By Jim Maholic, Oracle
This post is the ninth in a series of articles excerpted and adapted from my award-winning and Amazon Top 10 book, Business Cases that Mean Business (details on the book below).
This series is focused on building business cases for transformational cloud ERP initiatives by aligning projected future capabilities to core business drivers. We’re in the middle of unpacking the four components of the business case, which are:
Now it’s time to do the one thing many business case developers overlook before presenting their case to executives: the actual confirmation of potential benefits. All of your data collection and analysis can only take your business case so far. Benefit estimates lack credibility until they have been corroborated with key functional managers and executives.
To obtain such corroboration, you will need to meet with each manager whose area stands to benefit from your proposal and review your benefit estimates with them. You will need to gain their approval and support for your claims that these benefits are realistically achievable—and that your proposal will make it possible for the company to achieve them. This will frequently require negotiation on your part. Hopefully not arm wrestling, just negotiation.
Imagine the following scenario, using our sample company’s data from prior articles: your hypothesis suggests that the accounts receivable (AR) function can collect cash from customers sooner. Currently, the company collects its cash in an average of 49 days from the date of the invoice. Based on your discovery activities, you believe that the company can collect its cash two full days sooner, producing a one-time working capital improvement of roughly $104 million. You have come to this conclusion based on evidence you gathered and analyzed during your discovery activities.
Even though this potential benefit is valuable, suggesting that this potential benefit is achievable might trigger an adversarial response from the manager responsible for that performance. The manager might fear that company executives will interpret your benefit presentation as a negative reflection on his current performance. Why would there be a $104 million opportunity to improve unless the current manager is not managing his area effectively?
I have seen numerous managers raise this very concern. This is particularly evident when discussing large benefits. Suggesting that the AR function has an opportunity for a $104 million improvement could cause the manager to fear that he’ll be viewed as lacking focus on his department, since he allowed such a large opportunity to even exist. Part of your analysis is to be empathetic to such concerns. Prepare to soften the manager’s fear while simultaneously gaining the necessary buy-in that such improvements are reasonable and possible.
You may also find that a manager will withdraw support for an apparently accepted benefit. Previously, the manager may have expressed his support for your proposed improvement. Unfortunately, the passage of time will occasionally interfere with your benefit projections. After an initial, and enthusiastic, show of support for your benefit projections, a manager may get cold feet and decide to reconsider his initial commitment. You need to revisit each manager before you make your executive presentation to ensure that each manager still strongly supports your benefit projections.
I have experienced “benefit remorse” on more than one occasion. Benefit remorse works like this: The manager agrees with your initial projections that certain improvements or benefits are possible in his area. You move on to the next manager, believing that this benefit is well supported and documented. Without your knowledge, the manager thinks through the benefit and begins to realize that he will be held accountable for achieving the proposed improvement. Possibly he or she fears that compensation plans will be amended and linked to achieving this benefit that you are so eager to present. That’s when the remorse sets in. This is why it is essential that you must re-verify each manager’s commitment to your benefit projections before your final presentation.
It is important to understand that credibility occurs when the stakeholders, themselves, willingly stand by these benefit numbers. For that reason, they must buy into the number that you present. If you have a manager showing signs of benefit remorse, work with him or her and negotiate, and then adjust your numbers to fit the manager’s comfort level. A smaller benefit number that is supported by the stakeholder is much more credible than a larger number that gets publicly refuted. Work together, rather than as adversaries, to reach an acceptable, supportable number.
And one final thought: there have been times when I believed that a certain benefit was achievable, but the area manager would not agree. There have been a few rare times when the area manager strongly disagreed and would not support my projections. In those rare cases, I have presented my projections and calmly stated that though I believed the benefit projections were reasonable, the area manager did not agree. In most cases my projections were accepted by the executives as reasonable and credible. Not all cases, certainly, but in most. I believe this is due, in part, to the manner in which the numbers and the supporting evidence were presented. It is best not to be timid about your numbers, and it is best not to try to hide the fact that disagreements exist. State your case with calm professionalism and let the approvers decide on their own if your business case has merit.
Negotiated benefits that are supported by the direct manager responsible for them always yields credibility. Work with each manager calmly yet with conviction, supported by your evidence, and your business case numbers will generally carry the day.
In the next article we’ll take all that you’ve done so far and package your presentation to be powerful and persuasive.
This post is the ninth in a series of twelve articles excerpted and adapted from my award-winning and Amazon Top 10 book, Business Cases that Mean Business.
Developing a business case is simply the identification, calculation and communication of the value of your proposed capital expenditure. Creating a sound business case should not be intimidating. You simply must approach the development of a business case with discipline and ample planning. This series of articles will give you an overview of the creation of a successful business case. If you wish to explore this topic deeper, or just jump ahead right away, check out my book.