Making a business case

1. Building and Promoting a Business Case
@ PPMC Knowledge Sharing Session
Aug 2019

2. What is a business case?
The materials prepared for decision-makers to
show that the proposed idea is a good one and
that the numbers that surround it make sound
financial sense
- A written report or presentation
- Focused on a business problem and solution
options
- Justifies a business initiative or project

3. Coverage
• UNDERSTAND Business Case Basics
• What is a business case?
• When is it needed?
• How is it approved?
• BUILD Your Case
• What is the business problem?
• What are your solution option recommendations?
• What are the costs, benefits, risks, assumptions, and constraints?
• How will you measure success?
• PROMOTE Your Case
• Who will support your ideas?
• Who will derail your efforts?
• How can you get your business case approved?

5. Best Practices
• Decision-making tool
• View the long-term, big picture, Total Costs/Savings
• Non-emotional assessment; discern the music from the noise
• Focus on incremental cash flows
• More than cost savings
• Qualitative valuation and Alignment
• Account for rather than avoid risk
• Work to continuous improvement
• Treadmill quagmire
Why do a Business Case? (1)

7. Emotions!

8. • Campaign to deliver benefits, not a document to get money
• Thinking not writing
• Stakeholder engagement-way of working together
• Fit for purpose analysis
• Smart procurement of consultancy support
• Coherence and cohesion
Why do a Business Case? (2)

9. Why do a Business Case? (3)
• Disciplined Exercise
• Make tacit assumptions explicit
• Provides basis for allocating capital
• Balances flexibility and discipline
• Communication Tool
• Essential investment in building the relationship asset
• Defines what the project is (and is not)

10. Any business case addresses 5 key questions:
The 5 Case Model
1. Is there a compelling case for expenditure?
2. Does the proposal optimise value for money?
3. Is the proposed deal commercially viable?
4. Is the spending proposal affordable?
5. How can the proposal be delivered successfully?

11. Management
The 5 key elements of best practice business cases
The 5 Case Model
Financial Commercial
Economic
Strategic
Applicable - strategic fit
& business needs
Appropriate –
optimises
value
Attractive – to supply
side and feasible
Affordable – within
budget
Achievable – can
be successfully
delivered

12. Basics:
When is a business case needed?
• When it’s a high profile issue
• When it’s a low profile issue
• When risk is great
• When a radical solution is being proposed to solve
a business problem
• When business money or resources needed may
cross a certain threshold

13. 13
Success is a Numbers Game
• Will this proposal save money, cut costs, increase
productivity, speed development or improve quality?
• Have you looked at the tax and financial implications
of the proposal?
• What’s the impact of the proposal on the bottom line?
• Are our competitors doing this? If so, what are the
results they are achieving?
• Who are the stakeholders and are they supportive of
the proposal?
Answer Business-Related Questions

14. Non-Quantifiable Benefits (External Focus Benefits)
• Enhanced customer satisfaction
• Improved productivity from effective team work,
communications
• Enhanced strategic value of Product Development
• Better decision making from timely and effective
information
• Focusing initiatives

15. Intangible Benefits (Internal Focus Benefits)
• Reduced frustration and complexity throughout the
organization
• Ability to focus on customers and products
• Increased employee morale
• Clearer roles / responsibilities, accountabilities and
authority levels throughout the organization
• Effective and consistent decision making throughout all
levels of the organization
• Motivation and movement in one clear strategic direction

16. 16
Business Case Principles
• Decisions are made
relative to alternatives
• If possible, use money as
the common denominator
• Sunk costs are irrelevant
• Investment decisions
should recognize the time
value of money
• Separable decisions must
be considered separately
• Decisions should consider
both quantitative and
qualitative factors
• The risks associated with the
decision should be
quantified if possible
• The timing associated with
making decisions is critical
• Decision processes should be
periodically assessed and
continuously improved

18. Emotions!

19. 19
Many Rules to Use as Guidelines
• Prepare business cases in
language to communicate to
management
• Define all of your terms
thoroughly
• Bring in the outside experts
to help if needed
• Double and triple check
your numbers
• Never state a number
without bounding it
• Remember, numbers will
come back to haunt you
• Never talk cost reduction;
use avoidance instead
• Always relate your numbers
to benchmarks and your
competition
Preparation Presentation

20. 20
Many Tools and Techniques
• Break-even analysis
• Cause and effect analysis
• Cost/benefit analysis
• Value chain analysis
• Investment opportunity
analysis
• Pareto analysis
• Payback analysis
• Sensitivity analysis
• Trend analysis
Analysis Techniques

21. Three Bases of Argument

22. Arguments of Fact
• “The system will eliminate the need for hiring two positions for an
annual savings of $100K.”
• Justify using hard data, quantitative, structured feasibility assessment
• Target Audience: “Sensing”

23. Arguments of Faith
• “IS is infrastructure. We need it to support our growth and stability.”
• Justify by vision. Investment X will lead to benefit Y.
• Target Audience: “iNtuitives”

24. Arguments of Fear
• “If we don’t do this we may be eaten alive by our competition.”
• Justify by perception of events.
• Target Audience: “iNtuitives”

25. UNDERSTAND Business Case Basics
• Know the specific processes, dates, and templates for business cases within your organization
BUILD Your Case
• Chart current state issues to desired future state
• Identify impacts to business
• Research solution options
• Know the costs, benefits, risks, assumptions, and constraints
• Show how you will measure success
PROMOTE Your Case
• Know your supporters
• Seek out your saboteurs
• Meet with steering committee members individually
• Ask for their support
• Present your case with confidence

26. Business Case Template

27. 27
Final Thoughts
• Find out the “tone at the
top”
• Numbers can be your ally
when asking for money
• When asking for money,
talk your management’s
language not yours
• Don’t be casual about
numbers, be precise

28. 08033181225
Kayode.Adebiyi@nnpcgroup.com