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BUILDING A BENEFITS-DRIVEN BUSINESS CASEWhy produce a business case?Another interesting statistic:Justifying the investment – Once upon atime, IT investment was seen as “a goodthing” per se, but in this highly competitiveage, as with any change in the business,investment in IT has to be seen to offerbenefits to the business: results such asreduced transaction costs, improvedcustomer service or increased margins. ITinvestment must compete on an equal footing with any other business investment. In a survey of over 700 sites by CSC,82% of respondents said that their ERPimplementation was successful, but only22% said that they had achieved theanticipated benefits.Reducing the risk of failure – Due to thehigh profile of many projects and theassociated bad news whenever a failureoccurs, management is much more awareof the potential risks of IT projects, and weall want to avoid being associated with afailed project. If a sound, logical, justifiedcase can be put forward, showing benefitsto the business, it is possible we can reducethe risk or at least put the project on asound footing.There are three questions here.1 If only 22% could say they achievedanticipated benefits how could theother 60% know that their projectwas successful?2 How do you measure success if not bybenefits to the business?3 Why could only 22% say they achievedthe anticipated benefits?This is where reasons for failed projectsrelate to the subject of this article. Thereare many reasons why a project can fail. “A project is 60 percent more likely to beapproved with a cost justification andbusiness case.”Gartner “More than 82 percent of IT decisionsnow require a cost versus benefitanalysis.”Information Week “Return on investment is king, andprojects with a quick and clear costversus benefit are much more likelyto get funding in today’s uncertainbusiness climate.”The Industry StandardIn all the above statements, the idea ofbenefits comes through, either implicitly ina cost justification, or explicitly.6You will need to do a lot of preparatorywork before you can produce your case.For example, you will need to understandthe decision making process; who isinvolved and what motivates or intereststhem, who has the power and who has theinfluence, what decision-making criteria arethere and what else is going on. Who expects what? What is the process for making theinvestment decision? What are the primary business drivers? Why do it now? What are the boundaries? What is thescope of the intended change? What are the intended outcomesand benefits?“Without a business case properlysetting out the reasons for the change,the strategy to be adopted, thebenefits to be achieved, and gainingmanagement buy-in, a project is off toa shaky start.”Increasing the likelihood of approval –Apart from the above, as IT professionalswe want to increase the chance of a projectbeing approved and thus preserving ourlivelihood, so it makes good sense toproduce a business case anyway.How should I prepare for thebusiness case?Failure may be a case of poor project governance (by governance, I mean the wholeproject structure including staffing,scoping, planning, initiation, project management, risk management, quality), or itmay be poor preparation for change withinthe organisation and therefore poor take-upof the system by the users. No matter howgood the system, if the users can’t or won’tuse it, it is a failure.In many cases it is that the business casewas not properly prepared. Perhaps it wastoo superficial, or not aligned to thebusiness drivers, or it only considered costsrather than cost versus benefits. Equally, itmay be that the case was well prepared butno monitoring of benefits was carried out.Sometimes, even though a project hasseemed successful it is viewed as unsuccessful, perhaps because of poor perception bythe users. In this case, documented resultsthat prove success through comparison tothe identified expected benefits can oftenchange these perceptions. Without abusiness case properly setting out the reasons for the change, the strategy to beadopted, the benefits to be achieved, andgaining management buy-in, a project is offto a shaky start. What options are there for making theintended changes? What products orservices would be required? Who is the executive sponsor? Who is involved in the decision-making? Who cares about what? What are the decision criteria that willbe used? Are the changes achievableand affordable? With what other possible projects areyou competing?What should be in abusiness case?A business case typically contains thefollowing sections: Management summary Outline scope, reasons, strategic fit Options appraisal. Benefits expectedand quantified. High level cost/benefitanalysis of (ideally) at least threeoptions for meeting the business need.Include analysis of ‘soft’ or intangiblebenefits that cannot be quantified infinancial terms. Recommendation, preferred option withreasons for choice Costs & timescales. High level plan forachieving the desired outcome, with keymilestones and major dependencies(e.g. interface with other projects).A UK Oracle User Group publication

Investment appraisal, calculation detail,cash flow, payback, ROI Risks and mitigation. Contingency plansfor non-delivery Source information, proof, validation Benefits realisation planHere is the first mention of how to realisethe benefits – a benefits realisation plan.For many this is a new concept but if youare going to justify a project based on savings, you better be clear how you are goingto achieve them in reality. If done correctly,this should be a great help when the projectgoes live and you want to measure theresults. It may also be the differencebetween a perception of success or failure.Once you understand the playing fieldand have gathered your information; startputting your case together. Get it right!!! Be sure of your facts;check your calculations. Nothing undermines your presentation like an incorrectcalculation spotted by a director –“Go away and come back when youhave got it right”. Make it relevant. Gear it to what youknow about the decision makers and thecompany drivers. Focus on the top five costs, but do notoverlook other costs. Directors will wantthe headline costs but not the minutiae.Aggregate the smaller costs. Beware ofhidden costs. Provide explanation, document well.It has to be a standalone document thatreaders can follow. Remember, you willhave to come back to it later and understand what you did. Define formulae and variables. Showhow you arrived at results. Do not leavegaps where questions or doubts can arise. Obtain metrics and calculate. Evaluatethe expected benefits using data from thecompany. Be realistic. Use measures thatare important to the company. Make metrics easily measurable, ifpossible. When it comes to assessingwhether benefits have been achieved youwill want to be able to do so without toomuch trouble. It’s OK to estimate. In some cases youwill have to, but be realistic and explainyour logic. Include assumptions. Ensure peoplecan understand how you arrived ata conclusion. Determine proof needed and provideevidence. Back up your assumptions andestimates with relevant evidence, usingindustry data if possible and anecdotalevidence as well. E.g. Company Bincreased their throughput by 15% whenthey implemented this system.How big is a business case?This may seem an odd question, but manypeople have not been exposed to a seriousbusiness case exercise so have no feel forappropriate size. It is no good trying tojustify a multi-million pound project withone page of A4; conversely, 20 pages maybe overkill for a new server, so the size isimportant.The size of the business case should be proportionate to the size of the projectand its impact on the business.(5 – 15 pages excluding appendices).The management summary should beabout 10% of the document.OracleScene Issue 34 Summer 2008For small projects, you may only need toproduce the business case in one stage,with confirmation of prices, fundingavailability and other relevant material.BUSINESS & MANAGEMENT Assumptions“The level of detail required at eachstage depends on organisationalstandards and the scale or complexityof the project.”For larger projects, you should consider amulti-stage approach: Preliminary business case (or Strategicoutline case) to confirm strategic fit andbusiness need, typically no more than oneor two pages. Outline business case – indicativeassumptions to support the preferred wayforward (including procurement strategy,where applicable), variable lengthdepending on the scale of the project. Full business case – validated assumptions to support the investment decision,variable length depending on the scale ofthe project. The level of detail required ateach stage depends on organisationalstandards and the scale or complexity ofthe project.The full business case should include abenefits realisation plan.To give you an idea of the size of theexercise, it is recommended that you shouldspend up to 3% of the project’s potentialinvestment on building the business case.(So, on a half million pound project, that’s 15000 or 15 – 30 days depending onyour costing.)Documenting the businessprocesses that will be affectedOne useful exercise that can be carried outfor a relatively modest outlay is to map thebusiness processes operating in the affectedareas. This serves several purposes: It encapsulates the scope of theproject for which you are developingthe business case. It provides a graphical description of thescope for inclusion in the business case. It enables you to understand how theprocesses work.7

It enables you to capture the knowledgethat normally resides in peoples’ heads.BUILDING A BENEFITS-DRIVEN BUSINESS CASE It allows you to see processes thatare “broken”. Identify and describe the benefits thatthe proposed project should provide tothe company. Record intangibles. It provides a sound basis for processimprovement when the project getsunder way. Identify the metrics to be used – thosemeasures that are relevant to the projectand important to the business. It forms the basis of your testing andtraining materials. Quantify the metrics in the currentsituation using company data wherepossible, or industry standard data if not. It assists with benefits realisation byallowing you to monitor the improvedprocesses. Document your reasoning, yourassumptions, the costs, the metrics,the calculations, the evidence.“With the right tool and consultants,you can carry out interactive workshops with the users and get theirinvolvement and buy-in.” Determine recommendations. Analysethe numbers, decide which appears tobe the best option(s) and make sureyour decision is a result of reason, notemotion. By this I mean, don’t workbackwards to justify a pre-conceivedconclusion. Use a worksheet layout to present theresults, it imposes order. Keep it simple – one or two pages –any more and people will lose interest.Presenting the business caseWhen you have pulled it all together,analysed the results and drawn yourconclusions, ask yourself the followingquestions: Is the business need clearly stated? Have the benefits been clearly identified? Are the benefits consistent with theorganisation’s strategy? Is it clear how the benefits willbe realised?Find a specialised tool that enables you tomaintain the process maps together with allthe associated information and data on aserver, so that you can easily maintain themas the processes change. Word andPowerpoint are frequently used for this sortof thing, but the results are static and tendto get filed away and forgotten. Estimate the improvements based onwhat you know about the new system.E.g. reduces time to process a claim fromthree minutes to two. Try not to over- orunder-estimate.Find a consultancy company who,equipped with and trained in the use ofthat tool, have the skills to help you carryout the initial exercise of identifying anddocumenting the processes. Calculate the benefits.Involve the users. With the right tool andconsultants, you can carry out interactiveworkshops with the users and get theirinvolvement and buy-in. This gives you animproved understanding of the processes,leading to a more thoroughly researchedbusiness case.When you have produced the numbers,you will then be able to derive yourconclusions and recommendations.Producing the resultsBefore you can produce your businesscase, you need to gather and record all theinformation, carry out the calculations andanalyse the results.The key part of the business case is theinvestment analysis. This is the foundationfor your conclusions and their justification.Different companies use different measuresand some measures mean different thingsto different people, so make sure you knowwhat are the preferred measures in yourcompany. As with many things in life, it isnot always simply what the numbers say,but a combination of factors that decidethe best course of action; however, makesure the numbers back you up.8 Quantify the metrics in the new situationbased on your estimated improvements. Compute final results (IRR, NPV, ROI,payback period, whichever is used inyour company). Evaluate each benefit in turn. Identify themes. Several minor,apparently unrelated benefits may add upto a particularly relevant one. Check for compelling benefits fordifferent levels of the organisation.A percentage increase on the return oncapital employed may not mean much tothe Procurement Manager but it might tothe CFO. Match results to acceptance criteria.Obvious really! Include charts & diagrams. Some ofyour audience may not have time toread the verbiage but may take in agraph at a glance. You know what apicture is worth. Is it clear what will define a successfuloutcome? Where there is external procurement isthe sourcing clear? Is it clear why this is the preferredsourcing option? Are the risks faced by the projectexplicitly stated? Are the plans for addressing those risksexplicitly stated? Is it clear what the preferred option isand why it is preferred?All of this sounds like it is a pretty labourintensive and manual exercise. This is trueand I would suggest that for a large exercise you put a team together to share theload. Some people are better than others atwriting, some are better at numbers andsome like doing the investigation but notthe analysis. If the exercise is going toinvolve 3% of project expenditure on alarge project, it needs a leader and it needsto be planned. Its execution will also verylikely have to tie in with board meetings.One way of mitigating the effort is to finda supplier with a tool that is designed toassist with producing the investmentanalysis. Whilst you could do it yourself inExcel, a purpose built tool that allows youto record information about the factorsor benefits, hold related metrics andcalculate results, i.e. quantify the benefits inmultiple scenarios, can save you a lot oftime and effort.A UK Oracle User Group publication

About the AuthorConclusion Explain each calculationFor IT projects of any size, a business caseis a must. You must be clear about the business reasons for undertaking the projectand about how it will benefit the business.The investment analysis is a key part of thecase and should show quantified businessbenefits versus costs. The understanding ofhow the decisions will be made, who willmake them and with what other requirements for funding you are competing isas important as the business case itself.When you put all this together to producea benefits-driven business case, yourproject will stand a better chance of beingapproved and of being successful. Use it at any level Create as many scenarios as you want Be optimistic or conservative Include set-up costs and running costs Include intangibles Refer back to it Repeat the exercise with different values Show savings over a selected numberof years Show IRR, NPV, ROI, cashflow &payback period Provide reports and charts Use it to monitor resultsFor more information about building abusiness case, refer to the web site of theOffice of Government Commerce:http://www.ogc.gov.uk/delivery lifecyclebusiness case management .aspBUSINESS & MANAGEMENTWith a purpose-built tool you can:–Derek Hancockhas spent 23years in theApplicationsSoftwarebusiness, joiningMSA in 1985.Following sevenyears in sales andservices with Marcam, he joinedJD Edwards as a Client Managerin 1997, staying there until thecompletion of the Oracle take-over inMarch 2005. Whilst at JD Edwards hespent three years running a CustomerOutreach program aimed at helpingcustomers get more value from theirsoftware. He has worked in theJD Edwards marketplace ever since,spending time with Differentia andCincom Systems. Now withWhitehouse Consultants, the onlyOracle Certified Advantage Partnerfor JD Edwards in the UK, he stillconcentrates on working with theexisting customer base to ensurethey continue to get value from theirsoftware investment.With acknowledgement to the Office ofGovernment Commerce.10g Upgrade CompanionThis current version includes information about:Changes in the behaviour of Oracle Database 10g Release2 that will affect customers who upgradeThis section documents important changes in the behaviourbetween Oracle Database Release 9.2 and Oracle Database10g Release 2 (10.2). It also focuses on behaviourchanges that require a DBA to make an informed decisionin order to minimise the risks that may be introduced bythe changes.Best practices for pre-upgrade planning, upgrade operations, and post-upgrade analysisrecommendations and requirements. Oracle technical staffderived the Best Practices which is an accumulation of realworld knowledge and experience obtained whilst workingwith our customers.Critical and recommended patches, by platformThis section will help you prepare for an upgrade byproviding a list of patches that are recommended for yourplatform. This list of patches is based on the most commonissues encountered by customers on version 10.2.0.3 ofthe database. Carefully review each patch and only applythe patches specific to th

Director - PeopleSoft David Kurtz, director@ukoug.org.uk Director - JD Edwards David Rowntree, director@ukoug.org.uk Director Tracey Bleakley, director@ukoug.org.uk UKOUG Office UK Oracle User Group, User Group House, 591-593 Kingston Road, Wimbledon, London, SW20 8SA. Tel: 44 (0) 20 8545 9670 Fax: 44 (0) 870 9000 335 Email: info@ukoug.org