Define Business Case - Business Analyst

Purpose

To determine if an organization can justify the investment required to deliver a proposed solution.

Description

The business case describes the justification for the project in terms of the value to be added to the business as a result of the deployed solution, as compared to the cost to develop and operate the solution. The business case may also include qualitative and quantitative benefits, estimates of cost and time to break even, profit expectations, and follow on opportunities. The business case may present expected cash flow consequences of the action over time, and the methods and rationale that were used for quantifying benefits and costs. This provides a framework to demonstrate how the initiative is expected to achieve business objectives. In addition, the business case lists the constraints associated with the proposed project, along with the estimated budget, and alignment with strategies established by the organization.

Input

Assumptions and Constraints: Include assumptions about the revenue generated or retained by the solution or non-financial improvements it will deliver.

Business Need: Defines the value that a solution will deliver to the organization and how it aligns with the business goals and objectives.

Solution Scope: Defines the capabilities that will be implemented, the methods that will be used to deliver them, and the areas of the organization that will be affected.

Stakeholder Concerns: May include risks or issues that must be accounted for in the business case.

Elements

1. Benefits

Measure the benefits of the recommended solution in terms of both qualitative and quantitative gains to the enterprise. Where possible, benefits should be quantified. Benefits of a non-financial nature (such as improved staff morale, increased flexibility to respond to change, improved customer satisfaction, or reduced exposure to risk) are also important and add significant value to the organization, even if they must be assessed qualitatively. Benefit estimates should relate back to strategic goals and objectives.

2. Costs

Estimate the total net cost of the solution. This requires estimates to be made of capital expenditures for the new investment, costs of developing and implementing the change, opportunity costs of not investing in other options, costs related to changing the work and practices of the organization, total cost of ownership to support the new solution and consequential costs borne by others.

3. Risk Assessment

The purpose of the initial risk assessment is to determine if the proposed initiative carries more risk than the organization is willing to bear.

This initial risk assessment focuses mainly on solution feasibility risks, and is revisited throughout the project. The risk assessment should consider technical risks (whether the chosen technology and suppliers can deliver the required functionality), financial risks (whether costs may exceed levels that make the solution viable or potential benefits may disappear) and business change and organizational risks (whether the organization will make the changes necessary to benefit from the new solution).

4. Results Measurement

The business case articulates not only the projected costs and benefits to be realized, but also how those costs and benefits will be assessed and evaluated.

Techniques

Decision Analysis : Cost-benefit analysis compares the costs of implementing a solution against the benefits to be gained. Financial analysis includes the use of financial models that estimate the market value of an organizational asset.

Estimation : Forecast the size of the investment required to deploy and operate the proposed solution.

Metrics and Key Performance Indicators : Assessed to support benefit management, measurement and reporting, including where realignment of internal measures or systems is needed to ensure that the behaviors we are seeking can be seen, evaluated, and realized.

Risk Analysis : Used to assess potential risks that may impact the solution and the costs and benefits associated with it.

SWOT Analysis : Demonstrate how the solution will help the organization maximize strengths and minimize weaknesses.

Vendor Assessment : If purchase or outsourcing to a third party is in consideration, an assessment of the vendor may be performed as part of the business case.

Stakeholders

Sponsor: Approves the business case and authorizes funding.

Domain SME: Assists in estimating business benefits expected from the new initiative.

Implementation SME: Assists in estimating cost projections for the technology needed to support the new solution.

Project Manager: Participates in developing time and cost estimates, and may develop a preliminary project plan or Work Breakdown Structure in collaboration with the project team. The project manager will use the business case as an input for a project charter.

Output

Business Case: Presents the information necessary to support a go / no go decision to invest and move forward with a proposed project.

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