By Jim Maholic, Business Value Services, Oracle
As stated in the first post in this series, a business case is about business. Whether for IT or non-IT projects, the business case must be written in business terms.
We create business cases for two reasons: we believe there is a problem to be solved, and we believe that the value in solving the problem exceeds the costs we’ll have to incur to solve that problem. The starting point, therefore, is a statement that a problem exists. We call this statement the hypothesis.
According to Webster’s Dictionary, an hypothesis is “an unproved theory.” The hypothesis, or theory, of your business case is an opening assumption that a problem (or improvement opportunity) exists and that there is value to your organization in addressing it. A thoroughly researched and well-written business case will prove the theory. It’s really that simple. (We’ll discuss research methods and comparative analysis in upcoming posts.)
The hypothesis is the first of four primary aspects of a sound business case. Those four aspects are:
So, as you start the planning for your intended project, you might hypothesize that your company’s current procurement process is inefficient and hinders your ability to negotiate effectively with vendors. Your hypothesis could further posit that implementing new procurement software would favorably address this issue. That’s it. That could be your opening hypothesis. The business case could be launched from something that basic.
Your business case will become more persuasive as you supplement your hypothesis with credible supporting evidence. Therefore, you achieve success by validating your hypothesis: collecting compelling evidence that supports it, analyzing and structuring your evidence for effect, and recommending an approach that delivers value to the organization by solving the problem (or capitalizing on this opportunity).
It is also possible that your hypothesis is much more expansive than the above example. For instance, you could postulate, “The sales, marketing and customer service functions could be optimized, thereby yielding significant financial and operational benefits to the company.” Depending on the size and complexity of your organization, that hypothesis could either be presented as one broad hypothesis or as three (or more) smaller, separate, tightly focused ones. One size does not fit all circumstances. Today you might draft a business case for a single business improvement; next month you might draft one that makes the case for enterprise-wide transformation.
Regardless of the scope of your business case, there is an assumed declaration. The assumed declaration is, “The benefits realized by solving this problem significantly exceed the costs incurred to solve it.” Admittedly, there are benefits beyond those that are purely financial. But make no mistake: it is a rare project that receives the requested funding if the measurable, financial benefits do not exceed the costs.
You may not start out intending to tackle the big issues at your company. You may be content with the notion that your project will be confined to a particular, limited business function. But building a business case correctly should open the door to other parts of the organization. By starting with a strong, compelling hypothesis, you ignite executive interest. Executive interest yields access. Access invites discussion across departmental and divisional lines, which highlights other opportunities and expands the size of your potential project. A strong hypothesis has two tangible benefits for you: first, it allows you to position your proposal throughout the enterprise; and second, it should open the door to higher levels within the senior management corps giving you broader access and visibility.
In order to receive the necessary funding for your proposal, you’ll need to talk to people who can speak for and commit the organization to a goal, as well as those that set the vision and direction. A well-articulated hypothesis will grant you the right to speak to individuals at higher and broader levels within the organization. And since the key funding decisions are often made at the highest levels, it is advantageous for you to meet with the highest-level executives possible to ensure your proposal receives favorable consideration. And that’s the rub: for the executives to be willing to grant you an audience, you must give them a reason. Creating a compelling and achievable hypothesis is the first, best step in that direction.
This post is the fourth in a series of twelve articles excerpted and adapted from my award-winning and Amazon Top 10 book, Business Cases that Mean Business.
About the book: Developing a business case is simply the identification, calculation and communication of the value of your proposed technology 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 award-winning book on Amazon (just click on the book). Available in trade paperback and Kindle formats.