Business Case Development

Definition

Business Case Development

the requirements engineering task during which the business case for the development or enhancement of a system, application, or component is produced

Classification

As illustrated in the preceding figure, Business Case Development is part of the following inheritance hierarchy:

• Type: Abstract
• Superclass: Business Analysis
• Subclasses:
  • None

Responsibilities

The typical responsibilities of Business Case Development are to:

• Determine whether or not to develop or enhance a proposed system,application, or component.
• Compare the relative marits of competing potential systems,applications, or components.
• Develop and document the business cases for the recommended system,application, or component.

Preconditions

Business case development can typically begin when the following preconditions hold:

• The business strategy phase has begun.
• The business strategy team is staffed and adequately trained in business case development.

Completion Criteria

Business case development is complete when the following postconditions hold:

• The business case has been completed, evaluated, and approved by the authorized customer representative.

Steps

Business case development typically involves the business strategy team performing the following steps in an iterative, incremental, and parallel manner:

• Analyze the proposed new [versions of] applications or components by performing:
  • Cause and effect analysis to identify, analyze, understand, and document the [root] causes and effects of the problems to be solved by the proposed applications or components.
  • Perform cost/benefit analysis to estimate the cost avoidance (or savings), identify the benefits, and compare the costs and benefits of the proposed applications or components.
  • Perform investment opportunity analysis to determine the financial attrativeness of alternative applications or components (e.g., return on capital, after-tax rate of return, return on investment).
  • Perform pareto analysis to identify the most important factors impacting the success (i.e., critical success factors) or failure (e.g., major risks) of the proposed applications or components.
  • Perform payment analysis to determine the number of time periods required to recover the investment in the proposed applications or components.
  • Perform sensitivity analysis to anayze how sensitive important values (e.g., profit, return on investment) are to minor changes in input parameters.
  • Perform trend analysis to understand trends in important values that affect the decision on whether or not to develop the proposed applications or components.
  • Perform value chain analysis to evaluate the impact (via a decision tree) of the proposed application or component.
• Document the result of these analyses in the associated business case documents.

Techniques

Business case development can typically be performed using the following techniques:

• Cause & Effect Analysis
• Cost/Benefit Analysis
• Investment Opportunity Analysis
• Pareto Analysis
• Payment Analysis
• Sensitivity Analysis
• Trend Analysis
• Value Chain Analysis

Work Products

Business case development typically results in the production of the following work products:

• One or more business cases

Guidelines

• Business case development is definitely required for business engineering projects.
• Some level of business case development is usually needed to provide a foundation for application development.
• Business case development is usually performed during the business strategy phase, but it can also be performed of during the initiation phase if insufficient business [re]engineering was required to justify a separate business strategy phase.