Business Case Development Template and Guidelines

Before we get into the details of business case development, it is important to understand what is a business case, why do we prepare business cases, and how much time should we be spending on developing a business case.

What is a Business Case?

A business case serves as the center piece in integrating IT governance, portfolio management processes, and financial management processes. Business cases are an important document in helping leadership and management understand the business value of an investment or business opportunity. A business case is part sales and part marketing. But it is the “business” units’ opportunity to present an overwhelming and compelling justification for funding an investment to achieve organization or business unit mission, goals, and objectives.

An effective business case is a multi-purpose document that generates the support, participation and leadership commitment required to transform an idea into reality. A business case identifies an idea, problem, or opportunity. It provides context and content around the problem and equally illustrates the desired objectives and outcomes. The problem and desired outcomes are normally defined and described in terms of the business. The business case describes how and who will be affected. The how and who typically evolve around individual or organization behavioral changes; also know as change management. Change management also involves the people and process changes that would be required. The business case will breakout specific alternatives that were examined, their associated impacts, risks, costs, and benefits. Alternatives focus more towards a technical component contributing to the overall business solution.

Business case development is a collaborative effort:

·         It is business driven, lead by the business or program area that is making the proposal,

·         Information technology representative(s) form the Office of Information Services,

·         Change management representative(s) from the Office of Information Services, Business Process Engineering Unit,

·         Financial analyst representative(s) from Finance Policy and Analysis,

·         Any (all) stakeholders who will be impacted by the proposal, and to ensure approval and ongoing support

·         And a benefits sponsor.

Why Prepare a Business Case?

The simple answer to the question of “why?” would be:  1. it makes sense, 2. it is the right thing to do, and 3. business cases are recognized and accepted as a best practice.

Those three reasons either alone or together may not appear to be compelling enough. Below are more concrete requirements as to “why” we prepare business cases, founded upon statute and policy.

Governor’s Priorities and Initiatives:  In response to the current budget crisis and in support of the Governor’s priorities to “Restore Confidence and Accountability in Government” and “Make Government Live within its Means,” the Governor’s initiative on Regulatory Streamlining, and the activities of the Governor’s Advisory Committee on Government and Performance and Accountability, the Department of Administrative Services (DAS) and state agencies must do what we can to appropriately control information technology (IT) spending and stretch limited IT dollars.

Business cases are fundamental in identifying accountable business or benefit owner(s), high level business performance metrics, and the associated investment cost model.

How much time to spend on developing a business case?

General Rule of thumb: Business case time = approximately 5-10% of anticipated implementation project time. An anticipated:

• 25 day project to implement the business opportunity = 2 days to put together a complete but straightforward and simple business case
• 3 month project to implement the business opportunity = 9 days to put together an appropriately detailed business case
• 1 year project to implement the business opportunity = 1 – 1.5 months to put together a detailed business case
• 3 year project to implement the business opportunity = 3 months to put together a comprehensive business case

The Business case template is scalable to the nature and impact of the proposal.  The number of pages of a business case varies based on the subject matter of the case. It may be a brief 2-4 page document or an extensive evaluation consisting of 20 to100 pages. However, the length of the business case should be kept to a minimum, ensuring it stays on topic, presents relevant information in a clear and concise manner, and is focused on supporting management in making decisions. The time and effort spent on a business case should be in proportion to the scope of the problem.The definitive answer for the amount of time allocated to develop a business case is:  It takes as long as it takes. It is a function of time, commitment, understanding, and resources.

Business Case Template

At a minimum, the business case shall include the following sections:

• Executive Summary
• Introduction & Background
• Problem Definition & Desired Business Goal(s) and Objectives
• Alternatives
• Assumptions
• Benefits Estimates, and Benefit Metrics
• Cost Estimates
• Risk Assessment
• Financial Analysis
•  Recommendation
• Implementation Approach/Timeline
• Appendices