State your case

Developing a business case should not be an exercise in paperwork. If done properly, it can provide a foundation for more informed decision-making, helping you decide what to fund, what to cut and how to set IT priorities.

But one of the biggest inhibitors is fear. “I’ve never done this before,” and “I have no idea how to project revenues” are common realizations from those pressed to make a case. Big deal, says Jeffrey Hewitt, research director with Gartner in San Jose, Calif. Get it down on paper, and even if you’re way off the first couple of times, you can adjust your expectations and learn during the process.

Business cases aren’t just for MBAs who write for the Harvard Business Review. And they’re not just for large enterprises with massive infrastructure. A business case can help you decide whether to expand your business, invest in a new technology, select a partner or consider outside investors.

If you don’t set down your goals and expectations, if you don’t frame those in terms of their potential return, you increase your risk. “So much of business is done by the seat of the pants,” says Hewitt. “So much is done by accident.”

A business case can get everyone moving in the same direction. It can give you timeframes and measurements for success. It can also help set corporate expectations by accurately stating the benefits that will result from a particular venture.

The problem is a lot of SMBs don’t bother with business cases because they believe they’re too much work, too expensive or don’ít apply to their specific industry.

While smaller businesses can be nimble and quick to make decisions, it doesn’t mean they should be less diligent than their larger counterparts in how they manage risk, says Henry Dortmans, president of Angus Dortmans Associates Inc. in Oakville, Ont.

As a small business, you can’t afford to make major mistakes, and you can’t afford to throw money out the window on failed technology projects. No matter what industry you’re in, no matter what your size, a business case is really about due diligence.

Sometimes companies make investments based on hype, on the “latest and greatest” technology. Say you invest in a customer relationship management product without thinking it through, and after spending a lot of money, realize it was a big mistake. You’ve been sucked in by hype, says Michael Burns, president of 180 Systems in Toronto. “Until you go through the thought process of what those benefits and costs are, you’re in trouble.”

But developing a business case doesn’t have to be a formal exercise, says Hewitt, and it doesn’t have to be a 150-page document. It could be as simple as making some bullet points on a couple of pages. The important thing is that it’s a living document, and that you can go back to it, analyze it, make adjustments if necessary. Putting it down on paper forces you to follow a certain logic in your thinking, and can open your eyes to what’s working, what’s not, and other potential opportunities. Include points on background, key issues, objectives, scope, options, costs, benefits and risk.

While costs are relatively clear, defining benefits can be more complicated, says Burns. Beware if someone else — like a vendor partner — is defining those benefits for you, because they’re going to be biased. You have to use your best judgement, he says, and in some cases it will be difficult to come up with a quantifiable number. It might be more of a “soft” benefit, but those soft benefits could be important to your business.

Customer service sounds like a fairly intangible benefit, for example, but you can come up with measurements to determine whether you’re actually providing good customer service, says Burns. Maybe you haven’t lost any business over the past year, or maybe you have. How much was that worth to you?

And don’t forget to consider your risk factors, says Hewitt. Are there legal regulations that can affect what you’re doing? Is there a risk of a bigger, more powerful competitor entering your market? If anything changes, do you have a contingency plan?

A business case is really a combination of art and science, says Dortmans. “I don’t think you can look up a definition, pull out a textbook, develop a business case and it will work every time,” he says. While it does take time and effort to put the “art” into a business case, the more you do it, the easier it will become, and the more it will help you set realistic goals and measure success.

If you don’t have a business case, then you’re shooting in the dark, says Hewitt. There is, of course, an element of luck in business, but why not put a framework around it? “Let luck contribute to it, but let your business discipline execute on it and ensure that what you’re doing makes sense.”

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Vawn Himmelsbach
Vawn Himmelsbach
Is a Toronto-based journalist and regular contributor to IT World Canada's publications.

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