Business Case
Ganesh Botcha, Ajoy Chatterjee
16 Nov ’15, Monday
Agenda
# Topic
Speaker
Minutes
1
What is Business Case
Ganesh B
2
2
Key Value Drivers and Life Cycle
Ganesh B
3
3
Business Case Elements
Ganesh B
5
4
Description of each BC Element
Ganesh B
10

Problem, Alternatives, etc.,
5
What happens when BC is submitted
Ganesh B
5
6
Business Case Template
Ganesh B
5
7
Business Case in Agile
Ajoy C
5
8
Agile ROI
Ajoy C
5
9
Agile Impact
Ajoy C
5
10 References
Ajoy C
5
11 Q&A
Ganesh B, Ajoy C
10
What is a Business Case?
 Business Case is created to convince a decision maker to approve
the Investment for a Project.
 Business Case explores all feasible approaches to a given problem
and enables business owners to select the option that best serves
the organization.
 It provides the reasoning for initiating a Project with various
details viz., problem definition or new opportunity, alternative
solutions considered, expected costs, expected benefits/returns
and risks involved.
Why to create Business Case?
 Business Case helps Senior Management to evaluate and prioritize the
Project Proposals based on Strategic Alignment with Organizational Goals
and Business Objectives; Expected Costs vs Benefits, etc.,
Key Value Drivers for a Business
ORGANIZATION
Productivity, Operational Efficiency, Agility, Low
Costs, High Profits, Reduce Risks
CUSTOMERS
Product Features, Timely Delivery, Low Price,
Warranty, Politeness, Relationship
EMPLOYEES
INVESTORS
Job Security, New Learnings, Career Growth,
Work Life Balancing, Better Pay, Ethics
Low Investment, High and Quick Returns
SUPPLIERS - Order Volumes, REGULATORY - Compliance, SOCIAL, etc.,
Value Lifecycle
Phase 1
Value Identification
Phase 2
Value Delivery
Phase 3
Value Realization
Business Cases Created
Projects Executed
ROI Calculated
Business Case Elements
Problem /
Opportun
ity
Next
Steps
Future
State
Alternate
Solutions
Expected
Returns
Business Case
Investmen
t Costs
Recomme
ndations
Timeline
Resource
Requirem
ents
Problem Definition
 What Business Problem we are trying to solve?
E.g.:
 Install new hardware and software to improve our customer service to world class levels
 Vs
 Respond to 95% of our customers’ inquiries within 90 seconds with less than 5% callbacks
about the same problem.
 Define In Scope and Out of Scope
 Why we need to take this up at this time (what value it will add to the
business)?
 What are risks to Business if we do not take up this initiative now and what
decisions need to be made to move forward?
Future State, Alternate Solutions, Recommendations
Future State
• Desired State and Goals
• Gaps between current and future states
Alternate Solutions
• These are various paths available to solve the Business
Problem at hand or to get to the Desired state
• Analyze Alternatives based on Functional Features
offered, Product Performance, Service Level
Agreements, Product Cost, Market Share, Gartner
Quadrant Rating, Successful Case Studies, Customer
References, etc.,
• Provide Recommendations on Preferred Alternatives.
Resource Requirements, Timeline
• Resource Requirements
–
–
–
–
–
Hardware
Software
Network
Project Team and Skillsets
Office Space
• Phones, Printers, etc.,
– Conference Rooms
• Projectors, WebEx, Video, etc.,
– Access
• Timeline
– What is delivered and when
– When do we want each resource
Cost/Budget
• Capital Expenditure (CAPEX)
– Direct up front Development Costs – Labor, Non Labor,
Training, Travel, etc.,
• Operational Expenditure (OPEX)
– Direct Ongoing Maintenance Costs for running a
product, business, or system.
• Indirect Costs
– Facility expenses such as rent and utilities, etc.,
• Total Cost of Ownership
– Direct Costs (CAPEX + OPEX) + Indirect Costs
Approaches to Calculate Returns
• Tangible
• Break Even - How much revenue/units does the business need to
produce in order to become profitable (more the better)
• Payback Period - The time required to recoup the funds spent on an
investment, or to reach the break-even point.
• Net Present Value (NPV) - difference between the present value of cash
inflows and the present value of cash outflows
• Positive NPV is better
• https://www.youtube.com/watch?v=zGRVVSC4UUQ
• Internal Rate of Return - Internal rate of return (IRR) is the interest rate
at which the net present value of all the cash flows (both positive and
negative) from an investment equals zero.
• https://www.youtube.com/watch?v=hzZLYRv-sXE
• Intangible
• Improved Customer Satisfaction, Risk Reduction, etc.,
What happens after Business Case is submitted?
BC 5
BC 4
BC 1
BC 2
BC 3
Governance
• Governance Team reviews
proposed Business Cases
from the point of view of
strategic alignment, business
unit priorities, effectiveness
of solution to the problem,
required capabilities,
efficiency improvement,
costs vs returns to each
stakeholder, etc.,
Funded Projects
• Uses selection criteria to rank
the proposals and determine
which business cases need to
be funded
Business Case Template
Business Case in Agile
• Business Case in Agile is based on one basic fundamental – GEGS
• Good Enough to Get Started – Which means, you are good to start a
project upon an initial cost, which is fund the initial investigation into the
product and a couple of achievable timebox-ed iterations
• Which also means, do not over estimate, beyond a point that you can not
see
• As the product or work toward the product progresses, more value is injected
in terms of features. Hence it’s a value driven benefit which is reviewed
constantly during the life cycle
• Less Risk
• Faster ROI and continuous evaluation
• Full return may not materialize, but faster return reaches to business in
form of MVP
• It’s the Budget, not the Cost
• It’s not the cost to deliver the full return upfront but the budget available
to the sponsor, or that sponsor is willing to fund based on his/her evolving
goals
• Does not mean Estimation is not the Key
• Right Estimation and Right Stakeholders at Right Time
ROI in Agile
•
•
•
•
•
•
Faster Return
Faster Value
Faster Time to Market
Faster and Higher Profit
Higher Flexibility
Higher Quality
Agile Impact
“The Business Value of Using Agile Project Management for New Products and Services” by Dr. David Rico
References

Business Case Analysis Book


Business Case Analysis


http://www.information-management-architect.com/business-case-analysis.html
Business Case Essentials


By James W. Brannock
https://www.business-case-analysis.com/business-case-essentials.html
Business Case

https://en.wikipedia.org/wiki/Business_case
Questions?