By Jim Maholic, Business Value Services, Oracle
A business case is essentially a story. It begins by explaining the current state of your environment, how that current state is inefficient, costly, antiquated, stifling or all of the above, and how addressing those shortcomings will deliver value to your enterprise. Business cases (the story of value) run the gamut from a few short pages to several hundred. Bigger is not necessarily better.
You have to determine how much information you need to make a compelling case. It needs to be the right size for you and for your project. Factors that influence the size of your business case are:
Before you begin constructing your business case, take a step back and do a little planning. Key among your planning activities is gazing into the minds of those who will evaluate your proposal and determine whether or not it meets their criteria for giving you their endorsement. In the mind of your approvers, they are asking themselves three critical questions about your proposal. Those three questions are:
Let’s examine each of these questions in more detail.
Through some series of events, you have determined that a problem exists and must be solved. What is the problem and what value is there in solving it? Your business case must address that. In the case of on-premises ERP systems, we see a number of common issues: a lack of flexibility, an inability to change business models quickly, and missed revenue opportunities (which are often snatched up by more nimble, cloud-based competitors).
What happens if nothing is done about the problem? Does the company miss out on some perceived market advantage? Your business case must address that, too. As I wrote in the previous article, you cannot assume that every approver understands the issue and why it requires attention.
When planning a business case, most business case authors evaluate the merits of possible alternatives and offer valid, rational arguments that logically recommend one approach over another. Too often, though, business case authors overlook the single biggest alternative of any proposal—doing nothing! Frequently, authors assume that the company simply must do something and that inaction is simply not an option. Don't be that naïve. Any time money is involved, there will exist at least one executive who suggests that the best decision is simply to not spend the money. You must anticipate this and confidently explain why your solution is not only better than alternative solutions, but why it is also better than doing nothing.
In answering this question, you need to create a baseline understanding. It is important that you present a clear, unemotional statement of the situation as it exists today. How does your company compare to peer companies in its industry? Is your company ahead or behind the curve? Is there a problem with being ahead or behind the curve? These are fundamental statements that will help you provide a satisfactory answer to our first question, “Why do anything?” Once you establish a reason for doing something, you can move on to addressing the second question.
Few things are as frustrating as gaining approval for the first question and then being rejected here. Your business case must reveal the urgency of action. This is a delicate issue that requires care and balance. If you understate the urgency, you risk having your project deferred or rejected because it appears to lack a compelling reason to act now. Conversely, if you overstate the issue you run the risk of sounding hysterical if your proposal comes across as an apocalyptic alarm, rather than a sound, professional business proposal.
The two primary catalysts for answering the “Why Now?” question are financial return and risk mitigation. Regarding financial return, your business case will include a financial model that shows the benefits exceed the costs of your proposal. Showing the value of a single month often compels the approvers to act now. For example, if your benefits show an annual benefit value of $1.2 million, then each month that you delay costs the company $100,000 in forfeited benefits. Regarding risk mitigation, many legacy on-premise systems are at or near their end-of-life. There is a real risk to business continuity should one of those systems fail after their maintenance has expired. And while moving from an on-premise system to an Oracle Cloud ERP solution is not arduous, it nevertheless requires planning to do it right. Waiting until the last minute when you are nearing the end-of-life of a mission-critical system, like your ERP application, is not a prudent move. Better to act now while you have the luxury of time for planning and testing than to have your back against the wall at a future date.
This is the final question that your business case must address. Oracle's complete cloud application suite allows businesses of all sizes to connect their company-wide operations anytime, anywhere, and from any device. Modern best practices and data-driven intelligence are built into the applications. Customers can subscribe to an entire suite of software as a service (SaaS) applications, including enterprise resource planning, enterprise performance management, supply chain management, human capital management, and customer experience. Oracle's enterprise applications support all types of cloud scenarios, allowing customers to connect to other cloud services and integrate with existing systems.
To learn about the value that other clients have realized with Oracle ERP Cloud, you can read our 2019 benchmark report, or calculate your potential benefits with our assessment calculator. For specific answers to your questions, your Oracle sales team can address areas where the proposed solution is the right one for your business.
As you create your business case, be aware that your ultimate audience will extend beyond the people with whom you interact—your project sponsor and project contacts—to include people at one or more organizational levels above these individuals. The challenge here is to present, with confidence, a compelling and persuasive case that your recommendation should be adopted in a timely manner. It must articulate the benefits in a way that executives can accept and support. Your presentation must be diligently crafted and show that you have followed sound planning processes and that you are confident your approvers will acknowledge your effort and agree to move forward. To succeed, your business case must be able to stand on its own without your participation. Once you make the presentation and present your document to your managers, there is a high likelihood that your manager will take it to one or more levels higher in the organization for final approval. To be successful, your business case must be able to carry that message forward in your absence. This is why it must contain the whole story. Thoughtfully answering these three questions will go a long way to making your business case a case for action.
There you have it. Three questions that executives commonly ask when evaluating business cases.
This post is the second in a series of articles adapted from my award-winning and Amazon Top 10 book, Business Cases that Mean Business. The next article in the series will address aligning benefits to business drivers.