One of the primary responsibilities of some Business Analysts (BA), or Enterprise Analysts (EA), is to justify projects that the organization should undertake. The BA does this by creating a Business Case for the project and this task falls under the BA knowledge area of Enterprise Analysis.
Many Business Analysts miss the ball in the Business Case by making the justification for the project or IT business solution very subjective. Many Business Cases start off with what the IT business solution should be. To understand what should be in a Business Case and how to develop one, we must first understand the purpose of the Business Case.
The Business Case is a formal written document to assist executive decision-makers in making the decision on whether to invest in a particular project or IT business solution investment. Knowing this purpose of the Business Case brings to light two important aspects of the Business Case: 1) it is for executive decision-makers and 2) it is to assist in their decision to invest. This means that two very important sections of the Business Case need special attention: 1) the Executive Summary and 2) the money section.
I have personally seen that executive decision-makers look at these two sections only. Executives want to know 1) what is this about and 2) what is the cost and cost-justification. The Executive Summary should summarize the rest of the business case in a very concise and complete way for quick consumption by executives. The long, detailed version will be used by Managers, the Project Manager and other application software development team members. The second important section of the Business Case is the money. Notice, I not only said “what is the cost” but also “and cost justification”. The cost justification is what is usually left out of the Business Case; most Business Cases, even today, contain no ROI or cost justification analysis. The money section should contain not only the cost of proceeding with this project but it should contain a cost justification for undertaking the project. Projects can be justified by either a cost-benefit analysis, average rate of return, return on investment, internal rate of return or some other method of financial analysis.
Organizations may gain great benefits from engaging the Business Analyst in creating the Business Case including more informed decisions, project mix more strategically aligned and greater business understanding.
We will discuss the other sections of a Business Case and the process that the development of a Business Case should go through as this “The Value of a BA” series continues. Rich Larson of Watermark Learning presented a session on “Creating Bullet-Proof Business Cases” last spring at the Southwest Ohio Business Analysis Development Conference here in Cincinnati for Cincinnati, Dayton and other business analysis professionals in the region. Rich’s presentation, the BABOK® and other BA resources will be used to justify the concepts presented. I hope you continue to read and enjoy the series.