Many organisations have diverted spending to IT over the last 18 months and the need to develop a compelling business case for future IT spend has never been more in demand.
Our team has supported many of our clients to make the case for IT investment. Sometimes we’re helping to financially justify the decision to outsource. Other times it might be building a business case for a move to the cloud. Yet other times it might be setting out the financial risks of an ineffective cyber security policy.
These are the best 10 practice tips we’ve learnt along the way, to get you started.
With any piece of work, the fundamental success factor is knowing who the audience is. What are their concerns and motivations?
In the case of a business plan, you’ll be addressing the leadership team and, probably most significantly, the Finance Director. Do your research. Speak to them about their concerns. Understand their current focus and priorities.
How can you address these in your business case?
Your preliminary research should include understanding your organisation’s three-year or five-year business plan.
How does the investment you want to make align with that corporate strategy?
When it comes to writing the plan, it’s important to start at the very beginning. The first section should clearly define the problem you need to solve.
Why is this important to the business? How is it holding back growth, profitability or the achievement of other key strategic goals? What does it mean to the competitive position of the business? And it’s future readiness?
In IT, there is never only one solution to a problem. If a business case is to be convincing, you need to show that you have carefully considered the alternatives.
This doesn’t just mean looking at the direct competitors – say AWS to Microsoft Azure. It means considering alternative solutions – on-premises versus cloud versus a hosted datacentre. And, perhaps most importantly, what doing nothing would look like.
List all the possible ways forward: what are their advantages and disadvantages?
The financial justification of your project is the most important element. If that’s going to be convincing, you’ll need to provide a financial breakdown for each of the itemised possible solutions.
Start by addressing the status quo: is there a way to underline that the cost of inaction makes adopting your business case a priority? What risks are associated with inaction? What costs are associated with those risks?
What do you expect the costs of each solution to be? Think about the total cost of ownership, not just the headline rate. What is the likelihood of each cost occurring?
What do you expect the benefits of each solution to be? Can you assign a financial value to those benefits? What is the likelihood of each benefit being realised?
What are the tolerances? How far could each solution diverge from the expected costs and benefits? How would this jeopardise the viability of the investment?
Having clearly listed the costs and benefits, it’s now time to make a recommendation. What makes this the best way to solve the business problem you defined at the start?
Having named the best way forward, you now need to make the case financially for your selected solution.
Stick to accepted measures: what is the return on investment? What is the payback period?
Wherever possible, try to give each of the benefits a financial metric.
In most cases there will be some direct, quantifiable savings, e.g. the widget process used to take us four hours to complete manually, the new digital widget process would take just one hour. That’s a three-hour saving each time we run that process. We have seven staff, each running the process twice a day, five days a week. Their average hourly cost including wages, benefits and overheads is £40 p/h.
That’s 3 hours x 7 staff x 2 processes per day x 5 days per week x 45 weeks per year x £40 p/h = £378,000 worth of hours returned back to the business.
Then there’s the less direct but no less quantifiable costs: the auditing of these processes used to happen twice a year. Each time, it required a manager to devote three days to the process. Now we can produce the documentation for auditing automatically.
That’s 18 hours x 2 audits per year x £60 p/h = £2,160.
Plus, we no longer need the paper, ink, toner or storage costs for that documentation, averaging £650 per year.
But there’s also the less quantifiable costs. The seven staff who no longer have to undertake the repetitive manual tasks all day, have been redeployed to more value-adding and innovation-led tasks. The value of their experience can be leveraged more fully for business development. Can you put a figure to what that is worth?
The job satisfaction of the team and the audit manager has increased as a result of being freed to do more rewarding work. This has benefits in terms of the cost of talent acquisition and retention. Can you put a figure to those?
Position your preferred option in terms of the overall organisational strategy. How will it help to achieve the stated organisational objectives?
Having chosen a preferred option, you should now layout the implementation strategy for that solution. What is the appetite in the organisation for this solution? How will you achieve the stated goals? What are the key project milestones? Who will be accountable for each milestone? What controls will you put in place? How will you mitigate the project risks?
If your project gets the go-ahead, you won’t just be pitching to the FD or the board. Your solution needs the acceptance of a much broader team if it is to succeed. It is never to early to start working for their buy in.
It’s worth remembering that the pot is finite. Even with a brilliantly constructed business case, there may be other priorities that have an even more compelling case for investment and resources.
When you’re writing the business case, consider how it will help your project stand out amongst the other competing projects being considered by your organisation.
What now?
You can read more about this topic elsewhere on our blog:
• Managing change: Five things to consider when implementing technology change
• Leading in your market: Using IT to gain competitive advantage
• Understanding the cost of switching IT partners: How long it takes and How to get it right
Alternatively, please reach out to the Grant McGregor team. We’re always on hand to help and offer advice on IT-related topics. You can reach us below: