What is the purpose of a business case? Why should I bother? These are just some of the questions this guide will answer for teams who aren’t quite sure what to make of a business case.
If you’re in charge of a business unit and its expenditures, you want a clear and concise process for individuals on your team to submit ideas and for solutions to be evaluated. And if you’re the individual pitching a new product idea, or a solution to solve a bottleneck at your company, chances are you will need to convince someone within your enterprise that it’s worth investing the necessary resources in.
In order to figure that out, you will need to determine which resources will be needed and what the return on investment will be, among other important considerations. This is where the business case comes in handy, as you are making the case for this new business expenditure. If your idea does not require a purchase or any dedicated resources, then you may not need something as detailed as a business case. Nevertheless, it’s a great tool for evaluating an idea or possible spending. This blog aims to explain ‘what is a business case’.
What is a business case?
A business case provides justification for an idea, project, or task. It documents and communicates the purpose of starting a project, and offers an insight to budget allocations, resource requirements, benefits, risks and more. All the details necessary to execute a plan smoothly, with minimal disruption.
A thorough business case will also identify alternative options and provide critical data so leaders can make better decisions about new projects and ideas. All of these findings and considerations are then brought into on streamlined business case.
Whether that’s in the form of a comprehensive analysis or a simple presentation depends on the scope and scale of a business case. Ultimately, however, this should answer the question “What is a business case?”
What is business justification?
“Business justification” is simply an alternative terminology for “business case”. The principles, best practices and general guidelines are exactly the same. Using the phrase “business justification” is question of preference, and will determine who you speak to.
Further reading: How business cases support benefits management and realization
How to write a business case
Who needs a business case?
If you are working in the corporate or government landscape and you have an idea to pitch, the business case will help solidify the value of your idea. Corporations and government agencies typically have a bit of “red tape” to get through when it comes to anything new that involves the use of budget or resources.
Therefore, who needs a business case ultimately depends on who exactly is involved in the development of a new idea, project or task. Typically, roles involved with a business case include the following:
- Business Analyst
- Project Manager
- Finance Manager
- Subject Matter Expert
- Legal Advisor
- Senior business Executive
Why do you need a business case?
There are three reasons why your team needs a business case. Firstly, it’s important to gain buy-in from senior management to secure the budgets and resources necessary. Secondly, a business case gives your team the tools to develop a criteria for all new ideas and projects. If it doesn’t meet your newfound criteria, it doesn’t make the cut! And finally, your team needs a business case to grasp the scope of work required to bring new projects and ideas to life.
Now explore these key reasons in a little more detail below, and see for yourself why business cases can be so significant in moving forward as a business with the right projects and ideas!
Gaining leadership buy-in
One of the primary goals of creating a business case is to convince decision-makers to go forward with an idea or project. It essentially “putting pen to paper” in terms of getting your message across, the pros, cons, risks and more.
A business case demonstrates to your senior leadership team that you have applied rationale and given strategic thought to an idea, making the decision process much easier for everyone involved. And by doing so, your organization can focus on value-driven ideas and decision-makers are burdened less with new proposals that amount to very little impact.
What’s more, a business case helps your organization prioritize projects that are inline with the overall strategy of the business. Understanding what cases are viable, and which aren’t is key to building a successful business — something that feeds into our next reason to consider business cases, developing a criteria for new ideas.
Developing a criteria for new ideas
Criteria can be a powerful thing. Not just with new ideas, but anything. It’s a great tool for filtering out the fluff, categorizing specific items and prioritizing impactful tasks or actions. Ultimately, criteria is the mechanics for what we choose to focus on and why.
When we think of business cases, we are fundamentally referring to a criteria for new ideas, projects and tasks. One that helps align team efforts to support key business goals. And that’s exactly why business cases are such a necessity, as they provide a more efficient, optimized approach to innovation management.
Choosing to build a business case is choosing to create a transparent process that is companywide and a level playing field for all potential projects. What’s more, with each new opportunity your team will have a better understanding of whether it drives value in the right places or not.
In short, business cases help prevent aimless innovation efforts. Lessen the budget spent on dead-end opportunities and give your team something to work with when coming up with new ideas.
Understanding the scope of requirement
Last, but certainly not least, understanding the scope of work required is a key reason to take business cases seriously. Think about it; if the project is chosen, the business case can help with managing the scope of the project during the initial planning stage.
Then, after the project is completed, the business case becomes the measurement tool to assess how well your organization did with planning and implementation. Developing a business case is about connecting the dots; realizing what it really takes to plan, implement and succeed with a particular project or idea.
See, before any work takes place, a business case may reveal a problem further down the line. Risks that threaten your chances of success. You may discover that a particular project or idea won’t provide the benefits your team actually wants.
It’s safe to say that without first scoping out a project or idea from start to finish, you should holdback on making any decisions, investing any budget or allocating any resources.
Now you know what a business case is, you may find our other advice handy:
- How to develop a business case
- What I learned from pitching ideas to the C-Suite
- Business case software – a quick guide
FAQs: What is a business case?
What is included in a business case?
This depends on your organization’s in-house processes, but most business cases include:
- A brief overview of each area of your business case, known as an ‘executive summary’
- The project objectives and how they fulfill business needs
- An outline of the project plan
- The project scope – all the tasks and deliverables that will be executed as part of the project
- The background information around the business case, including the problem it will solve and who the key stakeholders in the business are
- The projected benefits of the project (including non-monetary benefits) and its success criteria
- The cost and potential risks of completing the project, including how they will be mitigated
- The implementation strategy.
What is the best definition of a business case?
A business case provides justification for initiating an idea, project, or task. Essentially, it is used to sell a project idea to key stakeholders and provides clear expected goals and benefits for project managers.
How to write a business case?
There are three key stages to writing a business case:
- Carry out research
- Get an implementation strategy together
- Compile your recommendations.
You can find a detailed guide in our blog on how to develop a business case.