The key to success in the modern business world is the ability of decision-makers to make well-informed choices that will drive growth and help the company stand out among its competitors.
Leaders are constantly faced with these types of challenges in all aspects of the business process, including the situations such as new product launches, the adoption of new technology, or the initiation of a strategic project.
This is especially the case in the current business environment where organisations commonly have a pipeline of multiple projects competing to get a go-ahead and funding. Each of these decisions comes with certain risks and rewards and the capability to assess and justify the feasibility of initiatives like these is crucial.
More often than not, the positive outcome of these critical choices will depend on one major factor – a well-crafted business case.
Business cases serve as a backbone of business analysis and strategic decision-making, so, their importance can hardly be underestimated. A business case is much more than just mere paperwork. It’s a powerful technique that can enable stakeholders to navigate the complex field of possibilities with clarity and foresight.
To better explain the importance of this effective business analysis tool, we will delve into the very concept of business cases, explore their significance in the business environment, and provide some guidelines on how to create compelling ones that will drive success and resonate with relevant stakeholders.
Table of Contents
What is a Business Case?
In the simplest of terms, a business case is a comprehensive document that outlines the reasoning behind a specific business initiative. It defines business needs and typically features a detailed analysis of costs, benefits, and potential risks and rewards related to proposed solutions, well as the recommended course of action.
A business case is an essential tool for decision-makers as it provides a clear overview of all the necessary information needed to evaluate if a particular course of action aligns with the overall organisational goals. So, when properly done, a business case should not only justify the investment in a certain business initiative but also provide a roadmap for the implementation of that initiative.
A business case helps stakeholders properly understand and assess the impact the change bought by a particular solution will have on different aspects of the organisation, including operations, finances, resources, and positioning on the market.
All this means that business cases can be used as a means for prioritising among the different projects in the portfolio and deciding which ones will be initiated. It’s important to note that the primary purpose of a business case is not to convince a decision-maker of a certain position but, rather, to help those in charge make a well-informed and objective decision.
Therefore, when writing a business case, a business analyst shouldn’t look to show something in a good or bad light but focus on identifying, analysing, and presenting facts associated with a business initiative.
Another important aspect of a business case is that it presents a complete story of the problem that needs solving. It starts with detecting an issue that needs a permanent solution, moves on to defining the needed change (evaluating the risks and benefits associated with the change), and, ultimately suggests a solution to the problem.
Elements of a Business Case
While specific business cases may differ depending on the nature of a certain project, every comprehensive business case should feature several key elements necessary for the success of the proposed initiative.
Business Needs Assessment
Typically, every business case, and every business analysis effort in general, starts with a well-defined business need that needs attention. Usually, the need will be in the form of either a problem that needs to be solved or an opportunity that can be acquired.
The assessment of that need should include a thorough analysis that should lead to discovering the root cause of the problem or an understanding of why a particular initiative is necessary. The need assessment should help the business analysis determine a true driver for the business case and answer the crucial question: “Why do we need to undertake this initiative?”
The process of need assessment will commonly involve collaboration with stakeholders, especially key decision-makers and subject matter experts, so it’s possible to gain a full understanding of the business environment and its pain points.
When properly conducted, a business needs assessment will provide a solid foundation for the business case and ensure that it addresses the real issues instead of just the symptoms of a problem. With clarity about the issue, it’s much easier to develop effective solutions.
Desired Outcomes – Goals and Objectives
A well-defined desired outcome, or the state that when the needs are fulfilled, acts as a North Star guiding the entire project towards success. When defining desired outcomes, it’s important to focus on specific, measurable, achievable, relevant, and time-bound (SMART
) objectives.
The desired outcome should provide an answer to the question of what the organisation expects to achieve through a particular business initiative.
Similar to need assessment, the process of defining desired outcomes should involve collaboration with stakeholders as that will give the business analyst an opportunity to elicit their goals and expectations. These outcomes need to be aligned with the organisation’s overall strategic objectives and represent actual benefits that stakeholders expect the successful execution of the project to deliver.
Defining the desired outcome so they are quantifiable and measurable also helps stakeholders track the progress of the initiative and measure its success against the predefined metrics.
The desired outcome should be evaluated not only upon the completion of the project but also revisited at the predetermined milestone over its duration, serving as a reference point throughout the project’s lifecycle and making sure that all efforts are in line with the overarching vision.
Plus, the desired outcome will serve as a benchmark to assess different solution options, with the one most likely to achieve the desired outcome ending as the recommended solution.
Assessing Alternatives
One of the essential processes in the pursuit of a successful business case is considering multiple solutions that could address the identified need.
This element of a business case involves the analysis of different potential courses of action to determine which one is most likely to lead to the desired outcome and best along with the organisation’s strategic objectives and constraints.
Each potential solution will vary in terms of processes, technologies, costs, timing options, risks, and other factors. Note that the solution suggesting status quo and no action is also a viable alternative that should be assessed. Every alternative should at least be evaluated against the following criteria:
- Scope – defining the scope of each alternative involves identifying the boundaries of the project and understanding what is included and excluded from each option, with regard to organisational and system restraints, product lines, business processes, geographic regions, and other factors. The analysis of the scope of the potential solution should also indicate how it will potentially impact the various aspects of the organisation.
- Feasibility – the analysis of feasibility for each alternative involves a comprehensive examination of the technical, operational, financial, and organisational feasibility of every potential solution. It should provide an answer to whether the proposed solution is viable and achievable considering the available resources, expertise, technology, and current infrastructure.
- Assumptions, risks and constraints – the examination of the assumptions, risks, and constraints associated with each alternative is necessary as the stakeholders and the business analyst need to be aware of potential challenges and uncertainties to be capable of making an informed decision on the most suitable solution.
- Financial analysis and value assessment – the potential financial impact of each option plays a big role in deciding which alternative is the most viable and recording the solution. The business case should include implementation and operational costs for every alternative, as well as potential financial gain if a particular option is chosen. In addition, it should provide a value assessment of every potential solution and explore the overall value (beyond financial metrics) that an alternative can bring to the organisation.
Recommended Solution
The recommended solution, basically, is the culmination of the business case. Based on the alternative assessment, the recommended solution should represent the most beneficial course of action and provide the most effective way to address the identified business needs and achieve the desired outcome.
The case for the recommended solution should feature a strong and logical argumentation, made on the basis of analysis, data, and stakeholder feedback. The reasoning for choosing a particular solution needs to be clearly articulated, highlighting its alignment with the overall organisational strategic objectives.
It should include a comprehensive cost-benefit analysis, indicating the potential return on investment, and outline all the risks and challenges this solution may bring, along with the viable risk mitigation strategies.
The Importance and Benefits of a Business Case
A business case, as a business analysis tool, also brings numerous real benefits to the organisation and can positively impact various aspects of the company’s strategic planning:
- Informed decision making – through a thorough analysis that includes cost-benefit analysis, feasibility studies, and risk assessments, the business case helps stakeholders gain a clear understanding of their choices. With the help of a business case, stakeholders can deliberately weigh all the pros and cons of different alternatives and choose the best course of action.
- Alignment with overall organisational goals – one of the main purposes of a business case is to make sure that every initiative is aligned with the overall strategic vision and objectives of the organisation. As it links each project to a broader vision, the business case becomes a valuable tool in ensuring that all the effort and resources are properly allocated in a way that contributes to organisational growth.
- Enhanced stakeholder engagement – the process of writing a business case involves collaboration with the subject matter experts, decision-makers, end users, and other stakeholders. This significantly increases their engagement and increases stakeholders’ commitment to the proposed project. In addition, the process fosters a sense of ownership among the stakeholders, making it easier to secure their support and buy-in.
- Risk mitigation – through identifying risks and uncertainties, a business case provides enough information on potential challenges to help stakeholders act proactively and plan for contingencies and risk mitigation strategies. This ensures that the project stays on track and minimises the chances of unexpected setbacks.
- Resource optimisation – a comprehensive business case also contributes to effective resource management which is often the key to the success of a project. It provides an understanding of the resource requirements for every initiative, including financial, technological, and human resources. With this insight, stakeholders can better manage resources and allocate them more efficiently.
Best Practices for Creating a Business Case
There are a couple of things every business analyst should keep in mind when looking to write an impactful business case that will garner support and approval from key stakeholders.
- Clarity and conciseness – The business case should be easy to understand. Avoid jargon, use concise language and, if possible, avoid unnecessary technical details.
- Data-driven and objective approach – Make sure that your business case is based on accurate data and credible sources. Don’t make assumptions without proper evidence. Failing to use an objective approach when writing a business case can result in a biased document.
- Stakeholder involvement – Ensure that all the relevant stakeholders are involved throughout the process, as that will help gather insights, build consensus, and ensure buy-in.
- Alignment with strategy – Link the business case you’re writing to the organisation’s overall goals and strategy. Make an effort to explain how the proposed project contributes to the overall vision.
- Realistic assumptions – Always use realistic assumptions when analysing cost estimates, benefits projections, and timetables. Any unrealistic assumption, no matter if it’s too optimistic or too pessimistic can undermine the credibility of the whole business case.
- Professional presentation – The business case should be visually appealing and professionally formatted. Ensure that data is presented clearly and easy to understand by using charts, tables, and graphs.
- Review and validation -To ensure that your business case is accurate and valid, have it reviewed and validated by experienced professionals and subject matter experts.
Business Case Template
The Business Analysis Doctor has a business case template in a business analysis template package. The business analysis template package also includes a business case template sample so that you can get a good idea of what to include in a business case.
