create new
revenue sources
 Lower future
development costs  Shorten product
development
 Reduce Inventory  Enable premium
pricing
 React faster to
 Warranty Costs
business change
Infrastructure
 Increase future scalability, flexibility and agility
 Technology Costs or Appeal
 Decrease facilities and management costs
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Benefits beyond ROI measures
• Beyond Financial Gain – tie to Strategy Objectives
•
•
•
•
Competitive Necessity
Market Demand
Vendor / Industry Standards Changes
Improves Quality or ties to strategic program (such as Six Sigma)
• Strategic Relevance is the second major factor to weight on Benefits
• Assign weighting to degree of clarity and fit to the enterprise strategy
• Benefit Attribution concepts
• If no ROI or direct strategic relevance –
• Meet Regulatory Standards – such as air quality
• Legal Requirements – such as email record keeping or file retentions
• Ensure business continuity – such as implementing new software if old is not supported
15
Intangible Benefits
Can be more emotional – less Measurable
• Company Reputation
• Customer retention and customer satisfaction
• Social Commitment
• Better Management Information
• Better Job Satisfaction
• Cost Avoidance
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Brilliant business cases give decision makers all
the information they need
Business Case Table of Contents
 Executive summary
 Opportunity/problem definition
 Options Considered – include do nothing
 Recommended solution
 Define Success Criteria & Measurement
 Impact Assessment – by Stakeholder
 Cost Benefit Analysis  Risk Assessment
 Financial analyses - summary
 Implementation approach/timeline for Business Case
– Value Achievement – Benefits Realization Plan
Business
Case
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Tips on Packaging the presentation
Package for the audience
Executive Summary (two to three pages)
Business language, not technical terms
Financials in the enterprise’s standard format
Body + Appendices for supporting detail
Convincing – use stories & graphics
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Sample Sunoco Presentation - How to Read the ROI Slides
Channels Impacted:
Dealer/Franchise
Distributor
Co-Op
Internal
Optima
Discusses some of the key technical
Description: A brief description of the process area and key areas of expected
ROI will appear
here. SunocoNet
approaches/issues
for integrating
to support the identified processes..
Indicates which channels are impacted by the
processes. Also indicates whether Sunoco is
impacted (Internal).
SunocoNet Implementation
Processes
Process
SunocoDealer/Franchise
Price Notifications
As-Is
To-Be
POS Email
Coastal Dealer Price
Fax
This area indicates the key
Notifications
processes identified during the ROI
Distributor/Rack
Price
assessment and
interviews. DTN
Notifications
Indicated are the current As-Is
process andPrice
the To-Be process.
Co-Op/Optima
Fax
ROI
Impact
is
shown as Low-High
Notifications
(H,M,L). High ROI is >$50,000 in
Dealer/Franchise
Manual/Phone
annual savings,Price
Medium is defined
Surveys
as $25,000-$49,000 and Low ROI
is <$25,000 in annual savings.
Co-Optima Price Surveys
Fax
Rack Price Surveys
OPIS
ROI
Pricing Module: Rack Price and Pump Price
Impact
Shows the relative amount of business
Components. Anticipate some modification.
change impact on
Portal
L the customer
(Dealer/Franchisee, Distributor) andIntegration
Sunoco.
with Sunoco legacy pricing systems
This is based on subjective industry required.
This area shows the tangible ROI
Portal
L
experience.
annual savings by process area.
Portal
L
Portal
L
Process
Indicates the integration complexity
Portal(Low-High) andHthe planned
Eliminate DTN for Pricing
implementation phase.
Eliminate Fax for Pricing/Surveys
Portal
H
Eliminate POS email for Pricing
OPIS
NA
Business Impact
Low
Med.
High
Complexity/Phase
Customer
Sunoco
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Price Surveys: Utilize SunocoNet Online Form
Functionality. Medium complexity to interface
with legacy system (vs. email to form recipient)
Estimated ROI
M/1
Est. Annual Savings
$XX.XX
$XX.XX
$XX.XX
Eliminate Survey Data-Entry
$XX.XX
Total
$XX.XX
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Use the business case to guide project execution
Business
Case
Phase review
Schedule/cost trade-off
Portfolio re-prioritization
Change in management structure
Change to the business environment
Phase review
Schedule/cost/scope trade-off
Risk assessment/mitigation
Phase review
Scope change
Execution
Project timeline
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Harvesting Benefits – Value
• Value Achievement – Realizing Benefits after the Project
• Governance Process should include ownership of Post Project
• Create a plan during project close-out for benefits realization
• Establish benefits measurements up front and review
• Post Audit Review should be done by non-project staff (Team)
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Benefits Realization
• A process that ensures project benefits are realized as
anticipated
- Intended benefits are identified at the project proposal stage
• Cost Benefit Analysis with timeframes
• “Benefit Owner” is responsible for benefit
– Ends with post-implementation measurement to see if the project
delivery matched expectations
• Business case is intended to fit within the Benefits Realization
Process
• It is all about getting “Better Business Outcomes”
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Recommendations
 Develop business cases collaboratively with all the
stakeholders
 Carefully document business cases so they are clear,
concise, credible, connected to business objectives and
cognizant of risks
 Create a Benefits Realization Model – ROI, Strategic Fit,
Risk, and Impact are typical components.
 Leverage the business case throughout the project life
cycle to achieve the payoff – progressively elaborate
benefits and costs as the project learns them.
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QUESTIONS & Comments
• Ken Fulmer
•
•
•
•
•
Former CTO – Sunoco, Inc
Former CIO – Delek, US
Principal – Information Workplace Solutions, Inc.
Current – Vice-Chair, IIBA Board of Directors
kenfulmer2@msn.com
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