Business caseUnderstanding of costs and benefits of change
Does a takeover or business combination strengthen our company? Do we with this project add social and economic value in our municipality? What does the implementation of a new ICT system mean for us?
For each investment, project or new initiative you want to justify the commitment of time and money. A business case weighs the costs and benefits of change in a structured way. A sharp demarcation and thoughtful assumptions form the basis of this consideration. Using a business case you substantiate the value of the initiative for your organization.
A business case requires answers
The business case is not important, but the answers to the underlying questions are.
- What are we really going to do?
- Which problems are we going to solve?
- Who will we be doing this for?
- How do we make the customer really happy?
- How do we make money?
- How do we minimize efforts and maximize the results?
“A business case that makes nothing but money is a poor business” – Henry Ford
A business case in 5 steps
Step 1. Internal analysis
Determine the core idea of the business case. What is it about? What solution do you want to provide? This central idea is in line with the mission, the vision and the ambition of your organization.
Step 2. External analysis
Shift the focus to the outside. What is the situation in which this business case has to be realized? Which collaboration partners can you be sure of, but also: which stakeholders will be against the idea?
Step 3. Organization structure
Analyze how the initiative can be realized. What kind of organization is necessary to make it a success? Also the implementation plan and the desired control and performance indicators are important herein.
Step 4. Valuation
The value created by the initiative goes beyond just profit. Lower costs, less redundancies or, conversely, a larger social return are benefits and merits as well. By comparing the costs, benefits and investments with each other a clear picture emerges. In the financial analysis the value of the initiative is quantified in euros. Also, for example, social benefits are calculated. Optionally, a sensitivity analysis is included.
Step 5. Success factors and risks
The success factors and risks identify how the organization can achieve the greatest success and which control measures it must implement.