Build a Better Business Case

Robert boettcher is awaiting approval of a project to upgrade the e-mail that he had suggested, when the number of accidental happened. The system rammed a day.

"All of a sudden, we can see the immediate value of upgrading," said boettcher, IT managers artesia HKMC capital, commercial mortgage securities companies and 60 staff based in Issaquah Washington state, "Everybody is saying, Why did not this been replaced? " Boettcher his case, to enhance the e-mail system artesia to his boss, a few weeks ago, but has not yet received the giving the green light for the six-digit project. See productivity to manage the impact of the collapse of the system and cost escalation has not done first-hand information is priceless. Boettcher is expected to approve his plan, is expected any day now.

Many IT managers see preparing a business case for project approval as a necessary evil. Most have never studied basic accounting, so learning to create a solid business case is often a matter of trials and errors. We like it or not, though, the preparation and business case is a very important part of any IT managers daily routine.

Executives may be the Bucks and the corner, but its down - M processor trenches IT managers on the line when ready to make a solid business case to spend dollars. "They are those who do the real work to calculate the figures, said:" Campbell, president and CEO of the Nuclear Research, Huiershili, Massachusetts, consulting firm, specialized measuring IT project investment return. "They are those who are most likely to be dismissed if things continue this way wrong." Campbell and his colleagues help IT managers and chief information officer with commercial cases on the facts and assess returns after.

Small and simple When it comes to preparing a business case for an IT project whether its part of the infrastructure or a particular project intended to reduce costs, or drive revenue - IT managers in small and medium-sized businesses (SMB) as boettcher usually not too many hoops through Jump.

Their counterparts in large enterprises are likely to have to face a "hurdle rate" - the amount of return a project must prove that before approving. In addition, Fortune 1000 companies often need to frame an IT project manager, and for all other IT projects for consideration by enterprises and the financial sector.

business case best practices cover the basics: Make sure your analysis and business case covers basic identify and solve problems, cost, efficiency, time and cost-effective, not to do the project.

Preparations and details: all the technology file, you may need to circumstances, you have to sneak into the details.

Envisaged, prepare responses: to imagine all the possible problems, company directors might ask, and stands ready with an answer.

That productivity: Be sure to prove how of the new project will help to enhance productivity and reduce overall cost of ownership. Do not neglect to quantify the indirect benefits (see "These quantify indirect returns," below).

Display and Description: preparation, demonstrate the value of new technologies.

Introduction of the sponsors: a sponsor , from business units to help you to make your case. For example, if the project will benefit sales, sales manager, sales to you.

Risk mitigation, management expectations: at present a worst-case scenario and the most likely situation is to help reduce the risk and management of expectations. Now the critical factors affecting numbers for these scenarios.

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mid-market IT managers (including most of the IT managers in the United States, because in terms of their number, SMB), and usually do not have follow a formal process. They will have to do some research, choose the best option, and walk through the hall in an informal conversation, their boss.

Anne Patterson, is typical in this regard. "If I say, This is what I need, they said, Let us look at your money. I did not go to the 18 chain of command, "Patterson said, the overall, it was Georgia Chamber of Commerce in Atlanta. When Patterson prepared business case, she has to cover the basic knowledge, including an overview of the issues, find solutions, operation costs and benefits of numbers and sketching out a timetable. "I whip up an executive summary to explain why the project will reduce the overall cost of ownership and increase their return on investment," Patterson said. Her boss is not interested in the technical details, but she has been detailed documents, a business case for each, and in case the board of directors should drilled to the details.

Patterson, the boss naturally gives more consideration to IT projects that cross the six-digit threshold. She has been way, he gave a thumbs-up on a project to improve the organization of about 60 personal computers next summer, with the migration from Windows Server 2000 in Windows Server 2003. "I am very lucky," she said. "They never said no to me." Nevertheless, the experience with a difficult boss in the past has made her very detail-oriented. She tried to imagine all possible problems, her director might ask, and always had a response.

That productivity Often, the most difficult item to the ground that the cost of infrastructure projects, such as e-mail, no demonstrable efforts to return billions of dollars. Suhale vorajee, business support manager for the UK-based branch of GE Commercial Finance, and the struggle of the welfare measures, paid a hard dollar. "I often work on the business case for IT projects, but also to support a strategic initiative. I got pushed, by the Vetting Committee, which hopes to see a hard-dollar benefit, and said: "vorajee. "How do you justify the cost of investment in innovation and technology, which has no precedent to go by, has been set up?" These types of projects is always difficult to justify, said Campbell. Imagine, for example, you have raised customer relationship management (CRM) applications that will enhance customer loyalty. "You may not be able to point to hard savings, but if your competitors are providing this service, you do not have, the percentage of customers, you will lose?" Make such a measurement is certainly more difficult, but not impossible, an increase of Campbell.

However, IT managers labor over excuse infrastructure projects, such as voice mail or network upgrade. "Sometimes the best approach is to assess the impact, if you took office technology disappear," said Campbell. "How much cost increase or a decline in productivity?" Some IT managers do not even attempt to quantify the projects expected production efficiency. Their belief is, to make it clear that the return (such as reducing the number of calls, call center or money to save printing costs), and are more "pure" and therefore, preferably those with production efficiency.

This is a big mistake, said Campbell. "If you do not believe that in the interests of soft, you should not buy a computer, you should not have lighting, in your office, a significant part of any business case for a measure of productivity growth," he said. (See "These quantify indirect returns," a secret project to measure the efficiency of production).

quantify these indirect benefits Under normal circumstances, IT managers avoid the improvement of productivity in their business circumstances, prefer to adhere to the benefits of hardware, they can prove that. This is a mistake, and warned Campbell, president and CEO of nuclear research work. The indirect benefits are equally real, and often have a much greater impact than the hard returns. Heres a way, the intangible benefits translate into practical benefits: 1. Quantify a lot of time, do you expect employees to save as the new application or system. For example, a new CRM tools will save 10 hours per year to 100 sales personnel to a potential saving 1,000 hours.

2. Because of the time savings, and not directly into the extra working hours, multiplied by the time saved by a correction factor to account for the core, calling for inefficient transfer of time. Correction factor is less than 1 and greater than 0. For example, the sales commission is the work of a high morale, so that they may have a correction factor of 0.7 or 0.8. Marketing personnel may not be able to use their savings in time, effectively, so their correction factor may be .5 or below.

3. In this example, the correction coefficient multiplied by the salesmen (0.8), by the total number of savings (1000), the actual savings time will be 800 hours.

4. Then multiplied by the result (800 hours), the average hourly wage salesperson to quantify, to the benefit of the companys dollars.

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null and void if all other measures, seeing is believing. When Bill OReilly tried to get his management team to realize the value of upgrading from Windows 98 to Windows XP, to achieve this goal. "I can be in a system from home said, Heres QuickBooks running on a new system running XP you can see, the bloody difference," OReilly said, IT managers in Seattle Prostate Institute. He only needs about $ 30,000 for this project, but even this is a very serious problem for the 75 prostate health care company.

Now, after being rejected once, OReilly is still to promote ratification of a programme to upgrade the voice mail system to unified messaging integration with Microsoft Exchange. "They choked on the up-front costs," he said. "Its still in the air, it is sometimes difficult to let them see beyond the dollar to enrol in the frontline." Shift the burden to When a business case for a project will be of benefit to a specific business unit or a certain type of user, it The key to the implementation of the order to get a group to accept responsibility for making the benefits happen. Boettcher has to insist that an executive, and make our own situation is beneficial to boettcher course.

For example, the sales department is artesia promote a CRM applications. Boettcher study of existing technology programme, the provision of load data, and eventually recommended Microsoft CRM, but that was it.

"Business case must be embarrassed by the department, they said, they need information. I am an IT staff, and not a sales person, I can provide information, but I can not make the benefits happen, "said boettcher. "I can talk about how it will integrate into our current environment, and I can talk about support costs, I can become a consultant, but I am not aware of any value to this business, until they told me." For these types of projects, not to attempt to obtain approval or financing until you have a commercial sponsorship, and with your supply.

Another solid choice is the worst of circumstances, with the most likely situation is a risk mitigation strategy. This helps engineering and management selected the least damaging worst-case scenario, explained Campbell.

First thing I see in the preparation of these are metrics to drive the rate of return on investment projects. These are clearly the project is the most sensitive figures. For example, if you have a 1.2 million US dollars project, and consulting costs to make up for the 1 million US dollars, then, the Advisory is obviously the most sensitive area.

Anything that could promote investment and consulting costs is a clear threat to the approval of this project and results. You need to establish milestones related to those most sensitive indicators for comparison. In this example, you would want to get a fixed price consulting services. Because it is key to the outcome of the project, you will want to assess your consulting fees each month to ensure that they do not have gone beyond control.

"You want to look at very carefully to make big impact on the number, it is even more important investment in the calculation of the rate of return," said Campbell.

It may never an IT managers favorite part of the effort, but most people feel that the process of making the business case easier with the passage of time. When he first started, in its 15 years ago, boettcher used to hate it. "Now I can make a better case," he said, "people listen."