Create a business case

Teams can have some great ideas about improving their processes, some of which might involve significant investment. It is common however to see their grand plans quashed when it comes to getting permission or financial backing. Improvement ideas can sound as requests for new toys and observations can appear as complaints.

In addition, a team that presents an improvement idea without framing it within a business case is less likely to be funded by the people who control the budgets. This might either be because the business stakeholders don’t understand the value proposition or they just might not take it seriously, because it is not written in their language.

If the team is not given feedback as to why their idea was not funded, and have further requests turned down, they may think ‘they will never go for that’ and not even mention the next big idea. If this happens frequently, potentially great ideas will be dismissed in favour of those that require much less investment but that are also much less likely to provide equivalent results.

If an improvement idea needs investment of any significant amount, then it is likely to be necessary to convince an internal stakeholder, quite possibly from outside the IT department, that it is a sound investment. If teams present improvement ideas with a business case they will have a much higher success rate.

Instead of asking for open-ended time and investment, present a likely return within a reasonable time period, with an appropriate amount of associated risk.

Key benefits

Just going to the effort of quantifying the opportunity might be enough. Often the potential benefit far outstrips any cost and there is no need to go any further in creating a business case.

Going beyond quantification and producing a full business case will make it easier to get funding for improvement ideas. This is for several reasons:

• Business cases prompt people to offer a rational response to a request by presenting information in a format that is easy to understand.
• They information is in the format that business people can use to make investment decisions.
• Finally and most importantly, they present ideas as likely outcomes: If I invest x, then I get y.

Business cases are versatile; they can be used throughout the organisation (and probably already are). We think that teams can use them for improving their way of working in the same way that whole departments can use them to fund a large change initiative. After all, businesses are built around the successful use of this technique.

How to make it work

At one of our financial services clients, the team calculated the break-even point in time savings for investing in automating regression testing. The department had an application with an ever-growing manual regression test pack that was taking around 100 person days to run per release. The team estimated the total effort to automate the testing at about 240 person days. It was then simple to calculate the break-even point as 3 regression pack runs, so the team put this business case in front of the head of department who immediately chose to fund the improvement opportunity.

This simple calculation did not even take into account the opportunity to reduce risk through task automation. When compiling a business case, consider including the risk angle. The decrease in risk can be significantly more important than the explicit value.

Another way to make this work well is to provide several options. Having multiple options to compare and contrast not only increases the chance of success, but may itself also increase the likelihood of a decision to select one of them. As Alan Weiss explains in Million Dollar Consulting regarding selling choices to clients, ‘always provide options – a choice of yeses’.

In order to compare investment opportunities we need to relate them back to the same currency. For example, asking someone to choose between something that will take about a week and an alternative that costs $10,000 is unhelpful.

In a business with limited investment capital, different parts of an organisation compete for the same capital. Teams who can describe an opportunity in a concise business case will find win the lion’s share of investment decisions.

A word of warning: as with any other business case, the assumptions included when formulating the plan will be tested. If a team makes unfounded assumptions that exaggerate their business case, then they may find future business cases reviewed with a much higher diligence. Remember the boy who cried wolf.

We’ve known teams who say that they cannot be certain about the likely cost of investment or the likely benefits to be realised; the result is that they do nothing. Instead we encourage teams to be brave. A plan is not a contract, it is an improvement idea and its primary purpose is to aid a conversation. By creating a business case, teams make the assumptions explicit. They have the chance to openly discuss our assumptions with colleagues and those in charge of the money.

With investment cases, teams are asking their internal stakeholders to use their business experience to judge proposals. Once people start framing improvement opportunities in terms of costs and benefits, they are often surprised at how engaged their partners become in selecting investment opportunities.