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Tuesday, September 1, 2009

Preparing Business Case

Developing a new product or functionality involves ensuring the money is spent wisely and that there is proper ROI (Returns on the investment). A business case is a detailed report used by the stakeholder/sponsor to justify the need of the project. The report should provide all the relevant information in an easy to understand format. In some companies business case is a must to receive funding and go-ahead for the project.
A business case is used to support a particular course of action when there may be several different options; the most important aspect of the business case is the cost-benefit analysis.
Identify your audience early in the process; you will have to address each audience's need, concern, expectation and level of understanding in the document.
Cost Benefit Analysis should be broken down into two categories, 'Direct Costs' and 'Indirect Costs', list all the topics under each category. With my experience sponsor loves valuing in dollars, try to work out each of the cost and benefits in dollars.
Although there is no official format or one that works for everyone, I can suggest you to structure the document in the following section
  • Background
  • Effect/Risk of the problem
  • Costs and Benefits
  • Proposal
  • Impact
  • Conclusion/Recommendation
Other factors which should be considered in the business case are
  • Financial (expense and revenue)
  • Corporate commitment
  • Quality
  • Customer pressure/satisfaction
  • Industry pressure
  • Legal compliance
Finally these are some of the questions which should be answered in the business case document
  • Why are we doing this project?
  • What is the problem this project is trying to address?
  • Are there any workarounds or alternates?
  • What are business benefits?
  • How are we going to solve the problem?
  • How much it is going to cost and how long will it take?
  • If we do this project, what are the risks?
  • If we don’t do this project, what are the risks?
  • If we need to measure success how will be measure it?
Try to answer the questions above in the document to create a good business case proposal. In the end of the document make sure you summarise the problem, costs and benefits of the proposed solution, the document should be structured to highlight that the benefits outweighs cost.
See you next time.

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