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Every day, dozens of people download a business case template from my website. It has been used by universities, Fortune 100 companies and the leading management consultancies. Some people follow up with questions.
Truth be told, a template alone is not a guarantee for a great proposal or business case. I have compiled a list of thirty tips that should be useful for managers, business development and sales people, and anyone else potentially facing the need to develop one.
1. Your case should have an objective: a real problem you are looking to resolve or an opportunity you are looking to take advantage of. Be clear on the raison d’être for your case. Rolling out a CRM system is not an objective but one of the alternatives; improving client affinity and increasing sales per client may be a legitimate objective.
2. Your perception of something being a problem or an opportunity may be entirely different from that of the decision makers. If you believe you are right and they just aren’t aware, do an exceptional work in explaining it so that they understand. Often, we see people spending months working on a case for a problem that they believe exists just to hear from a decision maker: “Look, this is really a non-issue.” Before embarking on a proposal, check upstairs if the issue is seen as warranting attention.
3. The size of a business case is not something you should be concerned about. Concentrate on the content instead, tell the story. The case should adequately present your proposal and, at times, two pages will be too many and, at times, two hundred pages will be too few.
4. Always present more than one alternative within your business case. What is the right number? Three or four should do it.
5. Do not introduce weak “straw man” alternatives which try to steer the decision makers towards the solution you favour. It is usually obvious.
6. I cannot stress this enough: do your absolute best in creating strong, viable alternatives, well thought through and diverse. If you don’t, a decision maker may introduce one during the presentation, which will be embarrassing and require time to evaluate. If that doesn’t happen, the decision will be limited to a potentially incomplete, deficient set, of which Shakespeare said “There’s small choice in rotten apples.”
7. Always recommend one of the alternatives. Firstly, because you are the author of the case, you will be expected to know more about it than anybody else and, hence, know which option is the best. Secondly, even if the decision makers disagree with your recommendation, you will at least have shown them that you have an opinion, which commands respect.
8. Every proposal has its audience. Choose the language so that they don’t have to work too hard to understand what you are saying. If the audience is external to your department, division or company, increasingly more detail will be required. The jargon, the acronyms, the oh-so-obvious to you process flows may need to be explained in fine detail. Conversely, if the case is for internal consumption only, there is no point in explaining obvious everyday things.
9. Different people think differently: some are big picture strategists, others are detail oriented. Some are risk-averse and others like the challenge of the unknown. People make decisions using their internal frames of reference, which are formed through juxtaposition of cultural norms, values, education, life experiences, memes, current events, and so on. An author of a business case will be best served to understand how the target decision makers tend to make decision, so that she could structure her message accordingly.
10. Expose key decision makers to findings as you go about developing the case to gauge their reaction and adjust the course if needed. If your proposal or business case has a sponsor, such as a senior executive, avoid surprising them at all cost.
11. Make your audience “own” important or contentious data. For example, obtain sales projections or cost assumptions from the head of the business unit, CFO or COO. If they or their subordinates are among the decision makers, not only will these numbers be challenged, the people who provided them will likely feel compelled to support your case.
12. Know your numbers cold.
13. Take the time to determine where the opposition is likely to come from and prepare to address most likely concerns. There is really no excuse for being unprepared.
14. If you are writing a proposal in response to a client’s request, remember that most clients know what they want, but few know what they need (for this reason, RFPs are a wrong vehicle for acquiring consulting services).Time invested to understand the real needs will pay off handsomely as in many cases you will be able to expand the scope significantly. Even if you cannot do that, for example, due to time constraints, always offer the client a choice of an alternative that delivers incredible value at a price above the stated budget.
15. Use the business case format with which is already adopted in the organization. If there isn’t one, you can download free business case template from my web site.
16. Be concise, clear, logical and persuasive in style.
17. When unsure how much of the numerical data (eg projections, pro forma earnings, etc) to present in a live meeting, start with summaries but always have detailed information in your back pocket. Likewise, in a written case, it is a good idea not to burden the write-up with extensive tables or derivations but to attach them as appendices.
18. Always identify your sources of data.
19. Ensure that your data sources are reliable. Despite the proven accuracy of Wikipedia, it is best not to use it as a source if information because its validity can be easily questioned.
20. Never cast blame or accuse anyone (e.g. past management, departed project teams, third parties, etc) for the current condition. It is irrelevant and can lead to unintended consequences, like in “You know, the former project lead you have just lambasted is the CFO’s wife…”
21. If your proposal or business case includes financial cost-benefit analysis, as most of them should, use the method which your organization is familiar with.
22. If you have a choice of a method of financial cost-benefit analysis, make sure you understand pros, cons and limitations of each of them. Not every method is appropriate for every situation. As a primer, this two-part article should be useful.
23. If you are not familiar with financial cost-benefit analysis methodologies, engage external help. Contrary to a common belief, this is not a job for an accountant. The cost of doing this is negligible compared to that of possible ramifications of it not being done right.
24. Two key principles to keep in mind for your cost-benefit analysis: realism and attribution (only consider effects directly attributable to the proposed course of action).
25. Cost-benefit analysis should not be limited to financial considerations. Consider the wide variety of benefits (or costs, which are reverse): industry leadership, strategic advancement, increased capacity, improved safety, reduced environmental impact, introduction of best industry practices, improved image, benefits to a friendly third party, doing the right thing, and so on.
26. Beware of the cost-cutting mindset, which stifles innovation and breeds self-censorship. Costs and benefits should be considered in a holistic, balanced manner, so that penny pinching does not eclipse blazing non-financial wins your proposal may offer. For this reason, I advise organizations against establishing arbitrary hurdle rates (e.g. “To be considered, you proposal need to show IRR of 20 per cent”).
27. No business case or proposal is complete without a risk assessment for each of the alternatives presented. Consider both likelihood and impact of each risk and be realistic in your assessment.
28. The key to adequate risk assessment is a stakeholder analysis done well.
29. Be prepared to discuss the business case in three different settings: a 30-second status update, a 5-minute brief with questions and answers, and a 30-minute presentation. I also advise managers, project managers and team leads to be ready for these three types of communication at all times. Caveat: there is usually a fair warning for the presentation, so that you have the time to think it through and prepare.
30. When you present your proposal, questions will be about implementation are likely. The popular topics are resources and timing. Often, you will already have explored these items, which will enable you to provide an informed answer. If you haven’t, think before the session how you would respond. Answers that don’t go well: “We don’t know yet”, “We will decide later”, or “We haven’t thought of that. ”
Nine out of ten business cases that cross my desk contain material errors, which often lead to incorrect recommendations worth tens of millions of dollars. If you ever wondered why two thirds of change initiatives fail, here’s your answer: many of them are based on a fallacy, a case that does not exist.
The issues run the gamut from poor understanding of objectives to complete disregard for the established methods of economic analysis, from strategic ignorance to financial ignorance.
Decisions on outsourcing and insourcing are also not immune from this flawed approach. In fact, many of them are deficient for one specific reason which I will outline here.
For any business case, one of the most important questions you have to ask yourself is the following.
Does this proposal deliver strategic value?
What exactly does this mean? In July of 2008, I wrote an article for CNET, which I think you may find valuable in this context. It can be found at http://blogs.techrepublic.com.com/tech-manager/?p=550.
When making a decision, what else should you consider beyond the economic costs and benefits?
Techrepublic’s Chief Editor Jason Hiner has turned my earlier article on into a video.
Just 8 days left to take advantage of the early bird discount!
What’s included:
- Five hourly teleconferences and webinars on the key leadership competencies. Five hours of highly valuable content which you can start applying immediately.
- Prep work emailed to you before each session to maximize learning.
- Follow up information and suggested reading emailed after each session.
- Download of a session, so that if the circumstances don’t allow you to participate in the live event, you will be able to take it up at your leisure. Your investment is therefore protected.
All sessions commence at 11:30am Eastern on a second Tuesday of the month. The schedule is as follows:
September 8 – Practical Strategy. Learn how to chart your course, whether you are in charge of 2 people or 20,000, in a practical, no nonsense way that informs your decisions immediately. You will be able to transform uncertainty into clear, actionable steps and milestones, and commitment.
- What is strategy, sans buzzwords
- How to assess your present position objectively
- How to create common vision, goals and milestones, which are endorsed (“bought into”) by all concerned
- How to execute a successful strategy.
October 13 – Financial Skills for non-Financial Managers. The essense of financial management delivered in an intensive format. You will learn to talk to CFOs in the language they will understand.
- Practical primer in financial accounting
- How to read financial statements
- Understanding financing, investing and operating decisions
November 10 – Cost-Benefit Analysis. Learn the state of the art methods of financial analysis in just one hour. Plus, a comprehensive review of non-economic factors that often get forgotten. You will learn how to make or recommend sound investment and operating decisions, and validate proposals and other documents from vendors and consultants.
- Tools and inputs needed for analysis
- Typical weaknesses – learn why 9 out of 10 analyses can be questioned.
- Contemporary methods, their strengths and weaknesses: payback, IRR, NPV, and Real Options.
December 8 – Business Cases and Decision Making. Advocate and make winning decisions, blending the knowledge of strategy, finance, behavioral economics and psychology.
- How to use a proven framework, key success factors and typical mistakes
- How to use what you know about the audience: attention to detail, agenda, priorities, preferences, style, etc
- How to use principles of behavioral economics to your advantage, whether you are on the giving or the receiving end.
January 12 – Practical Change Management. This content is well beyond the usual project management curriculum. We will talk about the key success factors in change management, why 2/3 of all change efforts fail and how to ensure yours is a clear win.
- How to ensure broad support
- How to make others do what you want them to do
- How to measure progress and refine the approach.
I recently answered this question and then thought it may be worth posting in the blog.
Question: What quality frameworks (ISO, CMMI, ITIL, etc.) have you used in your organization(s), and what pros/cons from each have you found in your experiences?
Answer: There are three key issues that I encounter time after time:
– Faulty belief that a framework (any of these) is a silver bullet for all and any problems. I have seen them applied to correct personality conflicts and dysfunctional leadership. I kid you not!
– Failure to customize. You gotta make it yours to work for you. An IT services organization I know lost customers because third line support found themselves compiling case documentation 80% per cent of their time. Resolved that, but not before some changes at the top.
– Falling in love with your methodology. This is not set-it-and-forget-it deal and you have to test your approach for relevance all the time. Is there a better way to do it? Are our assumptions still valid? A bank I know implemented user account management policies which require faxing (this was in 2008!) of a change form to the support centre. It takes 2-3 weeks to have a user set up. Meanwhile, the business has to put these people to work, so passwords are shared as a matter of standard practice. Formally, they have adopted ITIL. In reality, they are providing poor (if not dangerous to the business) service, having failed to re-evaluate their approach.
Business Intellegence (BI) systems have become a feature de riguer for organizations of all sizes. A BI implementation (whatever it may entail) is never a trivial investment and is prone to failures as any other complex project involving people and technology.
If you were to sit a few people who have been through a BI implementation at the table and ask them about the critical success factor, you would likely fill a few pages in your notepad, but let me share with you just three points that I consider most critical of all.
1. BI can offer excellent ROI but only if there are people within the business who have knowledge, curiosity and willingness necessary to understand the presented information, make inferences and initiate tangible actions. Finding such people in your organization is not at all a slam dunk. If you cannot identify them, don’t bother with BI.
2. There must always be a business sponsor (champion) and the higher this person sits on the corporate ladder, the better. In the absence of sponsor, adoption will meet resistance, the project may easily end up on a low priority list, and before you know it, the precious momentum will be lost. Don’t spend a sou before you identify the champion.
3. As your business changes, so will the data. BI data is notorious for getting polluted very quickly in the absence of ongoing support. Once it happens, it can no longer be relied on for decision making, rendering the system unusable. You have to subscribe to the notion that an ongoing development effort will always be required. If you are not prepared to assume its cost, do not implement BI.
IT management often laments the lack of respect and understanding from the “business side” of the organization. CIOs find that they are not quite on par with the rest of the C-level group, positioned as senior order takers, not strategic decision makers. A CFO once told me that “IT is basically a black hole”.
Does this sound familiar?
If you are in charge of an IT department and recognize that there is a problem (many don’t), you may want to know how to change the perception and bridge the gap between IT and the rest of the organization. The issue at hand is your department’s credibility. Here are five simple things that will cost you nothing but make a world of difference.
1. Learn as much as possible about the business of your organization, the industry and the key economic factors shaping the market. Enable your people to do the same.
2. Engage you business side peers in conversations. Ask questions about their part of the business process, concerns, views, pressure points. Listen much more than talk. Encourage your people to establish similar connections at their level.
3. In the majority of organizations what IT does day in and day out is a mystery. Hold open door days, issue a newsletter, keep a blog – market your department to the rest of the organization.
4. Learn to speak business language (see my article on this here) and develop this skill in your people – engage them in thought provoking conversations, sponsor learning, work with a coach.
5. Showcase your understanding and appreciation of the business content by offering your opinion on business issue and suggesting strategically valuable ideas that propel the organization forward.
If you do it right, you will develop credibility and a reputation of a strategic thinker. Your department will seize to be “a bunch of propeller-heads” and will evolve into a strategic asset of the organization.
What is stopping you ?
Techrepublic published my article recently, on the reasons why IT staff and managers are often ignored and what to do about it.
Bogorad on Business 