How to craft a persuasive business case for change

This blog post is a chapter extract from the book by Cenred Harmsworth and Dr Jack Jacoby: Managing Change Initiatives
Available in Hard Back, Soft Back and eBook from Amazon.

DEFINITION AND OVERVIEW

A business case presents and assesses the business justification for initiating a task or project.

Whenever an organization plans to commit finance or resources to a task or project, it should be in support of a demonstrable business need.

Therefore, a business case is used by organizations to:

• demonstrate the business need for a project or initiative
• demonstrate a project’s feasibility before spending significant funds and committing significant resources
• assess the strategic internal and external drivers for the project or initiative
• identify and assess the risks associated with the project and provide a suitable mitigation strategy; and
• assess, compare, and contrast the costs and benefits (both financial and nonfinancial) of choosing one option over another.

Typically, a business case will also discuss how the proposal will be implemented and held accountable (i.e., its governance structure).

Key Points

While a business case is almost invariably required to obtain the resources needed for major projects, it can also be used to obtain endorsement and resources for a wide range of KPO-driven organizational initiatives.

Key Actions

1. Examine the last five major projects undertaken by the organization.
2. Identify the business case used to seek approval.
3. Did each business case provide all the information stipulated above?
4. If not, were there any difficulties in securing approval for the project?
5. Reflect on this analysis and its impact on future projects within your organization.
   
   

WHY IS THIS IMPORTANT?

An important part of strategically managing an organization is ensuring that approval and adequate resources are secured for projects and initiatives.

There may be situations where your usual budget is not sufficient to fund an urgently needed project. In order to obtain the additional resources needed, senior executives will need to be informed of your requirements and approve any additional funding or other resources. Business cases can be an effective tool for achieving these outcomes. A business case can be used to:

• show how more efficient practices and processes can reduce costs or increase revenues
• demonstrate how projects can help achieve organizational objectives
• contemplate and assess the risks that may occur if certain processes and procedures are not followed or are followed incompletely
• outline responsibilities for ensuring the implementation of the proposed change project
• regularize and embed interrelationships between the organization’s stakeholders in the organization’s activities
• provide measures to monitor future performance so that performance can be monitored and evaluated over time
• highlight the need for the organization’s hierarchy of decision making to be considered when planning anything across the organization
• demonstrate how the project or initiative benefits the entire organization
• communicate the resources required to implement the project adequately, and
• demonstrate a need for an increased operating budget where this is relevant.

Key Points

A business case is important to secure the funds, resources, and organizational commitment to make significant changes to the way an organization delivers its core KPOs.

Key Actions

1. Examine the last five major projects undertaken by the organization.
2. Identify the business case used to seek approval.
3. Did each business case provide all the information stipulated above?
4. If not, were there any difficulties in securing approval for the project?
5. Reflect on this analysis and its impact on future projects within your organization.
   
   

WHEN DO YOU DO IT?

A business case will generally be needed when funding and/or resources are required in addition to the usual operating budget for the improved operation of the organization. This is usually due to the introduction or need for a major project or initiative. Examples of such initiatives or projects include, but are not limited to, the following:

• The introduction, implementation, or upgrade of a major operational or functional system or process
• A large-scale organization change
• A large-scale acquisition or disposal project

Some organizations may have very specific criteria for determining when a business case is needed. Other agencies may have a less formal method for obtaining additional resources.

Some organizations insist on a business case early in a project’s life to justify even the use of resources and organizational time on the preliminary processes of a project. In such an instance, the business case will contain more approximations and estimates because detailed understanding has not yet been established.

Where a business case is used to secure highest-level support for the project to proceed, then all necessary detail must be included.

Ultimately, the business case must serve the purposes of, and work with, the culture and the procedures of the organization.

Key Points

A business case is used to enable major changes such as large-scale systems changes, major acquisitions, disposals, or other projects that will provide significant change in the organization.

Key Actions

1. Examine the last five major projects undertaken by the organization.
2. Identify the business case used to seek approval.
3. In which instances was a business case utilized?
4. In which instances was a business case not utilized?
5. Reflect on this analysis and its impact on future projects within your organization.
   
   

THINGS TO WATCH OUT FOR

There are a number of issues and elements that those developing the business case should be mindful of. These include the following:

Be aware of your audience and their needs

It has been mentioned earlier that a business case is essentially a selling instrument. The audience of the business case is being asked to do something—approve, support, cooperate, provide resources, provide cash, and so on.

If it’s going “up” the organization (i.e., to senior management or the board), then it’s probably seeking their support and agreement to provide resources and budget. Without the support of this audience, the project doesn’t proceed.

If it’s going “down” the organization (i.e., to employees in general), then it’s probably seeking their initial in-principle and operational support once implemented. Without the support of this audience, the project will not operate as required.

If it’s going “out” (i.e., to external stakeholders, e.g., suppliers and customers among many others), then it’s probably seeking their perseverance, support, and cooperation. Without the support of these audiences, the project may lose suppliers, see prices increase, lose customers, or find that the change conflicts with regulations or legislation.

In each of these instances, the ask is slightly different, and the audiences need to be sold on something slightly different to other audiences. Therefore, what is said and how it’s said becomes crucial.

Bear in mind too that sometimes the interests and needs of your varying audiences may conflict. Therefore, skilfully writing the business case becomes essential.

Once you have established the various audiences that will be presented with the business case, you need to determine the following for each audience:

• Does the reader/approver of the business case understand the context and environment of the project?
• Looking at the business case from the audience’s perspective, what sort of information will they be looking for to give their support or approval?
• What impact will the project have on the specific audience?
• To what extent can the audience/person influence the direction, scope, or character of the project? And what needs to be done and said to ensure that the project remains true to its objective?
  
  

Securing support

It’s rare that a business case will be sufficient to win the support needed through the document or presentation by itself. Many organizations are inherently political. This is often a cultural trait of the organization often caused by fear, territorial issues, and the threat of losing authority and status. This cultural characteristic is often a result of the nature of certain types of projects and the organization’s past history of “doing stuff.”

Don’t underestimate the power and dysfunctional influence of this type of culture.

Therefore, in order to minimize the impacts of this issue, it’s recommended that you do the following:

• Work your audience. Take the time and effort to meet with all important members of your various audiences to talk through what is proposed, what is the likely impact on them, and what is expected of them before the project commences, during the project, and after go-live.
• Capture and record their questions, issues, and their concerns. Ensure that their concerns are identified (anonymously if possible) in the business case and discuss the manner you propose to satisfy those concerns. Ask the interviewees for their suggested solutions. If you can “live” with their solution to important issues and problems within the project, it will be harder for them to withhold approval or cooperation. The written record will protect you (and the project) from individuals who claim they “didn’t say that” at some future point.
• Ensure that you spend time explaining the benefits of the project to them and their area of responsibility. If they don’t know or aren’t convinced of the benefits, then why would they support the project?
• Don’t leave the meeting without knowing what it will take to get their support for the project.

You may also encounter “gatekeepers” through whom you need to navigate the project and who don’t have a real direct interest in the project or who are not directly affected by it. You still need to meet with them and secure their approval too. This is usually done by explaining the benefits to them or their responsibility area from the successful implementation of the project.

Keeping to your charter

The overwhelming consideration of most rational authorizing people is whether a project contributes to the organization’s charter, constitution, or core organizational objectives.

If the project contributes to core objectives and is rational and is an optimal use of funds, then it will be hard to argue against it.

Assume your audience doesn’t have a strong understanding of context

Although the majority of your audience will have a reasonable understanding of the project’s context, don’t assume that they do. Therefore, there are a few things to avoid:

• Ensure that the business case is clear and simple and that you are conveying in unambiguous words and concepts, which are important to understand.
• Make the document contain only the information that is needed to explain and convince. No more and no less. More will bore or confuse, less will stress.
• Don’t use jargon, acronyms, or terms unfamiliar to nontechnical readers. If you need to use such words, then include a glossary or definition of terms.
• If you are referring to other documents (such as preliminary and supporting project documents), then make sure those documents are easily accessible. Ideally, include them as appendices to the business case.
  
  

Ensure believability

If the business case makes claims or statements that are not factual or verifiable, then the business case will fail.

Some hints to help you:

• Try to ensure that unsubstantiated value judgments don’t appear in the business case.
• Support all arguments and statements with evidence, statistics, surveys, case studies, secondary research, independent research, personal research, and customer feedback data.
• Run the business case past uninvolved people who can provide robust feedback to establish whether they consider the argument plausible, convincing, and reasonable.
• Avoid exaggeration of problems.
• Avoid exaggeration of benefits.
• Avoid under or overestimating costs and resources.
• Avoid under or overexaggerating risks.
• Avoid emotive concepts and language.
• Consider incorporating relevant results of the initial feasibility assessments to add strength to arguments.
  
  

Allow for unforeseen influences

There are essentially two strategies that can be used here:

• Include within the business case all the conditions that will apply to the project, and state that if these conditions change, then aspects of the project may be or need to be changed.
• Accommodate a suitable contingency in the project if the project’s context is volatile.

Key Points

There are danger signs in writing a business case that if they apply, will kill a business case. Be mindful of:

• your audience and their needs and sensitivities
• play the political game to secure support of the business case before it’s pitched
• demonstrate how the project helps satisfy core organizational KPOs,
• keep it simple but complete
• make sure it’s believable, and
• allow for unforeseen circumstances.

Key Actions

1. Establish a business case do’s and don’ts list.
2. Check all business case submissions against the list to ensure compliance.
   
   

HOW DO YOU START?

The purpose of a business plan is to

• secure resources
• secure funding
• secure permission to proceed, and
• secure cooperation.

Therefore, in order to develop a business case that satisfied these purposes, a good place to start is to be very clear about the following core issues:

• How does the project or initiative enhance the organization’s core KPOs?
• Why is this project or initiative necessary?
• What are the consequences of not proceeding with the project?
• What are the consequences of inadequate resourcing and/or funding of the project?
• Who will benefit from the project and how will these benefits be experienced and when?

In order to develop an effective business plan, the following elements need to be known and understood:

1. Is there an accepted template that has been adopted by your organization?
2. Is there an accepted business case procedure/protocol that is adopted by your organization?
3. Are you familiar with the organizationally accepted terminologies used in business cases?
4. Are you aware of the project’s costs?
5. Are you aware of the financial context within which the business case must comply? In particular, are you applying for operating or CAPEX, budgeted appropriation or new funds, new debt or use of reserves, etc.?
6. Does the process you are proposing within the business case to secure funds for the project comply with the organization’s method for securing funding?
7. Are you aware of the regulatory, legislative, and compliance requirements that apply to your organization, and does the business case work within those constraints or outside them?
8. Does the business case support the organization’s strategic

objectives?

9. Do you fully understand the nature of the issue or problem that the initiative is intended to remedy?
10. Are you clear about the benefits that the project or initiative will deliver, and how do these benefits affect your various stakeholder communities?
11. Do you have a realistic view of the risks associated with the project or initiative?
12. Do you have effective mitigation and contingency strategies to deal with risks?
13. Do you have a realistic understanding of the resources required?
14. Do you have a realistic understanding of the time required?
15. Do you know the milestones associated with the project?
16. Have you considered various options available to you to deliver the benefits that the project is promising, and have these options been suitably assessed?
17. Have you recommended a specific option?
18. Have the promised outcomes from the project or initiative been defined in a manner that will enable the organization to recognize outcomes when they occur?
19. Do you know how the project or initiative will be managed?
20. Do you know how the project or initiative will be governed?
21. Do you understand how your various stakeholders will need to support and interact with the project?
22. Are you clear about what is in scope and what is out of scope for this project?
23. Does your organization have the internal resources with suitable skills and time availability to run this project, or does the organization need to bring in external resources?
24. How do you propose to secure these external resources, and what specifically are you looking for in terms of skills?

Key Points

1. Before you document and submit a business case, much work is required to understand the nature, impacts, and outcomes required of and from the proposed project or initiative.
2. Be prepared. Do the work and analysis. Have the answers to all the questions that will be asked by all rational stakeholders and authorizers.

Key Actions

1. Establish a pre-documentation-assessment checklist of all the things you need to be clear about before a business case is commenced.
2. Ensure that all business case submissions comply with this checklist before they are formally submitted for consideration.
   
   

RESOURCES

The resources you will need will depend on:

• the nature of the project or initiative
• its complexity; and
• its local, state, national, or international footprint

The answers to these three dimensions will determine whether you can provide internal resources to build your business case or whether you need to secure suitably qualified external resources.

The business case development process will, in general terms, require the following people:

• One person is required to own the business case development process. Strictly speaking, this is not a project manager because the costs to fund the project manager are embedded in the business case that is still to be developed.

Normally, this will be a “senior manager” who can have some of his or her time reallocated to the initial pre-project (or project preparation) tasks that are required.

Often, the person is a senior “middle manager” within a large organization. Generally, the smaller the organization, the more senior the person allocated for this task.

This nominated person will be required to coordinate the information flows that will come from the twenty-four questions above and the compilation of the information into a formal business case.

This person may or may not be the person who actually pitches the project to the authorizer. However, it’s this person who will be responsible for the robustness of the business case argument and, ultimately, its successful navigation through the organization.

• Depending on the proposed project’s nature, complexity, and footprint, a range of internal resources are required to answer questions 1 to 24 in the preceding section.

These resources are generally very specific to the type of information required from these questions. For example, someone in the corporate or finance department may be seconded to undertake some modelling of cost or benefits of the project and may be required infrequently over a few months once the model is constructed.

Similarly, other skills (and the people who possess them) will need to be called in as required to answer skill-specific issues or validate some of the responses to questions provided by others.

Where the organization spans a number of national or international jurisdictions, there may need to be skilled input to many questions from each jurisdiction in order to fully understand the organization-wide implications of the project.

• Once the business case draft has been developed (i.e., when senior managers believe they have a fairly good understanding of the dimensions and implications of the proposed project), there will be a need to secure support, at least in principle, from key functional and divisional managers.

This can be done by

• conducting a one-on-one walk through of the proposal
• facilitated workshop(s) with key people assessing the proposal, and
• a mixture of these two methods.

The people required to participate in the management validation of the draft business case will depend on the nature, complexity, and footprint of the project but probably include the following:

• Divisional managers impacted by the project
• Functional managers affected by the project
• Finance department representation
• HR department representation
• Common conditional attendees:
• Union representation
• IT/IS department representation
• Legal department representation
• PR or communications function
• External vendors
• These consultative sessions will inevitably result in refinement to the draft business case as a result of issues, concerns, and factors that were missed during the information-gathering process.
• The CEO, the CFO, and the project sponsor to whom a final draft business case is developed and presented to:
• the CEO
• the CFO, and
• the project sponsor.

This again results in refinements missed by the previous review team.

Depending on the nature, complexity, footprint, and criticality to the organization, this review team may be the project’s ultimate authorizer.

If the project is large, complex, and impacts all or most of the organization and its external stakeholders, it may need to be submitted to the board for final authorization.

Key Points

The development of the business plan will require a range of people and skills depending on the project’s nature, complexity, and footprint.

Key Actions

1. Establish a pre-documentation-assessment checklist of all the things you need to be clear about before a business case is commenced.
2. Ensure that all business case submissions comply with this checklist before they are formally submitted for consideration.
3. For each of the twenty-four tasks in your checklist, allocate the person or department responsible for securing the information or undertaking the tasks involved.

DELIVERABLES

The deliverable is the formal business case, and its submission to the authorizer is generally regarded as its completion.

It’s common, however, that sometimes the deliverable is defined as an approved business case. This therefore means that the business case may enjoy (or suffer) “continuous” modification until finally approved by the organization’s ultimate authorizer.

This latter definition has the effect of adding both time and resources to the business case development process.

Alternatively, sometimes authorizers will approve a business case on certain conditions; and those conditions, or compliance with them, becomes part of the approved project.

The components of the business case may vary depending on the nature of the project and its complexity and footprint. However, a typical business case will have the following components:

1. Executive summary
2. Overview of the issue or problem
3. Project objectives
4. Project options
5. Recommended option
6. Project benefits
7. Project scope
8. Cost-benefit analysis
9. Funding strategy
10. Stakeholder impacts and implications
11. Resourcing strategy
12. Training strategy
13. Project management
14. Project governance and reporting
15. Time frames
16. Risk assessment and mitigation

Key Points

A business case follows a fairly conventional format that needs to suit the nature, complexity, and footprint of the project.

Key Actions

1. Determine your organization’s business case template or format.
2. Ensure that the information to satisfactorily complete each section is available.
3. Ensure that all your business case submissions comply with this format before they are formally submitted for consideration.

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