Business Case

Definition

Business Case

the business (re)engineering requirements work product that documents the justification (from a business standpoint) for producing a [new version] of a:

• Business Enterprise
• System
• Application
• Component
• Center

Objectives

The typical objectives of a business case are to:

• Ensure that any decision to develop is based on sound business reasons.
• Justify the development of the business enterprise, application, component, or center.

Benefits

The typical benefits of a business case are:

• It provides a foundation upon which to develop the associated business vision statement.

Contents

The typical contents of a business case are:

• Market Summary
• Current Solution(s):
  • Solution X
    • Strengths
    • Weaknesses
    • Gap Analysis
• Competition:
  • Competitor Y
• Business Opportunities
• The Solution(s):
  • Recommended Solution(s)
  • Alternatives Considered
• Analysis:
  • Cause & Effect Analysis,
    which documents the [root] causes and effects of the problems to be solved
  • Cost/Benefit Analysis,
    which estimates the cost avoidance (or savings), identifies the benefits, and compares the costs and benefits.
  • Investment Opportunity Analysis,
    which documents the financial attrativeness of alternative applications or components (e.g., return on capital, after-tax rate of return, return on investment).
  • Pareto Analysis,
    which identifies the most important factors impacting the success (i.e., critical success factors) or failure (e.g., major risks) of the proposed solutions.
  • Payment Analysis,
    which documents the number of time periods required to recover the investment in the proposed solutions.
  • Sensitivity Analysis,
    which documents how sensitive important values (e.g., profit, return on investment) are to minor changes in input parameters.
  • Trend Analysis,
    which trends in important values that affect the decision on whether or not to develop the proposed solutions.
  • Value Chain Analysis,
    which documents the impact (via a decision tree) of the proposed solutions.
• Recommended Actions To Be Taken
• Conclusion
• Appendices:
  • Major Issues
  • TBDs
  • Assumptions

Stakeholders

The typical stakeholders of a business case are:

• Producers:
  • Business Strategy Team
  • Technology Strategy Team
• Evaluators:
  • Strategy Inspection Team
  • Customer Organization, which inspects the content for correctness
• Approvers:
  • Technical Leader
  • Project Manager
  • Customer Representative
• Maintainers:
  • Business Strategy Team
  • Technology Strategy Team
• Users:
  • Customer Organization, which uses it to understand and communicate the goals of their business.
  • Business Strategy Team, which uses it to develop the business vision statement.
  • Requirements Team, which uses it as an input to the application vision statements.

Phases

A business case is typically produced during the following phases:

• Business Strategy: Completed
• Business Optimization: Maintained
• Initiation: Not Applicable
• Construction: Not Applicable
• Delivery: Not Applicable
• Usage: Not Applicable
• Retirement: Not Applicable

Preconditions

A business case typically can be started if the following preconditions hold:

• The business strategy phase is started.
• The business strategy team has been staffed and trained in business case development.
• The customer analysis has been started.
• The market analysis has been started.
• The technology analysis has been started.
• The user analysis has been started.

Inputs

The typical inputs to a business case include:

• Work Products:
  • Customer Analysis
  • Market Analysis
  • Technology Analysis
  • User Analysis
• Stakeholders:
  • Customer Representatives
  • Business Domain Experts
  • Business engineering Domain Experts
  • Competitor Domain Experts
  • Marketing Domain Experts
  • Marketplace Domain Experts
  • Partner Domain Experts
  • Technology Domain Experts
  • Vendor Domain Experts
  • Usability Domain Experts

Guidelines

• This is a living document that is developed incrementally and iteratively in parallel with other documents.
• This document should typically produced during the business strategy phase of a business reengineering project However, it may also be either created or updated during the initiation phase of an application development project.
• Clearly and convincingly summarize the business justification in the executive overview.
• Document alternatives because decisions can only be made relative to alternative choices.
• Where practical, use money (e.g., present value) as a common denominator to avoid “comparing apples with oranges.” For example, quantify tangible benefits in monetary terms.
• Be conservative with the finanical numbers to avoid being discredited for being overly optimistic.
• Where practical, consider both quantitative and qualitative factors. Use qualitative factors to make choices when quantitative factors are close.
• Where practical, use ranges of cost and benefit estimates.
• Focus on the business issues, rather than the technical issues.

Conventions

The business case is typically constrained by the following conventions:

• Content and Format Standard
• MS Word Template
• XML DTD
• Inspection Checklist

Examples

• Example Business Case