Transcript from Michele Grayâ€™s video interview June 2009
Getting the business case right
Michele Gray’s Biography
Senior Director of Global Consulting, ADP Michele is Senior Director of Global Consulting and is responsible for pre-sales consulting support for ADP’s HRO global & regional prospects. She has extensive consulting experience HR BPO, organizational development and change management. She joined ADP in 1999 initially heading up the UK-based business consulting team working with multinational companies that sought to leverage ERP technologies and outsource their payroll. Athough Michele is based in the UK, she travels extensively thoughout Europe. She can be reached at: firstname.lastname@example.org
Transcript from Michele Gray’s video interview Watch the video
Reasons for the business case [10s – 1mn15s] It is crucial to understand the timing for the business case as well as its decision-making cycle. Put simply, the business case makes sense only if its purpose is clearly identified. Depending on needs, two types of business cases can be identified. The first one is a high-level and indicative business case. Its main purpose is to evaluate the potential savings that can be generated from a project. This high-level business case is often used as a justification for investment. It is the first step to secure funding for a project.
Another form is the detailed business case. It is used when the time has come to precisely detail and validate the project’s costs as well as its expected savings. Both forms of the business case are useful and have to be used according to whether the situation calls for securing funding at the initial stage of a project or having the project finally validated by the board members.
Detailed business case [1mn16s – 2mn16s] Companies that are working on a detailed business case are often doing it when they are in the contract finalization phase with their service provider. The business case is used to validate the savings that can be expected in the end.
At this stage of the project, the company has already agreed on the project’s scope and its geographical coverage as well as the service level that will be delivered by the provider. The business case is designed to determine future costs, split responsibilities and detail the savings as well as the way they will be generated.
High-level business case [2mn17s – 4mn06s] The high-level form of the business case is often used as the first justification for a project. In a climate where funding for new projects is limited, it is crucial to be able to demonstrate where potential savings can be made. Nevertheless, considering a business case from only cost savings perspective would be limited. Cost savings are with no doubt a prerequisite of any business case. However, many decision makers are also looking for the additional business value that any project can bring.
In other words, the project’s stakeholders are also interested in the benefits beyond the most obvious cost savings: strategic benefits that will enable a company to set-up its future strategy, facilitate the migration to any new activity or enable it to integrate new businesses faster and manage its international expansion. The role of the business case is to enable a company to articulate different objectives in a single document in order to validate the feasibility of its project.
Gathering accurate data [4mn07s – 5mn00s] In most situations putting together a business case is the best opportunity to assess the quality of the information available in a company. After all, building a business case is all about putting the right data together in order to make projections. Not getting the right data is a problem that can’t be ignored. In situations when exact data cannot be collected, companies and their service provider
will have to base the business case on assumptions and extrapolations. The usual practice is to work on early studies available in the company or to extrapolate results based on significant examples of costs and/or processes that already exist in the company. This approach is valid as long as the assumptions and extrapolations are clearly documented.
Wrap-up [5mn01s â€“ 5mn52s] Getting the business case right is all about timing
and purpose. The purpose of the business case wonâ€™t be the same according to your projectâ€™s status and the objectives you want to achieve in your organization. This is when it is important to determine what form of the business case to present as well as to be clear on the data on which all your assumptions and projections are based.
A business case is also designed to offer a detailed view of a problem and the potential solutions for the company. It is crucial to identify the people who will read it even before putting it together. The ultimate goal of any business case is to convince an audience to support a specific project. Tangible and intangible benefits have to be clearly detailed.