What is a Business Case
Changing Resource Allocation to Deliver Strategy
A business case is used to change strategy. Most organizations have a strategy even if it’s not actually written down in a strategic plan. Strategy can be defined as " a plan, method, or series of maneuvers or stratagems for obtaining a specific goal or result" according to dictionary.com. This definition can be applied to all organizations. Strategy is the business direction. A statement of what will be achieved by when and how. Many businesses have a strategic document covering all aspects of the business direction and goals, defining future deliverables and the resources to be allocated to ensure delivery.
Every organization has limited resources and the strategy is a statement of how those resources are allocated. When a change is needed (e.g. a new competitor enters the market, a competitor launches a new product, new technology provides an opportunity to improve efficiency) the mechanism to change strategy is the business case. A good business case provides a number of options and when one is agreed, the appropriate resources are then reallocated and diverted from existing parts of the strategy.
Typical Elements of a Business Case
Every organization is likely to use a business case tailored to its own needs. However there are elements which are common to almost all business cases.
- Background. A statement explaining why the business case has been prepared, often including what has changed and what is now needed.
- Objectives. A description of what has to be achieved. Objectives should be SMART (Specific, Measurable, Achievable, Realistic and Timebound).
- Options. A business case should always provide more than one option. One option should be to continue as now, with no change.
- Resources. A list of the resources needed to deliver each option, including any costs of stopping existing work or diverting resources from current initiatives.
- Costs. A statement of how much will each option cost.
- Benefits. A description of the benefits which will accrue from undertaking each option. Benefits should be measurable (quantifiable) and should be stated in financial terms.
- Solution. A recommended solution, including a justification and outlining any risks.
- Decision. Usually completed after the business case has been discussed, giving a summary of the decision - approval or reasons the business case was declined.
If a business case is approved, then the result will be a reallocation of an organization’s limited resources from an existing element of strategy to the new initiative.
Format of a Business Case
Most organizations that use business cases have a defined format. The business case document template is often available from the finance department as some of the financial calculations can be complex and mistakes can have a significant impact on an organization.
It is important to ensure that business case documents are completed fully and that supporting documentation is available to back up statements made in a business case. For example, if a benefit such as a cost saving has been identified, then details (such as who defined the saving, how it will be achieved and when) will be required to ensure benefits are realized.
When considering a business case, a key consideration is whether an option’s benefits outweigh its costs. Even if this is the case, it is still possible for a great business case to be rejected as all organizations only have limited resources to allocate.
Strategic Business Case
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