It’s no longer acceptable to justify an investment in IT based on staying competitive or keeping pace with technology advancements. There must be a business case. Unfortunately, there is a lot of confusion about what makes a good business case.
A business case is a tool that supports planning and decision-making for both operational and investment decisions. A good business case includes the methods and rationale that were used to quantify benefits and costs. It shows expected profit impact and/or cash flow consequences over a period of time.
Need For Independence
One of the big problems with business cases is that they are written by the same people who want to be funded for a particular project. These people have a vested interest and typically find a way to make their case with numbers. It gets worse when organizations rely on vendors to help them with their business case. The vendors may have some slick material and may be able to offer a few ideas for people who don’t have a clue, but caveat emptor.
- Estimate approximate Total Cost of Ownership (TCO) based on responses to an RFI or RFP
- Estimate approximate benefits based in eliminating problems identified in a business process review
- Prepare a 5 year cash flow that includes a Return on Investment (ROI) calculation
- Recommend a plan of action