Guidelines for Developing a Business Case



Guidelines for Developing a Business Case &

Business Case Template

The intent of this document is to provide a single source reference that contains the combination of management, technical and resource information required to promote a concept or investment opportunity to reality.

Before getting into the details of developing a business case, it is important to understand what a business case is, why we prepare business cases, and how much time should be spent on developing a business case.

What is a Business Case?

A business case is the first step in a capital planning and investment model. It serves as the center piece in integrating IT governance, portfolio management processes, and financial management processes. Business cases are the single-most important document in helping leadership and management understand the business value of an investment or business opportunity. A business case is part sales and part marketing. But it is the “business” units’ opportunity to present an overwhelming and compelling justification for funding an investment to achieve organization or business unit mission, goals, and objectives.

An effective business case is a multi-purpose document that generates the support, participation and leadership commitment required to transform an idea into reality. A business case identifies an idea, problem, or opportunity. It provides context and content around the problem and equally illustrates the desired objectives and outcomes. The problem and desired outcomes are normally defined and described in terms of the business. The business case describes how and who will be affected. The how and who typically evolve around individual or organization behavioral changes; also know as change management. Change management also involves the people and process changes that would be required. The business case will breakout specific alternatives that were examined, their associated impacts, risks, costs, and benefits. Alternatives focus more towards a technical component contributing to the overall business solution.

Business case development is a collaborative effort:

• It is business driven, lead by the business or program area that is making the proposal,

• Information technology representative(s) form the Office of Information Services,

• Change management representative(s) from the Office of Information Services, Business Process Engineering Unit,

• Financial analyst representative(s) from Finance Policy and Analysis,

• Any (all) stakeholders who will be impacted by the proposal, and to ensure approval and ongoing support

• And a benefits sponsor.

Why Prepare a Business Case?

The simple answer to the question of “why?” would be: 1. it makes sense, 2. it is the right thing to do, and 3. business cases are recognized and accepted as a best practice.

Those three reasons either alone or together may not appear to be compelling enough. Below are more concrete requirements as to “why” we prepare business cases, founded upon statute and policy.

Governor’s Priorities and Initiatives: In response to the current budget crisis and in support of the Governor’s priorities to “Restore Confidence and Accountability in Government” and “Make Government Live within its Means,” the Governor’s initiative on Regulatory Streamlining, and the activities of the Governor’s Advisory Committee on Government and Performance and Accountability, the Department of Administrative Services (DAS) and state agencies must do what we can to appropriately control information technology (IT) spending and stretch limited IT dollars.

Business cases are fundamental in identifying accountable business or benefit owner(s), high level business performance metrics, and the associated investment cost model.

ORS 184.470-184.477 (Information Technology Portfolio Management): In August 2001, HB 3372 (IT Portfolio Management was signed into law. Substantive provisions of the law were included in ORS 184.470-184.477. In short, IT Portfolio Management (i.e., IT investment management) is an integrated approach to managing investments that provides for the continuous identification, selection, control life-cycle management, and evaluation of investments.

Business cases are integral to the portfolio management process and to initiating investment opportunities identified within enterprise plans.

DAS IRM 107-004-010 (IT Asset Inventory/Management Policy: State law requires the Department of Administrative Services Information Resources Management Division (DAS IRMD) to ensure all state-owned information technology (IT) assets are inventoried, tracked, and managed throughout the IT asset’s lifecycle.

Business cases are an integral component managing the IT asset portfolio

2005 Enterprise Information Resources Management (IRM) Strategy (EIRMS): The EIRMS is a business-driven IT planning process designed to address common business needs, specifically: support achievement of the Governor’s Oregon Principles, support strategic business objectives of state agencies, and provide a common vision of the planning, staffing, acquisition, management and shared use of IT throughout Oregon government.

There are three goals and objectives that business cases are an integral component or enabler:

Goal 1: Establish effective business-driven Enterprise IT Governance

Objective 1.1: Implement the state’s IT Governance Policy

Goal 5: Optimize the efficiency and effectiveness of government

Objective 5.1: Establish a facts-based continuous improvement and performance management program

Goal 6: Ensure IT investments are selected, resourced, acquired and tracked to optimize mission accomplishment

Objective 6.1: Implement an information technology investment (portfolio) management program as required by ORS 184.470–184.477

DHS Policy DHS-110-001, Information Technology Project Budgets: The policy explicitly requires the development of a formal business case for any business investment opportunity that may have an IT component and that will require budget/limitation authority transfer to the Office of Information Services. It is also intended that all DHS approved Policy Option Packages (POPs) will require a completed business.

How much time to spend on developing a business case?

General Rule of thumb: Business case time = approximately 5-10% of anticipated implementation project time. An anticipated:

• 25 day project to implement the business opportunity = 2 days to put together a complete but straightforward and simple business case

• 3 month project to implement the business opportunity = 9 days to put together an appropriately detailed business case

• 1 year project to implement the business opportunity = 1 – 1.5 months to put together a detailed business case

• 3 year project to implement the business opportunity = 3 months to put together a comprehensive business case

The Business case template is scalable to the nature and impact of the proposal. The number of pages of a business case varies based on the subject matter of the case. It may be a brief 2-4 page document or an extensive evaluation consisting of 20 to100 pages. However, the length of the business case should be kept to a minimum, ensuring it stays on topic, presents relevant information in a clear and concise manner, and is focused on supporting management in making decisions. The time and effort spent on a business case should be in proportion to the scope of the problem.

The definitive answer for the amount of time allocated to develop a business case is: It takes as long as it takes. It is a function of time, commitment, understanding, and resources.

Within the Template

This document describes how to effectively prepare each section of a business case. By following the guidance provided, the resulting business case will be: 1) in a standard format, and 2) contain the information required by a governing body (Cabinet, Information Technology Governance Council (ITGC), Information Systems Managers (ISMs) so that they may make their best informed decision regarding proposed business opportunities (approve, deny, or continue business case development efforts).

At a minimum, the business case shall include the following sections:

• Executive Summary

• Introduction & Background

• Problem Definition & Desired Business Goal(s) and Objectives

• Alternatives

o Assumptions

o Benefits Estimates, and Benefit Metrics

o Cost Estimates

o Risk Assessment

• Financial Analysis

• Recommendation

• Implementation Approach/Timeline

• Appendices

Under each major heading, text that appears in italic is intended for instructional purposes and should be deleted so the text of the business case information may be entered.

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