As one salesperson told us recently; ‘I have seen more business cases in the past year than I have in the previous 19 years’.
With budgets being squeezed, projects and purchases must increasingly compete for scarce organizational resources. The reality is the business case is now more important than the sales proposal.
The emergence of the business case as the prime factor in organizational spend decisions obviously presents advantages for those sellers who can demonstrate the business justification for their solution.
If a vendor wants to win the sale, they must at least input to the preparation of a credible and compelling business case. Traditional features and benefits message are no longer adequate.
What your solution does and how it does it, including the technology involved, is the stuff of traditional sales presentations, but not a business cases.
The reality is that many buying decisions are made when the salesperson is not in the room, by a sceptical audience that the sales person may not have met, based on information which the salesperson has had little, if any input to. Traditional feature led sales pitches are out of touch and won't cut it in the boardroom.
The Compelling Business Case.
Whether your sales goes ahead will depend on a ‘to the point’ value equation, that reflects not only costs, benefits and risk, but also how the project will contribute to the achievement of broader organizational goals and strategies. That is the new reality of the business case sale.
A compelling business case is not just important in getting the sale, it is also essential to ensuring successful implementation and developing long term client relationship. As one buyer said to us, "the business case is also playing a role in guiding, tracking and managing project success, it may no have done in the past but it is now".
A Review of Business Case Best Practice.
In order to guide you in your new role as business case facilitator to your prospect we have reviewed the work of 9 of the leading experts in this space (the list is at the end.)
Specifically, this article presents an overview of the key advice from specialist books written for buyers on how to develop a business case and sell their projects internally.
The Business Case and Success.
The business case is not just a means of optimizing the allocation of scare organisational resources among competing projects. It is also an important means of ensuring project, as well as organisational success.
Let us take IT projects as an example. Everybody knows that most IT projects run into problems - the Standish Group and other figures are familiar to us all. However, the cause of those problems is often misdiagnosed.
Indeed, most of the experts suggest that the number one reason for the failure of IT projects is a poor business case, or no business case at all. That is not just failures in terms of delivering on time and within budget, but more fundamentally for IT to impact on business success.
Cost overruns are often not the result of overspending, but of underestimation of costs at the planning and budgeting stage. Indeed, the problems with most projects can be traced back to their inception and planning. The business case has an important role to play in making sure projects get started, but also stay on track.
Business Case Quality Issues.
Some of the experts suggest that expenses claims were subjected to more scrutiny than business cases for the purchase of multi-million pound IT systems!
All too often the business case was seen as bureaucratic, as opposed to a strategic exercise. As a result, many business cases were prepared to justify a desired choice of action, as opposed to presenting management with the information required to evaluate, select, manage and track projects in terms of their impact on the organizational success. Times have changed whether it is an external purchase, or an in-house solution, the development of a robust business case is now essential. As sales people we need to ensure we keep our focus on the how (the features, the technology, the solution) and the why (the business case).
12 Tell tale Signs of Poor Business Cases
Based on our experiences and the experiences of nine leading experts in the field, here are 12 telltale signs of poor business cases:
2. Absence of cross functional involvement
3. Failure to engage with stakeholders and their needs, creating buy-in in the process
4. Failure to adequately define scope and requirements
5. Failure to present a menu of alternatives and options, in the context of business drivers and constraints
6. Lack of feasibility study type information and scientific validation, or data
7. Failure to address how the project fits with the organization’s strategy and past decisions.
7. Failure to address how the project fits with the organization’s strategy and past decisions.
8. Failure to conduct an accurate, robust, and credible cost – benefit analysis, underscored by clear and realistic assumptions
9. An overly simplistic analysis of project related risk, or implementation issues (governance, control.)
10. An overly simple view: The business case is prepared and presented; but it has limited value throughout the project lifecycle
11. Lacks structure and process for completion / agreement
12. Weak investment analysis
Business Case - Document, or Process?
Underpinning many of these problems is the fact that the business case is often seen as a document, rather than a process. This is particularly the case in the absence of corporate standards with regard to:
· How a business case should be completed
· What it should contain
· Who should be involved
· How it will be evaluated
· What templates are to be followed
The single most important factor in terms of business case preparation is the process involved, in that any business case is only as good as the process by which it is prepared. Also the process of business case preparation is iterative, evolving to reflect changing needs and requirements.
The Full Life cycle Business Case.
All too often a business case document is hastily prepared and then once the project is given the green light it is put aside. A business case should be a living document, that:
· Guides implementation
· Tracks progress
· Manages change requirements and helps the seller and buyer
· Enables management to assess if projects are delivering as expected and if corrective action is required
Business Case - Attractiveness and Achieveability.
A business case is concerned with 2 dimensions of a project – attractiveness and achievability. So it is not enough to include just a cost and benefits justification.
The business case must also address how achievable it is, including for example a register of risk, as well as details of implementation, governance and control.
When it comes to the economic analysis, it is important to realize that people often have a genuine difficulty with numbers and in particular in working with spreadsheets. That is not withstanding the challenge that may be presented in terms of the monetization of benefits, particularly in the case of less tangible ones.
All of the above is a lot to take in, as sales people we need to develop our business case development skills.
The business case must also address how achievable it is, including for example a register of risk, as well as details of implementation, governance and control.
When it comes to the economic analysis, it is important to realize that people often have a genuine difficulty with numbers and in particular in working with spreadsheets. That is not withstanding the challenge that may be presented in terms of the monetization of benefits, particularly in the case of less tangible ones.
All of the above is a lot to take in, as sales people we need to develop our business case development skills.
1 comment:
As specialists in building business case capability, we support your findings. Business Development Managers are attending our business case seminars as they see the linkage with sales success.
To quote world reknown Business Case author, Dr Marty Schmidt - Business case analysis has become mandatory for important decision making and planning in government, business, and nor-profit organizations everywhere. As a result, most case-building responsibilities now belong to people who are not "finance" people. Fortunately, the difference between a strong case and a weak case has very little to do with finance.
Everyone talks about the business case but surprisingly few people really know what that means.
That was true in the early 1900s, when business case analysis was born along with a new, developing discipline called finance. In those days, most people thought that business case analysis was "finance." They thought the job of building and using case results should be left to financial specialists.
Lack of business case understanding is pervasive in 2008, as well, but there's a difference: more than 90% of the professionals called on to produce or use case results today are people who do not practice finance for a living*. More than 90% of the people who participate in "Building the Business Case" seminars are not finance people. They generally have little or no financial background. They are product managers, IT managers, agency directors, sales people, engineers, training consultants, and hundreds of other things that are not "Finance." Now, it is they who are asked to build the case. What happened?
We know that the economy is difficult and that the tolerance for management error is approaching zero. In this climate, business case analysis has become mandatory for important decision making and planning in governments, businesses, and non-profit organizations everywhere. Does this mean we all need more "finance"?
Fortunately, the difference between a strong case and a weak case has very little of to do with finance and everything to do with understanding a few simple elements of case design.
For business case resources and information on in-house and public seminars, visit:
www.solutionmatrixpacific.com
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