Reduce complexity

How to build a compelling business case

Focusing on realisation of effects through high credibility and reduced complexity

One of the major pitfalls of working with a business case is that it becomes too complex, and it is unclear who owns the effects of the project. Fundamentally, focus has to shift from calculations to conditions for calculations – what assumptions have we made in order to create the basis for decision-making?

How to build a compelling business case

Today, nobody pays much attention to how the calculations were made (often because it is unclear how data have arisen), or if it in fact makes any sense at all to calculate all costs and effects.

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It seems as if figures in a calculation model have more value, simply because they are there – not because the conditions and assumptions are in order. In consequence, organisations typically face three overall challenges: unclear ownership of the business case and its effects; challenges in relation to identifying the right potential; lack of realisation of effects.

Our approach

This article will present an approach to the business case, which is based on few and clear conditions to which a steering committee/decision-maker can relate. The method ensures an answer to the very important question “why this project?”, and, furthermore, it ensures that we are able to quantify and follow up on the results of the business case in a meaningful way.

Implement Consulting Group’s business case method is based on the principles of reduced complexity and clear roles in the project. Often, the key to this is strong involvement of stakeholders, experts, leaders etc. In order to create ownership, all involved parts of an organisation need to be able to see the value of the planned change. The organisation has to see the “what is in it for me?” perspective, which means that the business case should also contain elements of risk analysis and stakeholder analysis, where particularly the concept of trust is essential.

Thus, the business case has to provide an answer to whether we believe that change can be implemented with impact. This demands strong involvement of leaders and key employees in the development of the business case, and the roles as project owner and project manager are essential. In short, a “dynamic duo” must be formed between project manager and project owner – which turns into a trio when the effect owner is included.

Jesper Krøyer Lind
Jesper Krøyer Lind
+45 3085 8002

An involving method creating anchored business cases without using additional resources

By adding involving methods and tools to a scientific process, project groups become better equipped for developing the right business cases with high success rates.

Step 1 – The purpose of the project

When we create an overview of the purpose of the project, we break down goals and establish a goal hierarchy. The goal hierarchy provides an overview of purposes and related success criteria which the project is to realise over time.The success criteria measure backwards on the success of the project, while effects point forward by being realised over time in an operational situation. Therefore, it is important to create a clear connection between the success criteria of the project and the effects which the business has to realise after project completion.

Step 2 – Proposed costs and effects

When we create an initial overview of costs and effects, we use a very simple method which is based on the principle of challenging opportunities rather than possible challenges. By using a simple approach, we make the first estimate of the costs that are included in the project and the effects which we would like to realise through the project. We recommend working with “the grid” method on posters or Post-its on the wall of the project room. When we use “the grid” method, we work with three classic types of costs and effects: non-recurrent costs/ effects, recurrent costs/effects and non-financial costs/effects.

Step 3 – Breakdown of effects

When we break down effects into a hierarchical structure, the aim is to break down effects into measurable units. The breakdown is based on the effects which were identified in “the grid”. It is important to involve experts from the project group as well as people from the business who will later realise the effects of the breakdown in order to ensure the correct structural connections and at the same time support the ownership of the achieved effects.

Once the effects have been broken down into measurable units, we place them on a timeline to get an overview of when we expect each individual effect to be realised. We set a date for when we expect each effect to be realised, and, subsequently, we plan when we want the effects to be realised – we call this timing. When we have timed and dated the effects, it is important to focus on and identify the early indicators of effect. Early indicators are the first signs that we are moving in the right direction in relation to being able to realise the effect. Often, these are effects that can be detected as changed behaviour of the employees who later realise the desired business effect.

An involving method continued

Step 4 – Conditions diagram

Now we are ready to set up the business case as a conditions diagram. It is a question of “turning” the breakdown of effects into a horizontal level and breaking down cost types into measurable units. The conditions diagram is a type of “reading instruction” for the business case, and through the specified methods we ensure that the conditions of the business case are made clear to the reader. This provides an overview of the conditions, which can then be challenged in the steering committee before the final calculation model is established.

Our experience is that this particular process and breakdown into tree structures provide an overview as well as ownership because we accept the structure during the process. It may also be a good idea to involve experts from the project group as well as people from the business or management for final quality assurance of the conditions.

Step 5 – What we need to include in the calculation model

We determine the strategy for realisation of effects by identifying the quantifiability of the effects in relation to their traceability to the project. Quantifiability indicates the degree to which we can put actual figures on the effect. Traceability indicates to what extent we can trace the realisation of each effect back to the concrete project.

The purpose of this exercise is to strengthen the credibility of the business case. If the value of effects is included but not well-documented, there is a great risk that key stakeholders will perceive data as unreliable, and thus it will be more difficult to establish ownership and support from these stakeholders for the business case. Should it later turn out that it is possible to quantify these effects, they should of course be included in the updated business case during the course of the project. This is easily done because the structure of the business case has already been documented in the conditions diagram, and, therefore, the connection between each individual effect is easy to trace.

Step 6 – Developing the business case

Finally, we develop the business case with a calculation model and text. The calculation model contains costs and business effects, while the text version contains a summary (graphs and tables) of the calculation model and a description of the behavioural effects (and non-financial effects). When we develop the business case, it is important to consider the choice of calculation model in relation to the need for documentation of calculations.

As a main rule, the choice of a detailed calculation model will increase the level of complexity of the business case work, and it requires involvement of several experts and more in-depth business case knowledge for those employees who are to work with the business case in the project. Often, a calculation model with a medium level of complexity, in which the main conditions have been calculated and documented in the conditions diagram combined with a textual description, is the preferred solution.

Strong involvement and ownership

The appropriate anchoring is a must for the realisation of effects. Anchoring is best created through involvement where key stakeholders are involved in the business case work. One of the main points is to include the right people in the initial phase of the project. Basically, one should remember to involve the people who are to own the effects. In the business case work, we work with three concrete roles which we call a “dynamic trio”: The project owner, the project manager and the product owner. By focusing specifically on these three roles, we gain a better understanding of the project, its deliverables and effects.

As it appears from the method, one of the keys to succeeding with a compelling business case is to involve the right people in the project. Our methods provide an opportunity to observe, who actually has something to contribute with, and who is there for more “political” reasons. Using the involving methods, it becomes clear who can clearly answer the question “what is in it for me?”, and who has more strategic input to the business case. This allows the project manager to focus on those stakeholders who are to own the effects and leave the political clarification to the steering committee executive – which is the point of the dynamic trio. Conversely, this requires the relation between the three roles to be close, open and based on trust.

The above text is an extract – you can download the entire article at the top of this page.