The approval and funding of major initiatives generally requires the preparation of a business case. The role of the business case is to ensure that decision-makers have all the information they need to decide that going ahead with the activity is a feasible course of action, supports the business’ strategic direction, and will create value for your organisation.

It might seem that by just presenting the facts, your case will make itself, but it’s not that simple. To prepare the most persuasive business case possible, you must anticipate what your stakeholders want to know, and in what context they will be making their decision.

How, then, do you prepare an effective business case?

A business case is actually an argument: an argument in favour of one recommendation against a number of alternatives. Consequently, to be a good business case, it should be strongly persuasive. The desired outcome will be an agreement from management approving the funds required to proceed with the recommendation. In reality, a business case actually has TWO primary purposes – to persuade your stakeholders that:

1. the problem or opportunity you’re addressing is real, and does in fact need addressing, and
2. your recommended course of action is the most suitable with the best benefits for the organisation.

If you keep these two purposes in mind, you will be better able to decide what information must be included.

Generally, this means your business case will outline the impacts to the organisation if the problem is not addressed, which options are available, and details about your recommended solution.

The business case also has another purpose – it provides traceability back to senior management and the basis for their decision when a project was authorised. Accordingly, it will outline the business motives and benefits underlying that decision, and define the key objectives that the project should achieve.

The people reviewing and approving your business case are senior management, and they don’t have time to wade through volumes of information that won’t add to their ability to make a decision. You should present all the information your stakeholders require to understand the business need and the recommended solution, but you don’t want to include anything irrelevant.

The best way to determine what information is important is to understand your stakeholders as well as possible. What do they know about the problem and the business context? If the solution involves technology, how familiar or comfortable are they with the pros and cons of different technologies? Are they technology savvy? Have they been involved in approving similar types of proposals before – and what was the result? Who can you speak with to find the answers to these questions?

Some of the areas that they will likely be most interested in are – the strategic and cost impacts of not addressing the problem; the time, money and resource costs of addressing the problem; risk to the business; and the realisation of the benefits your business case is claiming. You need to ensure that your information on these areas is very clear and comprehensive, and that the argument you put together is logical and makes sense.

This consideration drives the structure of a business case. The first section is the Executive Summary – literally a summary of the problem for a busy executive, its impact and strategic positioning, and the most important details of the solution you’re proposing. The body of the business case then goes into detail about these. This enables your decision-makers to get a high-level view of the problem, the urgency to address it, and the preferred solution. They can then choose to read the rest of the document, or ask their trusted advisers to read it and come back to them with a recommendation.

Based on what you know about your organisation, your industry and your stakeholders, try to anticipate what their concerns might be. These concerns might include:

• ‘No-one else is doing this’ – There is sometimes a fear of being the first in an industry to attempt to solve a problem in a particular way. What is the benefit in getting ahead of the pack? How sure are you that this is a safe, feasible solution to this problem? Are there organisations in different industries using this solution for similar problems?
• ‘Everyone else is already doing this’ – If your organisation seems to be trailing the pack, what is the benefit in doing this now? Would it be better to look at solutions that are newer and more leading edge to get a competitive advantage rather than playing catch-up? What success have competitors or similar companies had in doing this?
• ‘We can’t afford to do this’ – This is the perennial challenge of a business case – it should answer the question that we CAN afford to do it, if the benefits make it worthwhile. You should also articulate why the organisation can’t afford NOT to take the action you’re proposing.
• ‘We can’t spare the resources’ – Organisations are regularly subjected to headcount and cost pressure, so you need to be able to articulate how and when resources are required, the necessary skill sets, and where they can be found in the organisation (or externally perhaps). However, convincing your senior stakeholders of the urgency of the problem should motivate them to assist in determining where resources will come from.

What about ‘context’?

Context is going to be all important as it defines the backdrop of the business, and has a large influence over what factors will be taken into consideration during decision making.

For example, in today’s tight economic climate, a funding request may be competing with ‘mandatory demands’ on the business, leaving management little room for discretionary decisions. Even a projection of strong benefits and financial returns may still fail the test of how best to spend a company’s limited resources.

Understand the prevailing context of the business, and ensure that you take these factors into account as necessary when building your case.

Senior stakeholders don’t enjoy surprises. Neither do shareholders or regulators, and if you are proposing a significant program of work, you need to make sure you include everything you will need to realise the benefits you are predicting.

This means that you need to cover elements such as change management, transition to business-as usual, lifetime management, warranties, decommissioning of defunct technology, risks, and so on. It’s also important to clearly state any underlying assumptions that were made in preparing the document. You don’t necessarily have to cover everything in detail, as the point of the business case stage is to set projections and outline plans, but you need to try to estimate what funds, resources and time will be needed for these things.

It might take longer to secure approval by doing this, as you are potentially creating discussions up front, but it will mean that once you have succeeded you will have clear air to carry out the work. Gaining senior stakeholder agreement to everything up front is very powerful; it means you don’t have to keep interrupting your program of work to get progressive approvals as you go. The risk in waiting to get approval for other parts of your solution is that you will be dealing with a different set of stakeholders, which means you’re duplicating the work you put in to get the decision-makers over the line.

Covering everything at the beginning means you may get early warning of any areas where your senior stakeholders have concerns, and you can prepare contingency plans in advance to avoid the possibility that the initiative may be abandoned down the track.

Clearly, you might not be able to pull all this together by yourself. Writing a successful business case is not a solitary activity, it’s a team effort. Consult with your colleagues and peers to gather the information you need; draw on industry research and activity; request financial advice internally if necessary. Your organisation’s accounting, procurement and human resources areas can be very helpful in pulling this information together based on the reporting they do.