Updated Mar 13, 2020

What is a Business Case and Why You Need One

Building a strong business case for technology investments is critical. Many projects fail due to poor project planning or lack of executive buy-in and support, or a combination of each. Building a business case will help lay the groundwork for a solid project plan as well as gain support from the boardroom. According to Joe Rotella, CMO at Delphia Consulting, a business case is defined as “a structured proposal for business improvement that functions as a decision package for organizational decision-makers.” Management deals with a number of different business objectives, budgets, and priorities, so your business case must stand out. A strong business case will clearly demonstrate the needs, benefits, costs, and solutions.

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Four Tips to Building a Business Case for Technology Investments

1. Identify Business Needs

The business needs might be painfully obvious to you, but these needs might not be so obvious to management. So it’s important to take the time to clearly outline the challenges and issues in your current business processes. Present this as the current state with the intention of later showing the benefits of the proposed solution as the future state (more to come on the latter). As the popular adage says, “you can’t get to the future state without knowing the current state.”

What is causing the business need(s), and what is missing today? Fundamental business needs include:

  • Inadequacies with the current solution (ex: lack of integration, legacy system no longer scalable)
  • Problems with current solution provider (ex: lack of service or support, poor information security standards)
  • Operational inefficiencies (ex: high administrative overhead, manual and redundant tasks)
  • Reduce Risk (ex: single point of failure, human error)

2. Focus on Benefits

Make sure that you align benefits not only with the business needs but also the broader goals and objectives of the organization. Where the current state focuses on the present reality of existing business processes and tasks, the future state represents optimized business processes as a result of implementing a new solution.

Here are a few examples of benefit scenarios:

Scenario #1:  Reduce Advisor Attrition

Business Need:  Compensating advisors timely and accurately is critical from a cost point of view and is vital to boosting advisor morale.
Benefit:  By automating compensation management, commission disputes decrease as does the overall time and effort to run month-end payroll.

Scenario #2:  Make Better Management Decisions

Business Need:  Lack of data insight makes it difficult to act swiftly and make informed business decisions.
Benefit:  With the ability to leverage accessible and comprehensive business information, managers can make informed data-driven business decisions faster, earlier, and with confidence.

Scenario #3:  Reduce Operational Risk

Business Need:  It’s an operational risk to have business logic in one person’s head (or Excel files), which can lead to gaps in knowledge and personnel.
Benefit:  Leveraging data aggregation and compensation management solutions add essential redundancies to these business processes.

3. Formulate Cost Projections

Building a strong business case necessitates an appraisal of how the technology investment will help reduce costs. Begin by formulating cost projections that entail the technology acquisition and ongoing maintenance fees. Work with the solution provider to create a sample cost of ownership. This information can then be used to calculate the return on investment (ROI). While ROI is a commonly used metric, it will be beneficial also to include the payback period (PBP), also known as “break-even point.” PBP is the time needed to recover an investment before positive net benefits begin. This key metric will help build the case for the technology investment and inform the decision-making process.

4. Outline the Implementation Strategy

Outlining the implementation strategy in a concise manner is vital for building a successful business case. Be sure your implementation strategy addresses the following:

  • When will it start?
  • What are the major milestones?
  • Who needs to sign off?
  • Who are the stakeholders?
  • What metrics will be used to define success?

This final step will help set expectations and ensure that everyone is on the same page regarding the evaluation process and the duration of the implementation.

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