Business Transformation Enablement Program
A Template for Transformation Business Case
September 2004
Transformation Business Case
“To provide the necessary information to determine whether the transformation is a worthwhile investment”
Note: This document template is provided for use with the Business Transformation Enablement Program Strategic Design and Planning Methodology. Text displayed in blue italics (style=BTEPInfo) provides guidance to the Practitioner and should be deleted before publishing the document. A paragraph entered following this style will automatically be set to style=Paragraph1. Use File/Properties to change the document title. September 2004
Approvals
Describe the meaning of approval of this document. Sample text follows. This Transformation Business Case, with its commitments to carrying out the recommended slate of projects with responsibilities and accountabilities as documented herein, is approved by the individuals indicated in the table below.
Department Department name
Position Title
Signatory
Date
____________________ Name Department name Title ____________________ Name Department name Title ____________________ Name
_____________
_____________
_____________
Table of Contents
1 Executive Summary ............................................................................... 1 2 Introduction ............................................................................................. 1
2.1 2.2 Business Problem/Vision .................................................................................. 1 Current Situation ............................................................................................... 1
3 Target Business Design Summary ......................................................... 1 4 Transformation Strategy Summary ........................................................ 1 5 Transformation Description .................................................................... 1
5.1 5.2 5.3 5.4 Objectives ......................................................................................................... 1 Scope ............................................................................................................... 2 Out of Scope ..................................................................................................... 2 Target Outcomes and Benefits ......................................................................... 2
6 Design Alternatives ................................................................................ 2 7 Strategic Alignment ................................................................................ 3 8 Environmental Analysis .......................................................................... 4 9 Transformation Risk Assessment........................................................... 5
9.1 9.2 9.3 Business and Operational Impacts.................................................................... 5 Risks of Project and Each Viable Alternative (not including status quo) ............ 6 Risk of Not Proceeding with Project (status quo) .............................................. 8
10 Cost/Benefit Analysis ............................................................................. 8
10.1 Quantitative Analysis – Financial Costs and Benefits ........................................ 9 10.2 Qualitative Analysis – Non-Financial Benefits and Costs ................................ 11 10.3 Assumptions ................................................................................................... 12
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11 Selection and Recommendations......................................................... 13
11.1 Selection .......................................................................................................... 13 11.2 Recommendations............................................................................................. 13 11.3 Transformation Responsibility ............................................................................. 13 11.4 Transformation Accountability ............................................................................. 13 11.5 Implementation Strategy..................................................................................... 14
12 Review and Approval Process ............................................................. 14
12.1 Review Process ................................................................................................ 14 12.2 Approval Process .............................................................................................. 14
Appendix A: Glossary ................................................................................ 15
Definitions, Acronyms, and Abbreviations ..................................................................... 15 References................................................................................................................ 15
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Transformation Business Case
1
Executive Summary
2
Introduction
2.1 Business Problem/Vision
Summary of the business problem and the vision.
2.2
Current Situation
Summary of the current situation plus how we got here: any relevant historical information and any original assumptions that are no longer valid.
3
Target Business Design Summary
Provide a summary of the Target Business Design. It is not meant to replace that deliverable, but to provide sufficient information for readers to understand the context of the Business Case.
4
Transformation Strategy Summary
Provide a summary of the Transformation Strategy. It is not meant to replace that deliverable, but to provide sufficient information for readers to understand the context of the Business Case.
5
Transformation Description
5.1 Objectives
Outlines what the transformation will accomplish, in clear and measurable terms, within a specified time frame. These objectives can be used post-implementation to evaluate the success of the project. The objectives should be broad enough so that meaningful alternatives are not ruled out, and narrow enough so that only relevant alternatives are considered and that costs and benefits can be formulated. Objectives should be focussed on goals, not operations, and on outputs, not production. Examples of objectives: reduce processing time from 1 hour to 30 minutes, by March 2003 reduce administration costs from $1.2 to $1.1 million for the 2003 fiscal year
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Treasury Board of Canada Secretariat
5.2
Scope
Define the parameters of the transformation. Specifically describe the time frames, department or organization, function and technology. Time frame: Give specific details about when the transformation will start and end. Department/Organization: Detail the specific locations and/or sites, if applicable, and departments or group of departments that will be involved in the project. Program: Describe what programs of the department or organization the project will involve. Technology: Define the boundaries within which the transformation must work (e.g. use of existing systems, compliance with established standards). Briefly list the alternative designs being considered along with the opportunities included in each.
5.3
Out of Scope
List the items that are specifically excluded from the project.
5.4
Target Outcomes and Benefits
Itemize specific and measurable outputs and outcomes of the transformation. Each output and outcome includes an estimated time frame for its implementation. Also show the outcomes as they relate to the Program Logic Model for each alternative design in scope. Target Outcome Estimated Time frame
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Design Alternatives
Provide the reader with the range of options that are available to address the problem or opportunity. Provide the reader with the rationale as to why some have been eliminated as viable alternatives. Finally, provide a detailed description of viable options that will address the business problem or opportunity. Viable alternatives usually include a “do nothing” option (status quo). Begin by listing design alternatives that may resolve the business problem or take advantage of an opportunity. Then, based on a practical and common-sense analysis, narrow the list to include only viable alternatives, stating the reason for excluding an alternative. Valid alternatives should not be excluded due to funding constraints. Only the viable alternatives will be examined in further detail in other sections of the business case. We suggest limiting detailed cost benefit analysis to 3-5 alternative designs. For each selected alternative, explain the key features including people, processes, and systems. Discuss how each viable option addresses the business problems and meets the objectives of the transformation initiative within the outlined scope.
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Transformation Business Case Each alternative must be defined in sufficient detail to enable identification of specific impacts (i.e., business and operational impacts), transformation risks, and costs and benefits. Include partnership and shared service opportunities that may enhance the business outcome of an alternative. Include any detailed requirements analysis in an appendix. Checklist for alternatives: 1. 2. 3. 4. 5. 6. 7. Have all possible solutions been identified? Have all viable alternatives been determined? Is there sufficient reason for the exclusion of possible solutions? Are the alternatives truly distinguishable? Are the viable alternatives defined at a sufficient level of detail to define costs and benefits? Where possible, do alternatives take advantage of partnerships and shared service opportunities? Have critical success factors been identified for each alternative? Have all constraints for each alternative been identified?
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Strategic Alignment
Provide the reader with an understanding of how the project aligns with the overall business plan of the organization and how it may impact other initiatives. Review the business plans of all internal stakeholders and identify specific goals that the project is intended to help achieve. Identify the level of impact the project could have on the goals of the various business plans by using the following rating system: “High” indicates that the project is critical to the achievement of the goal. “Medium” indicates that the project directly impacts the goal but it is not critical to its attainment. “Low” indicates an indirect impact to the achievement of the goal.
Goal from Departmental Business Plan
Level of Impact
Explanation (if required)
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Treasury Board of Canada Secretariat Checklist for strategic alignment: 1. 2. 3. For goals that have been assigned a high level of impact, is the project truly critical to achieving the goal? Does the explanation support the evaluation of how the project impacts the goal? Does the project align with the business plan? Will there be support for this project?
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Environmental Analysis
Provide the reader with an understanding of what other organizations ― internal and external― have done or are doing to address similar types of problems. The reader can use this section to compare the proposed business case to those of other organizations and industry trends. The analysis should include what is happening in other government departments, other government jurisdictions, and private industry, that directly relates to the scope of the project. Research may include such information as the following: length of comparable projects specific project outcomes critical success factors project costs benefits achieved what the organizations would have done differently lessons learned
This section includes any findings from research studies that identify industry trends and best practices. Checklist for environmental analysis: 1. 2. 3. 4. 5. Are the organizations chosen for the environmental analysis representative of your situation, specifically in terms of size and complexity? Are the sources of the research reliable and has the data been verified? Is the time period of the research study applicable to the current situation? Have conclusions been made from the research? How is the research incorporated or considered in the business case?
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Transformation Business Case
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Transformation Risk Assessment
This section provides the reader with an understanding of the risks that are related to the transformation project (both in development and implementation) and how these risks may vary by viable alternative.
9.1
Business and Operational Impacts
Provide the reader with a list of all business and operational impacts for each stakeholder. Each impact is described and analyzed for each viable alternative. For each stakeholder, identify all business (strategic, focussed on the long term ) and operational (procedural, focussed on the details) impacts that may arise from the project. Examples of business impacts are as follows: a change in service and/or products being provided a change in focus or direction of the department
Examples of operational impacts are as follows: staff training required reduction of staff resources
For each alternative, identify the magnitude of each impact (high, medium, low, or none) using the following rating system: “High” indicates that the magnitude of impact is significant and stakeholder support and preparation is critical to the alternative’s success. “Medium” indicates that there is a manageable impact on the stakeholder. “Low” indicates the alternative will have a minor impact on the stakeholder. “None” indicates that the stakeholder will not be impacted by the alternative.
If necessary, document the rationale for the evaluation.
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Treasury Board of Canada Secretariat
Impact and Description Stakeholder 1: Impact 1 – a description of impact 1 Impact 2 – a description of impact 2 … Stakeholder 2: …
Alternative 1
Alternative 2
Alternative 3
High Medium
Medium Medium
High Medium
Checklist for business and operational impacts: 1. 2. 3. 4. For each stakeholder, have all business and operational impacts been identified? Has the magnitude of impact been accurately evaluated for each alternative? Have all stakeholders been considered? Have risks that specifically relate to each alternative been included?
9.2
Risks of Project and Each Viable Alternative (not including status quo)
Identify all risks that may relate to the project. A risk is a factor or event that may jeopardize the project from achieving the anticipated benefits or increase the cost of the project. Examples of project risks are as follows: lack of senior management support legislative changes insufficient training inadequate communication conflicting priorities inability to free up critical business resources
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Transformation Business Case Probability of Risk “High” indicates that the event is highly likely to occur. “Medium” indicates that the event is likely to occur. “Low” indicates that the event is not likely to occur.
Impact of Risk “High” indicates that the event has a significant impact on the project. “Medium” indicates that the event has some impact on the project. “Low” indicates that the event has a minor impact on the project. “None” indicates that the event will have no impact on the project.
If necessary, document the rationale for the evaluation. Other special areas of risk to be considered are as follows: Privacy (use the Preliminary Privacy Impact Assessment ― PPIA ― to document privacy risks) Security (use the Preliminary Threat and Risk Assessment ― PTRA ― to document security risks) Operations (use the Operational Impact Assessment ― OIA ― to document operational risks) Disaster Recovery (use the Business Impact Assessment ― BIA ― to document the risks of disaster recovery)
Project Risk Assessment Risk 1 – a description of risk 1 Risk 1 General Mitigation Strategy … Risk 2 – a description of risk 2 Risk 2 General Mitigation Strategy …
Alternative 1 Probability High Impact Medium
Alternative 2 Probability Low Impact Low
Alternative 3 Probability Medium Impact Low
Specific Strategy
Specific Strategy
Specific Strategy
Low
Medium
Medium
Low
Medium
Medium
Specific Strategy
Specific Strategy
Specific Strategy
Please refer to the Integrated Risk Management Framework (IRMF) and the Integrated Risk Management Guide for more elaborate information about risk management and developing strategies.
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Treasury Board of Canada Secretariat
9.3
Risk of Not Proceeding with Project (status quo)
Status Quo Probability High Impact Medium
Project Risk Assessment Risk 1 – a description of risk 1 Risk 1 General Mitigation Strategy … Risk 2 – a description of risk 2 Risk 2 General Mitigation Strategy …
Specific Strategy
Low
Medium
Specific Strategy
Checklist for transformation risk assessment: 1. 2. 3. 4. 5. Have all general project risks been identified? Have all risks specific to each alternative been identified? When evaluating the probability and impact of each risk, have the specifics of each alternative been taken into consideration? Has a risk mitigation strategy been identified for unacceptable levels of risk? Have the risks related to status quo been identified?
10 Cost/Benefit Analysis
Provide the reader with an evaluation of the costs and benefits associated with each viable alternative. The reader should be able to easily understand and compare the developmental, implementation and ongoing expenditures to the expected financial and non-financial benefits for each viable alternative. It might be important to remember what Tom DeMarco and Timothy Lister warn about in their book Waltzing with Bears: Managing Risk on Software Projects: “Costs and benefits need to be specified to equal precision.” In other words, if the value proposition for a project is “We gotta have it,” then the cost estimate should be “It’s gonna be expensive.”
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Transformation Business Case
10.1 Quantitative Analysis – Financial Costs and Benefits
This section may be omitted when the purpose of the document is only to identify transformation opportunities. Full Cost Analysis Where possible, all costs and expected benefits resulting from this opportunity should be analyzed for each viable alternative (including the costs and benefits of status quo). This methodology provides the reader with a total cost picture and is much more informative that an incremental approach. Any detailed worksheets should be attached as an appendix. Incremental Cost Analysis If it is not possible or practical to fully analyze the entire cost, or where the incremental project costs are relatively small to the entire cost, an incremental approach may be used. This methodology involves identifying the changes or differences between each alternative using the projected benefits/costs of the status quo alternative as a basis. Time frame Identify an appropriate project time frame over which both the cost and benefits will be analyzed. Time frame should be appropriate to the expected lifecycle of the project, from incurring costs to achieving the anticipated benefits. Costs Identify all relevant costs incurred by all stakeholders over the project’s time frame: direct costs indirect costs initial/developmental costs implementation costs ongoing costs capital costs total cost of ownership
Consideration should be given to the following: when the costs will be incurred who will incur the costs certainty of costs
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Treasury Board of Canada Secretariat Benefits Identify all quantifiable benefits related to all stakeholders over the project time frame. Consideration should be given to the following: when the benefits will be achieved the recipient of the benefits certainty of benefits
Benefits should be expressed in terms of outcomes (tied into the Program Logic Model and Results Based Management). They should highlight the link to the original problem identified in the “needs to be met.” For every benefit identified here, there should be a corresponding strategy statement that will show how these benefits will be achieved. It is not sufficient to merely state what the benefits are expected to be. It is critical that these be thought through and a viable implementation strategy be developed for each. An example of a summary cost benefit template Summary of Quantitative Cost/Benefit Present Value of Benefits Present Value of Total Costs Net Present Value of Project Viable Alternative 1 $ $ $ Viable Alternative 2 $ $ $ Viable Alternative 3 $ $ $
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Transformation Business Case An example of a costing template for each viable alternative Quantitative Analysis – Viable Alternative 1 Benefits: Revenue Costs: Analysis Design Implementation Ongoing Operational Costs: Human Resources Administration $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Net Benefit or Cost of Viable Alternative 1 Net Present Value (xx% discount rate)
$ $
$
$
$
$
$
If there are some assumptions that have a significant impact on the cost or benefit, a sensitivity analysis should be presented. Contingency allowances or interest rate premiums should be used to account for differences in certainty or risk. The cost/benefit analysis should be reviewed for validity through the use of benchmarks, experience of other organizations, industry data etc. This would include the use of a public sector comparator for public-private partnership projects.
10.2 Qualitative Analysis – Non-Financial Benefits and Costs
Some of the costs and benefits may not be quantifiable (i.e., difficult to attach a dollar value). For example, non-quantifiable benefits could be increased customer satisfaction or increased staff morale and non-quantifiable costs may be reduced corporate image or adverse public perception. Where reasonable, these should be translated into quantifiable benefits (e.g. increase in staff morale may lead to high productivity, which may lead to less overtime). The non-quantifiable cost/benefits should be summarized using the table below.
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Treasury Board of Canada Secretariat Viable Alternative 1 Viable Alternative 1 Qualitative Summary Benefits: Benefit 1 Benefit 2 Description of Benefit 1 Description of Benefit 2 Description Stakeholder(s) Impacted
Costs: Cost 1 Cost 2 Description of Cost 1 Description of Cost 2
10.3 Assumptions
All assumptions used to determine both quantitative and qualitative costs and benefits should be clearly documented. This would include general assumptions as well as assumptions specific to each alternative.
Checklist for cost/benefit analysis: 1. 2. 3. 4. 5. 6. 7. 8. Have all quantitative costs and benefits been identified? Have all qualitative costs and benefits been identified? Is the time frame appropriate considering the expected life span of the project? Can any of the non-financial items be converted to financial items? Are all the assumptions clearly identified? Have all common or general assumptions been applied consistently to each alternative? Have assumptions been reviewed to identify the sensitivity of their estimate on the impact of the results? Have benchmarks, the experience of other organizations, and industry data been used to validate costs and benefits?
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Transformation Business Case
11 Selection and Recommendations
Provide the reader with a selected alternative based on an overall evaluation of the alternatives in terms of impact, risk, and cost/benefit. Specific recommendations for moving the project forward are also presented.
11.1 Selection
Recap each of the alternatives based on their Business and Operational Impact, Project Risk Assessment, and Cost/Benefit Analysis. Based on these results, one alternative should be chosen. Alternative Alternative 1 Alternative 2 Alternative 3 Business and Operational Impact Describe overall assessment Describe overall assessment Describe overall assessment Transformation Risk Assessment Describe overall assessment Describe overall assessment Describe overall assessment Cost/Benefit Analysis Describe overall assessment Describe overall assessment Describe overall assessment
Choose the alternative based on the above recap, selecting the one that maximizes the effectiveness and efficiency while minimizing risk and cost.
11.2 Recommendations
Make specific recommendations on proceeding with the project. The extent of the recommendation may range from suggesting approval for full project implementation to requesting that a more detailed requirements analysis be done to validate some key business case components.
11.3 Transformation Responsibility
Recommend a project manager who will have responsibility for managing the implementation. This section would include any additional governance aspects related to cross-government projects.
11.4 Transformation Accountability
Recommend a project sponsor who will have overall accountability to ensure the project is completed. This section would include any additional governance aspects related to cross-government projects.
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Treasury Board of Canada Secretariat
11.5 Implementation Strategy
Ensure that those approving the business case understand the resources they must allocate ― people, dollars, time ― to complete the recommended next steps of the project. Outline the proposed implementation plan for the recommended next steps at a high level. Enough detail should be provided so that those approving the business case understand the resources they must allocate ― people, dollars, time ― to complete the recommended next steps of the project. The strategies must detail how the benefits will be achieved. For example, if the benefit has been expressed as a savings of 10% and if some of these savings are coming from job cuts, then the strategy must explicitly show how these will be achieved (e.g., cannot cut 10% of one individual job, therefore how are these savings going to occur). The section should include the following: major project phases high-level work plan, deliverables and target dates for completion costs required to carry out the implementation plan personnel (departments, roles) required proposed project structure assign responsibility for implementing and monitoring the risk mitigation strategies
12 Review and Approval Process
Indicate how the business case has been reviewed and approved and by whom. This section will also contain the final outcome of the business case. If approved, the evidence of the approval should be included. If not approved, the business decision behind either rejecting the project or deferring the project should be documented.
12.1 Review Process
Indicate who will review the business case.
12.2 Approval Process
Describe what the approval process is and who is involved. The business case should be signed and dated by the approving individual(s), indicating whether or not the business case is approved. If applicable, approval conditions should be identified. If the business case is not approved, reasons for the decision should be documented.
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Transformation Business Case
Appendix A: Glossary
Definitions, Acronyms, and Abbreviations
This section should provide the definitions of all terms, acronyms, and abbreviations required to understand this document. This information may be provided by reference to the BTEP Glossary and/or to an existing glossary in the problem domain. NOTE: The use of acronyms should be reserved for GoCs departments, agencies, Crown corporations, and their component branches, sectors, or directorates.
References
This section should provide a list of all supporting documents referenced in the body of this document. For each document, provide the title, version, date, publishing organization, and source from which a copy of the document can be obtained. This information may refer the reader to a document management system or library where the document is housed.
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