How to create a winning business case
Published: September 15, 2006
Summary: Veteran industry analyst, Stephen Ibaraki discusses the key questions for making a business case for software projects by using a business planning model.
The notion of keeping up with technology for technology’s sake ended shortly after Y2K. In today’s competitive business environment, there must be real value generated from any proposed software project.
But with tightening budgets, how can an IT investment be effectively sold? The answer lies in making a solid business case. Stephen Ibaraki, I.S.P., 2005 Computing Canada Lifetime Achievement Award recipient and veteran industry analyst based in Vancouver, discusses the key questions for making a business case by using a business planning model.
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Q: What elements are found a successful business case
When making a business case for an IT project, three important business drivers must be kept in mind:
| • | Providing high value to the organization and clear differentiation from the competition; |
| • | Supporting a low operational cost advantage through increased productivity and efficiency; |
| • | Providing a platform that enables continual innovation. |
It also pays to keep business priorities at the forefront of your planning. Remember that a successful business must generate value for stakeholders, be they employees, customers or suppliers. In an increasingly connected world, a business must also enable effective collaboration with internal and external networks. With the advent of the Internet and globalization, the competition can just as easily be from another continent as next door. This means businesses must look for ways to stand out. (Learn how a Toronto-based book publisher improved its business workflow by 33 percent)
Remember also that business must be agile. That is, they must be continually aware of their internal and external environment and be able to select and then implement a business initiative quickly from an array of choices. In doing so, they leverage their strengths, correct their weaknesses and take advantage of new opportunities. It’s these opportunities that allow for growth.
Any technology investment a business considers has to map back to these realities.
Q: How do you go about justifying an IT project?
A strong software business plan should include the following elements:
| • | Purpose: This is the executive summary. What is the objective of the investment? What are the overall links between the IT investment and the business objectives? |
| • | Vision: What does the business want to become in the future, and how will IT support this? |
| • | Business opportunity and estimated market size: How will IT enable or support new business opportunities? How big is the potential market and what amount can be captured by leveraging IT? |
| • | Target markets and delivery models: What are the target markets? How does IT support better service and delivery to those markets? |
| • | Competitive analysis: Who is the competition? What are their strengths and weaknesses? How are they employing technology? How does IT provide your business with a competitive edge over the competition? |
| • | SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis: Identify the internal strengths and weakness of the business. How will IT overcome weaknesses to make then business strengths and position the company to engage new opportunities as a result? How are external threats reduced or mitigated using IT investments? |
| • | Customer strategies: How can customer and partner relationship information captured through IT investments increase retention and revenue? |
| • | Human capital strategies: In what ways can IT improve the satisfaction of employees? |
| • | Resource analysis: What are the resource requirements for the IT investment before, during and after implementation? What savings are enabled to offset this investment? |
| • | Metrics for IT success: What are the specific measures for IT success? What are the contingencies if there are unexpected disruptive forces? |
| • | Financial projections: Finally, what is the expected total cost of ownership of the solution, and how will that be justified in new business opportunities? |
Q: How do I sell a technology solution within the business case?
The challenges outlined in any business case can be best addressed by leveraging industry standard operating system platform and office productivity systems, such as those from Microsoft. This provides a familiar, easy-to-use interface on which collaborative, business-focused solutions can be built. Many of your customers’ partners run these environments. This is an important consideration, as being able to integrate seamlessly is essential for business success. Moreover, building on a unified and standardized technology environment puts the focus on business issues and not on technical intricacies. Once implemented, the technical support is minimal. The focus is primarily on the user experience and. as an extension, enabling business success.
Outlining technology in these terms is bound to make the purchasing justification easier.
