As we’ve discussed in the past, the over-arching goal of a good business case is to focus a project by providing justification for its intent and process. For this reason, a business case is only as good as the thought and research that goes into it.

Here’s how to build a business case that compels change by highlighting the appropriate business needs and yields efficient and effective solutions to your organization’s challenges.

First Things First: Inputs and Tools Needed

Crafting a solid business case requires key pieces of information or existing documents. These provide the building blocks of your actual business case. Before beginning a project, you should ask several questions to identify the problem, constraints, and anticipated project results. There are a host of techniques we use to answer these questions.

Key Inputs

1. The problem statement or business need. We often think the problem is one thing and research the issue, only to discover that the “problem” is a symptom of a larger, underlying challenge. What are the goals of the project? How does the project relate to the organization’s objectives? What do we want to build, and why do we want to build it? What are the planned benefits of the project? We’ll explore this further in the business need statement below.
2. Any assumptions made as you developed the business case. What do you assume to be true for the purposes of planning? For example, if the project requires funding, are you assuming that this funding will be available? Are you assuming that certain resources, perhaps subject matter experts, will be assigned to the project?
3. The scope. How far are you willing to go to solve your problem? You will need to know this before you can complete the business case. Another way to think about the scope of a business case is to identify what you will not do to solve the problem. For example, does your solution have to live within the capabilities of an existing IT system or is a new system on the table?
4. The stakeholders. Who else is involved? What are their concerns? Briefly talking to them about the problem and your proposal can help to ensure a more comprehensive business case. When identifying stakeholders, be sure to look at all angles of the problem and proposal. You want to cast a wide net and consult stakeholders who don’t share your area of expertise. Stakeholders with different perspectives can help create a  business case that looks at the big picture and proposes a viable solution to the problem.

Tools and Techniques

There are several analytical tools used to determine the most appropriate plan to achieve the organization’s goals:

• Gap Analysis – compares actual performance or results with the desired outcome of the project
• Root Cause Analysis – examines the highest level of a problem to identify the root cause
• Decision Analysis – examines and models the possible consequences of different decisions about a given problem
• Estimation – forecasts the cost and effort involved
• Metrics Evaluation – used to track and assess the status of a specific business process
• Review of Key Performance Indicators (KPIs) – measures progress toward a goal or objective
• Risk Analysis – identifies areas of uncertainty that could negatively affect value, analyzes and evaluates those risks, and develops and manages ways of dealing with the risks
• SWOT Analysis – identifies internal strengths and weaknesses within and under the control of a company, and external opportunities and threats for the organization
• Vendor Assessment – assesses the ability of a vendor to deliver the product or service

Writing the Case: Components of a Convincing Case

Every organization has a slightly different template for the business case. Still, the main components should be similar to ensure efficacy. They are:

• Business need or problem statement
• Analysis of the situation
• Recommendation
• Evaluation

Your template may not have these specific sections listed above. However, you should still ensure the topics, concepts, and questions encompassed by each are covered in your business case.

Business Need Statement

The business need, or problem statement, lays out the situation within the organization that needs to change and should always include those factors, or drivers, prompting the need. Organizations cannot afford to change for change’s sake; the reason for any change should be clearly laid out. Common drivers include:

• Market Demand – such as business growth, competition, and customer feedback
• Organizational Needs – like high overhead costs or outgrowing of a physical location
• Technology – such as Y2K, internet, or mobile devices
• Environmental Impacts – like flooding and stormwater issues
• Social Impacts – like public perception, health consciousness, and attitudes toward the environment
• Change in Strategy – such as new administration or leadership

As you start crafting your business case, you may find that multiple drivers are pushing the change. That’s perfectly normal, and they can all be listed. Whether you list all of the drivers you can identify or just the key driver doesn’t matter, as long as you have at least one identified.

Along with the drivers, the business case should also identify the problem. The problem may be an opportunity that the organization should take advantage of, a threat that can be avoided by acting now, or an improvement that is needed immediately. The impacts should also be listed, especially if some key stakeholders or groups will be affected by the problem you have listed.

Because the business case is primarily used for justifying the project, you should explain the value that solving the problem can provide. Perhaps the problem will open a new market opportunity or prevent legal issues down the road. Include these positive outcomes for solving the problem in your business case.

Finally, the business case should start to lay out some limits for the final solution by stating the scope. This section should not provide the full scope of your proposal – instead, focus on the scope of the business need or problem and the overarching constraints that the solution must live within.

Analysis of the Situation

All organizations have strategic goals and objectives. Every proposal should line up with those goals and objectives. In analyzing the situation, you will provide more details about the problem and start to tie this into your proposal. The details about the current situation and the various options for solving the situation should be listed in this section.

Take the time to spell out how the problem and proposal align with your organization’s strategic direction. Ideally, you also want to identify where the gaps are between where the organization is now (with the problem not addressed) and where the organization will be once the problem is solved. Additional questions to answer include:

• What are the root causes or main contributors to the problem?
• What are the gaps between where you are now and where you will be when the problem is solved?
• What are the critical success factors?
• How will you know you’ve solved the problem?
• What criteria are feeding your decision?

Finally, include the options and potential solutions available to you. Doing nothing should always be listed as an option – it may not be a viable solution. Still, it lays out a baseline for the problem.

Recommendation

In the Recommendation section, describe the solution you propose and note why you recommend that specific solution. Keep in mind that the whole point of a business case is to give your decision-makers enough information to decide. Details to provide include:

• Assumptions
• Constraints
• Dependencies
• Major risks and opportunities
• Estimated timeline and high-level milestones
• Key first steps
• Estimated costs

Finally, measurable benefits spell out exactly what the organization stands to gain from the proposal. Benefits may be binary – the organization either complies with statutory mandates or does not. Where you have qualitative benefits, try to provide a measurable component (e.g., “Customer satisfaction, as assessed on satisfaction surveys, will improve by 10%.”). Benefits may be quantitative at the outset (for example, “Maintenance costs will be 10% lower in year one of implementation than they are currently”). Keep in mind that you will discuss ways to quantify and measure benefits in the Evaluation section. Your details here should reflect that.

Remember that this is not a project charter as you provide these details. Many of the items to include will then feed your project charter. However, the business case will remain at a higher level than the more detailed project charter.

Evaluation

The evaluation section expands upon the measurable benefits included in the Recommendation section. It highlights the advantages of your proposal by laying out the positive outcomes and explaining how they can be measured.

The focus in your Evaluation section should be on tangible benefits that can be seen, felt, and measured. Questions to answer include:

• How will the results be measured?
• How will you quantify and measure benefits?
• How long until you break even?
• Will you see a profit?

While the first two questions lay out a high-level plan for the project to follow, the last two are more predictive, and that’s okay.

The End Goal: Go or No-Go Decision

Crafting the business case entails answering various questions as you flesh out your proposal and call on a variety of tools and techniques. The main goal of any business case is a go or no-go decision, so enough details need to be provided to inform that decision. When reviewing your draft business case, ask yourself:

• Is the business need clearly stated and in line with the organization’s strategy?
• Have the benefits been clearly identified?
• Does a potential solution exist?
• Is the necessary funding available?
• Are the risks – and the plans for addressing the risks – explicitly stated?
• Is it clear what will define a successful outcome?

Pursuing the right proposals and prioritizing the most worthwhile projects is critical for any organization. A well-crafted business case can provide the information your organization needs to make truly informed decisions about spending its limited resources and which projects to pursue.

This post was adapted from a Momentum white paper, The Importance of a Business Case: Define the Problem, Identify Solutions, Justify Decisions. Contact us to read the white paper or learn more about working with a consultant to build a strong business case.