Preparing and Presenting an Effective Business Case
Presentation to SLIS Wellington July 2007
Table of Contents
What is a business case? Why develop a business case? What goes into a business case?
Presenting your business case
Summary
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What is a business case?
“A business case describes the business reason for undertaking a project. It provides decision makers with the information they need to make a fully informed decision on whether funding should be provided and/or whether an investment should proceed.” Examples of potential projects in the library/information context Cataloguing systems Major acquisitions Digitisation Staffing
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The business case should answer these questions:
What is the project? • • • • Description Value proposition Likely impact(s) Who are the stakeholders?
How much value will it create? • NPV of the investment • Resulting time-phased cash flow impact • IRR and payback period
What will it take to implement? • What operational changes are necessary to achieve desired financial benefits
Is this project worth doing?
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Table of Contents
What is a business case? Why develop a business case? What goes into a business case?
Presenting your business case
Summary
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Why is a business case necessary?
• Creates a climate for rigorous analysis of new ideas and the ability to quantify expected outcomes • Calls for the consideration of issues before a project is launched and/or implemented • Identifies financial and business owners of a project; establishes accountability for results • Establishes a benchmark against which the performance of the project can be monitored and benefits can be tracked • Allows for identification of problems and tracking of expected costs/benefits
Creates Discipline
Establishes Direction
Advantages of Creating a Business Case
Provides Control
• Provides management with an outline of the key steps necessary to complete the project(s) • Gives stakeholders a sense of where things are headed if projects are implemented • Highlights the operational changes necessary to implement a project
Minimizes Risk
• Identifies the financial impact of the project (i.e. IRR) • Assesses the impact of the risks and rewards associated with the project
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Table of Contents
What is a business case? Why develop a business case? What goes into a business case?
Presenting your business case
Summary of key concepts
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Preparing the business case
Use your organisation‘s methodology which will include: Evaluation of the level of significance of the project Information on the scope/details of the project Who will it affect? What is the policy context? Utilise those people who have the information and skills to supplement your business case. Optimistic or unrealistic budgets and implementation schedules can destroy the credibility of a business case.
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Business case components
Executive Summary • High level summary of opportunity • Description of the project and resources required to implement • Summarise how the project aligns with organisation needs or strategy
Analysis of Opportunity
• • • • • • • •
Where are we now? What are the various options Summary of opportunity (value creation and value drivers) Relevant internal and external factors Detailed description of costs and benefits (generally quantifiable) Initial and recurring costs and benefits If there is uncertainty in the numbers, presents a range of numbers and describes the uncertainty (including ―best case,‖ ―worst case‖ and ―most likely‖ scenarios) Cost/benefit assumptions
Costs and Benefits
Risks and Rewards
• Detail non financial risks and rewards eg impact on employees • Mitigation plans for risks • Can be a strong factor in the success of a business case
Implementation Plan
• • • •
Implementation timeline, deliverables, resources Operational changes required to achieve financial targets Business owners and operational owners of the project How will you recognise when the need has been met?
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Table of Contents
What is a business case? Why develop a business case? What goes into a business case?
Presenting your business case
Summary
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Presenting your business case
Raise idea verbally first Ask what level of detail is needed First decide how formal you want to make your business case. Ensure you are presenting the business case to the right person Does your organisation have a set business case structure? Is there a multi-step approach in gaining approval? Usually depends on either the amount of money you are asking for, or the extent of change you wish to make. The larger the sum of money, or the greater the degree of change, the more formally the business case should be presented.
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Presenting your business case
Does funding have to come from a specific budget? When presenting the business case, try to imagine every possible question that could be asked and have the answers ready. Make sure the language used is right for the reader and the case is relevant, concise and interesting. Talk to people in your organisation that have presented a successful business case in the past – what factors were important? Create a story that speaks directly to user needs and offers help with their problem. Understand the key ‗sway‘ factors – is it financial, political etc The argument should be based on sound data and logic but also contain an emotional appeal. (If I had 30 seconds with the decision maker, what should I say to convince them to fund the project)
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Presenting your business case – know your reader
Present your business case in a way that matches the style of the decision maker. As a general guideline, most business people display character traits that indicate their broad business style.
Spontaneous
Expressive
Dominant
Social/Amiable
Easy Going
Direct Driver
Controlled
Analytical
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Presenting your business case – know your reader How do you persuade a ―Driver‖
Keep it short Use a structured presentation Your questions should show incisive thinking and knowledge Your answers should be direct, brief, targeted and decisive Their main overt interest is in results Need to show specific evidence
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Presenting your business case – know your reader How do you persuade an ―Amiable‖
Use an informal, friendly presentation style Your questions should show the interest in people Your answers should be friendly with a human content Their main overt interest is in team building and how it is seen by others Need to include facts and sentiment, personal experience, build on the familiar Avoid to much pushing, urgency or too technical comments
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Presenting your business case – know your reader How do you persuade an ―Analytical‖
Be disciplined and on time with all facts in order Use a logical, process oriented presentation style with support for details Your questions should be pointed and technical Your answers should be specific and supportable Their main overt interest is in the factual detail showing how it works and the logic Avoid to much flamboyance, absence of facts, inaccuracy or incompleteness of detail.
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Presenting your business case – know your reader How do you persuade an ―Expressive‖
Personal focus is important Use an informal, or informal but warm presentation that is creative and expressive Your questions should show achievements and pride Your answers should be personal and show charisma and warmth Their main overt interest is in the big picture/vision Need to include imagination, creative data Avoid to many details or being impersonal
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Table of Contents
What is a business case? Why develop a business case? What goes into a business case
Presenting your business case
Summary
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Summary
Know your organisation Research the issues well and discuss the proposal extensively internally Write the business case with all costs and issues explained The business case should include the relevant financial justifications, but it should not be the sole purpose of the document. The business case must cover a broad range of topics and issues that address all stakeholders‘ concerns from economic, social and environmental perspectives.
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Key concepts
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Use the business case as a leadership tool A business case is not just a requirement for securing approval of major project expenditures. It can also serve as an effective leadership tool to weigh the merits of various approaches, communicate the intent of a proposed plan, and align key stakeholders behind the proposal. Clients are far more likely to make good decisions if they consider a reasonable set of alternatives, the benefits and costs of the alternatives, and the potential risks that might derail implementation of each alternative.
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Build a business case to evaluate options, not justify a position Explore alternative possibilities, not just one option.
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Identify each alternative's "hard" and "soft" costs and benefits When developing a business case, consider and calculate the costs and benefits from all points of view—financial, customer, executives, employees, and the public. Although decision makers take a deep interest in the IRR of large capital investments, they also want to weigh softer issues such as an idea's potential impact on employee morale, customer satisfaction, innovation, and legal risk factors. Many of these areas are just as important as hard numbers in helping a company realize its strategy and goals.
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Align key decision makers and stakeholders Include all key stakeholders in discussions who would be affected by the proposed changes. Use the discussions to surface information to improve the proposal and lay the groundwork to ensure buy-in from all those whose support would be needed to successfully implement the plan. Confirm assumptions and assess alternatives during stakeholder discussions.
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Identify and consider potential problems that could derail the proposed plan Once issues and problems have been identified, define potential mitigation strategies to address potential problems and issues.
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Key concepts (continued)
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Identify project owners and business owners for required operational changes In addition to project owners, business owners should also be identified for each of the operational changes required to achieve the desired financial benefits. Operational changes necessary to achieve the benefits highlighted in the business case must be clearly articulated, along with key metrics, baseline assumptions and desired financial/operational targets.
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Develop and communicate a powerful story showcasing your idea's advantages Develop a pitch to "pre-sell" the proposal. Develop a concise but compelling strategic story to emphasize the benefits of the proposal. If necessary, develop a short and concise graphic presentation to sell the concept to executives and key stakeholders.
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Use benefits tracking to update the business case A business case is not something that should be put in a binder and stored on a shelf to gather dust. Once a business case has been approved and implementation has begun, actual benefits and costs should be tracked vs. planned benefits and costs. If there is significant variance between actual vs. planned results, the business case should be updated to reflect actual benefits and costs.
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Ultimately, a good business case helps the client make a decision At the end of the day, a business case ―looks‖ like whatever the client needs to make a decision . . . the goal is to help the client make a decision, no matter what the format of the business case.
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Some useful definitions
The Payback Period: The number of years that it takes to generate enough cash flows to recover the initial investment. Return on Investment (ROI): The cashflows generated by the option divided by the total investment in the option. Discounted cash flows should be used to calculate ROI. Discounted Cash Flows: A discounted cashflow is equal to the present value of a cash flow received in the future.
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Key Questions
What is the business problem to be solved? What is the value of solving the problem? What is the cost of not solving the problem? What is the proposed solution? What are the major deliverables? What is the estimated cost? What is the estimated duration? Who will implement the solution? Where is the funding coming from? Who has what responsibilities?
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