The words “business case” seem to be commonly used across all organisations these days. Depending on the size and type of decision, a business case may be required by senior management. Bigger the cost of the decision, the more likely it is that a detailed business case is required to prove its worth.
A good business case generally aims to provide guidance to a group of executives or management in three major areas:
- Solving problems impacting the top line
- Solving problems impacting the bottom line
- Risk and opportunities for investments
The humble beginnings of the term “business case” are hard to find, but the meaning of business case is clearly defined in wiki. Every purchase decision in the organisation that typically requires a significant investment will call for some form of business case. Business cases come in varying formats and lengths, but below are the common themes amongst them:
- Articulate the problem and situation: this is a fairly standard requirement before any business decision is made. It can often seem mundane to write about a problem that everyone knows and talks about, but often writers of business cases forget it’s importance. A well-articulated problem definition can capture the decision makers attention. It can ensure that they understand the depth and breadth of the problem and its impact on the delivery of products or services. This section doesn’t need to be too long, however it does need to convey the crux of the matter succinctly.
- Any related historical and current/ongoing impacts: a section describing the background of the problem and current or previously recorded impacts can add significant weight to the problem definition. This tells the reader that the problem is recurring, and has impacts on the top line or bottom line. This could be in the form of reduced productivity or increased costs, reduced employee morale, increased fatalities, loss of clients, etc.
- Costs of impacts on business: very often business cases fail to quantify the costs of impacts. This is crucial to get right in order to justify the proposed solutions and related costs. After all, if the costs of solutions outweigh the costs of impacts, the business may choose to continue to live with the impacts! However, this can be hard to define in many cases if the impacts are not clearly related to costs or in productivity. It also requires analytical skills from the writer of the business case. To be able to articulate costs of impacts, it is required for the activity in question to have been measured end to end. This is often a missed step leading to difficulties in measurement of impacts. In fact, good scoping tools like https://hrlead.com.au/hr-system-selection/ have a section to determine time spent on activities and hence related costs.
- Solution options: it is fairly easy to put forward solution options that relate to an action that might lead to purchase or investment. However, to put things in context, give management an opportunity to compare and contrast, a do nothing option should always be included. The do nothing option is always an option! The writer of the business case may not see this is as a viable option, but from the point of view of the business management, do nothing may be a valid option. This is especially true if the costs of the solution outweigh the benefits or costs of impacts to the business. However, every solution option needs to define the pros and cons of it, and related scope, costs and timelines. Organisations often tend to underestimate true and total costs especially when technology purchase is one of the options. So here are some quick tips of what consists of true and total costs of technology purchase decisions:
- Procurement costs relate to the expenses involved in procuring new technology for example legal advice, tender reviews, etc.
- Licenses costs will include the obvious costs of using the vendor products and services, but it may also include one-off costs of set-up.
- Implementation (internal and external) costs are all about how you plan to receive the products of the vendor. If it is self-install and your internal IT department will install it on staff’s laptop this will still require effort hence associated salary dollars. If the software requires configuration or customisation, then you are looking at both external consulting costs as well as internal staff costs to second them to the project.
- Integration (if required) costs are often missed. These are costs of integrating the new software into the organisation’s existing IT infrastructure. Example of integration at minimum could be ongoing user imports as new employees join the company.
- Maintenance and support costs are ignored and can be painful if not considered carefully. To put it simply, is the software going to be supported internally by IT or other departments or will it be supported by the vendor or both? Irrespective, there is a cost associated with such support. And depending on what type of support is required, there will be different levels of costs associated with this.
- Change management costs are usually limited to training related costs. Unfortunately, this is not it â€“ change management is much more than just training. It includes a raft of costs in order to ensure the new software is accepted and used by relevant staff. This includes consideration of upskilling existing staff in not just using new systems but giving them supplementary skills. For example, it is not sufficient to buy an analytics or business intelligence tool and training staff on using it. If the employees don’t know how to interpret, analyse and present the data being delivered, the new system will only become a data generator.
- Disaster recovery costs are often forgotten by organisations but are very important to consider. What if the software goes down or stops working? What is the plan to harvest the organisation’s data from the vendor? How does the vendor ensure that it maintains a safe environment where there are regular checks and balances on the ongoing performance of the systems?
- Finally, the recommendation on how to proceed: this is usually the final section of the business case. Out of the solution options presented, the writer should highlight their recommended solution. At this stage, if an independent advisor, such as https://hrlead.com.au/ , has assessed the business case, it is very important to have this included in the report. This adds credibility to the solution option being recommended and indicates an independent analysis has been undertaken in order to avoid internal organisational bias.
At HR Lead Consulting, we specialise in helping businesses select and implement HR software. We have developed the worlds most detailed all in one scoping, requirements gathering, vendor matching, testing, adoption and project management tool to help every size business. We are motivated to significantly change the trend of failed systems implementations, which take far too long and do not achieve the desired results. We make system selection simple. If you are even contemplating looking for a new HR system don’t do anything until you have called us on 1800 720 665.