Building Your Business Case
Before you get to implement your next great project you'll need to convince those who fund it that they should. To be effective, you must think like they think and prepare a compelling business case.
Whether you’re a network architect on staff at a corporation, or part of an IT practice supporting customers, or even an independent contractor proposing projects to clients, you will regularly be called upon to do something that involves no technology work at all – build a business case for your next recommendation or proposal.
Sometimes, providing a business case may be a simple procedural requirement that you will dash off quickly. More often, however, your client or executive sponsors will want a deeper understanding of what you’re proposing and why they should approve it.
Here are a few things to keep in mind as you build your case
They Don’t Care If It’s Cool
As technologists, we are excited by new technologies as they emerge. We examine the new functionality we can take advantage of, and the elegance of the architecture. Our imaginations run wild with what we’ll be able to do with this new tech, and we invest time in thinking about what changes will be needed to our infrastructure. Technologists simply love new tech.
Corporate executives and business owners? Not so much.
I’m not saying that non-techies don’t appreciate new tech. Many of them do. But all of them share some simple, basic responsibilities. They must run the business and continuously work to make it more profitable. This means they must find ways to reduce costs, and ways to increase revenue.
And that’s it!
The Only Two Ways to Increase Profits
When you boil away everything else about senior management, the two ways available to them to fulfill their mission of increasing profit are to lower costs and raise revenue. Everything else contributes to one or both of those.
When preparing your statement of justification for the investment required to achieve your next technology implementation, think about these two critical dynamics. Talk about how your project contributes to one, the other, or both. How does your proposed new technology addition help to reduce operating costs, and/or how does it help your company increase revenues.
Don’t get lost in the features and benefits the manufacturer emphasizes. Don’t wander into the weeds of speeds and feeds. Your decision-maker simply doesn’t care. How does it support increasing profit? That’s what they most need to know. That’s their mission.
Return on Investment (ROI)
While you may see your proposed next project as an exciting opportunity to dig your hands into some new stuff, your decision-maker always sees it as an investment. You’re part of that investment. In addition to any hardware, software, or services you may be proposing, they also have the cost of you and your colleagues who will work on the project to consider.
A wise manager of mine once said to me, “If you’re asking me for $100 to do something and you can show me how I get back $101, we have a beginning to the conversation.“
The first challenge you face is to quantify how much your project will reduce costs by, and how long it will take to realize those cost reductions. Your decision-maker will want you to translate that into how quickly the investment you’re asking for will return to the company. That is, how long will it take for the savings realized to equal the investment made. That gets you to break-even, which is still unimpressive.
Next, how quickly will your project return more profit in the form of reduced costs and increased revenue? Depending upon the business, senior management will want to know how much they can see return to the company every month, quarter, or year. Is that return more than they would receive if they put the investment into a money market? If not, they begin becoming skeptical.
One of the most difficult things to calculate is the return on investments in marketing. Each marketing activity broadcasts its messages to many potential customers. How can you attribute the arrival of a new customer to a specific marketing activity? Unless you have your salespeople capturing that information by asking them what encouraged them to reach out to your company, it’s very nearly impossible.
Almost as difficult is identifying the indirect ways investments create contributions to the bottom line. If your investment makes it easier for staff members to perform certain tasks, those tasks may contribute significantly to lower costs or increased revenue or both. How to connect your project to those gains is the question, and it’s a challenging one. Often a best-guesstimate is all you’ll be able to provide. Be conservative here to maintain your credibility.
It’s Not What It Is, It’s What It Does
You may find yourself tempted to copy and paste all the great things the manufacturer says about the new technology products you want to implement. Resist that temptation. Your decision-maker doesn’t really care.
What your decision-maker does care about is what this new technology will do for their operations. How will it create improvements? Will the savings be “soft” as in “greater productivity” or hard dollar savings they can take to the bank?
Noted author Simon Sinek in one of his pivotal books tells us to “Start with Why.” This is the best possible advice to technologists proposing new technology investments to senior management or clients. Focus on why this investment will pay back dividends. Be prepared to explain why they do what they do, but not how they do it. Again, your decision-makers just don’t care.
They simply care about how your idea contributes to the bottom line. You should, too!