Next time you're wondering if you should invest the time to detail the risks and rewards of a project that may never get the green light, think about the price of failure. “Pay now or pay later,” says Scott G. Fass, director, Global Risk Management Solutions, with multinational consulting firm PricewaterhouseCoopers LLP, New York, N.Y., USA. “Executives who lead by their gut find themselves delivering late and over budget, and do not meet stakeholder expectations. Without a solid business case, the best project plan often does not support organizational objectives and will lack commitment.”
INTERNET MINI BUSINESS CASE
The largest airline in Asia, Japan Airlines (JAL) employs nearly 20,000 worldwide and operates in 109 airports in 30 countries.
PROBLEM STATEMENT: To establish closer and stronger customer relationships in the near term and increase long-term customer retention rates and stimulate travel volume.
CONCEPTUAL SOLUTION: Update Internet infrastructure to include an Internet-based reservation system. Allow passengers to make, confirm and cancel reservations, see flight schedules, and learn space availability, arrival and departure information.
JUSTIFICATION: In addition to forging closer bonds with customers, e-business technology is a strategic marketing tool for JAL. Specifically, JAL sees a strong opportunity to leverage the information gained through its various Web programs as a means of attracting and keeping “high-value” customers.
RESULTS: From April 2000 to July 2000, the number of online reservations increased 50 percent. JAL has added ticketless domestic reservations with credit-card payment capability, and, more recently, an i-mode service, which enables customers to use JAL's Web services via a cellular telephone.
“From the beginning, we have intended not simply to deliver information to our customers, but to be interactively connected with them,” says Tomohiro Nishihata, JAL director of e-business, product planning. “We see personalization technology and targeted communications as an important future tool in our attempts to attract customers and strengthen our interaction with them.”
→ Equally good at deciding which products to launch or which problems to solve, a strong business case increases your odds of maximizing organizational effectiveness and overall value. “Ideally, project objectives are aligned to organizational objectives, and organizational objectives are mapped to strategic vision,” Fass says. “When the business case is written and developed correctly, it becomes the thread through these elements. The objective is to have a whole lifecycle approach to obtaining beneficial returns on project investments.”
→ Although the written business case is the end result, the real benefit is the process: brainstorming the options, coming to the best decision as a team with vested interests in the ultimate benefit to the organization. “When used effectively, the business case provides a context for the executives to test out and confirm their views and then communicate that thinking to those who will be responsible for making it happen and those who will be affected,” says Brian Coutanche, principal, Brian Coutanche Consulting, Jersey, U.K.
The discipline of thinking through the benefits and the resource implications will sometimes show that your priority is not necessarily the organization's priority, Coutanche says. “Organizations are always faced with limited resources and have to judge the relative merits of the alternatives and the linkage to tactical and strategic drivers against a changing business background.”
Bare Bones
When done right, a business case specifies the project constraints or boundaries—it's not the scope or the project management plan, says Donna Fitzgerald, partner, Knowth Consulting, Kirkland, Wash., USA. “It's solely focused on the problem, how much we want to pay to solve it and what we expect to get back from our efforts. I call the business case my North Star, my 2 a.m. guidance. I need something that tells me very clearly why I am doing this and what value it brings to the customer—what flexibility I have.”
→ According to Fitzgerald, a winning business case contains three essentials: a statement of the problem (or opportunity), a conceptual solution and a justification for engaging resources.
PROJECT SERVICES MINI BUSINESS CASE
General contractor Ulliman Schutte Construction (USC), Miamisburg, Ohio, USA, is an engineering-based company known for its expertise in complex treatment plant construction projects with budgets from $1 million to $70 million.
PROBLEM STATEMENT: Onsite teams needed to communicate with each other and the corporate office, and to access key databases, e-mail and the corporate intranet. Complex projects required on-site servers to facilitate data management.
CONCEPTUAL SOLUTION: Create a fleet of on-site technology trailers. Depending on the complexity of the project, deploy one or more trailers to each job site.
JUSTIFICATION: USC's reputation for exceptional on-site project management is its key competitive differentiator. To maintain that reputation, highly skilled teams in the field needed the same level of technology they had in the office.
RESULTS: The onsite construction office trailers have proven reliable and dependable. Once a project is complete, the system rolls off to the next site. Project managers developed a stable network that ensures systems run without interruption.
Ideally, project objectives are aligned to organizational objectives, and organizational objectives are mapped to strategic vision.
Scott G. Fass, Director, Global Risk Management Solutions, PricewaterhouseCoopers LLP
The problem statement should include extensive analysis. The business case writer should host solid discussions of the issues with up to 12 key stakeholders (or a representative cross-section). “In IT, we put the right people in the room and ask what's happening and what's our level of pain,” Fitzgerald says. “Concentrate on how you should define the problem, because often people have already leapt to a solution that doesn't really solve it.”
During this phase, determine the affected community and arrive at the cost of the problem, either in people, time, lost sales to customers—whatever is appropriate—and determine the urgency to fix it.
Once you agree on the real issues, begin conceptualizing a solution. This aspect of business case writing requires systems thinking, because you must examine the problem's impacts across the enterprise. “You are ensuring you understand the complexity of the situation and its interconnections to other issues,” Fitzgerald says. “From there, the solutions become obvious.”
In these meetings, stakeholders brainstorm solutions to determine whether the problem will require a new system, process changes or both. “Arbitrary numbers at this point are fine—here's where project managers start to scream,” Fitzgerald says. “If someone related to the problem says what solving this problem is worth individually or to the company, then that's what really matters.”
MARKETING MINI BUSINESS CASE
The eighth largest U.S. wireless service provider, Chicago, Ill., USA-based U.S. Cellular provides service to more than 4.2 million customers in 149 markets across 25 states.
PROBLEM STATEMENT: While the launch of U.S. Cellular's Mobile Messaging service in 2001 was considered a moderate success, senior management wanted to extend the reach and frequency of text messaging services. Billing capabilities needed to be expanded to provide customers with a range of options. The technical platform needed to be enhanced to support interoperability with other carriers and to handle increased message volumes associated with such growth.
CONCEPTUAL SOLUTION: Develop and execute a Mobile Messaging marketing plan that would efficiently drive increased usage. Define a compelling service offering, and create a customer communication strategy.
JUSTIFICATION: Mobile Messaging services were considered critical to the company's strategy of providing customer service and maintaining profitable growth.
RESULTS: A multidisciplinary, collaborative project team completed the marketing plan. The project included a service offer definition, promotion and communications plan, business case to drive investment decisions and organizational development strategy. According to David Benson, director of product development and management for U.S. Cellular, the project has yielded:
• Incremental revenue 600 percent greater than original forecasts
• Competitive differentiation based on the company's ability to charge only for outbound text messages
• Additional voice traffic spurred by complementary text messaging
• Opportunities for growth as the company creates and introduces new SMS-based services.
CONSTRUCTION MINI BUSINESS CASE
Wireless service provider Bell Atlantic/Nynex (now Verizon Wireless) wanted to increase the flow of jobs between its accounting, engineering and construction departments.
PROBLEM STATEMENT: Time was wasted doing manual activities such as maintaining job logs, juggling schedules, preparing daily forms and recycling work through engineering. The stakeholders of this system—engineers, control managers, design-build managers and clerical, accounting and staff personnel—were dispersed through 82 locations in the U.S. Northeast corridor, from Presque Isle, Maine, to Lower Manhattan, N.Y.
CONCEPTUAL SOLUTION: Build a wide-area network across the Northeast United States, deploy more than 1,000 personal computers, install or configure more than 100 file servers and 20 database servers, convert 1 million records into the new system and train more than 1,500 users all within a nine-month period. Deploy the software, and support the transformation of these 82 centers from standalone, non-standard business units into a highly productive competitive group that uses state-of-the-art tools to respond quickly and efficiently to rapid market changes.
COST: 3.5 years and $43 million.
JUSTIFICATION: The Engineering Construction Records Information System (ECRIS) was considered a high-risk project with a 20 percent chance to succeed. However, the firm was downsizing and needed process efficiency to remain competitive, so the risk was acceptable.
RESULTS: The project management team fully implemented ECRIS on time and under budget. In the end, an early retirement plan was implemented, and although people had to be reassigned, the completed ECRIS system allowed Nynex to avoid layoffs. ECRIS usage continues to grow, and it is now classified as the second largest Oracle client server application in North America. Leaders devised the business plan, but project managers delivered it.
Next, determine the direct and indirect cost of the proposed project and how the solution aligns with company strategy. Past project performance can be used to support or sink a proposal. All risks and rewards will need to be outlined in order to make a qualified decision, but in the end executives will have to make a judgment call.
“While outcomes may be quantified in financial terms, numbers can be misleading,” Coutanche says. “For example, if the rationale is about improving customer service to nurture loyalty, the business may not have any precedent for expressing this strategic outcome in simple financial terms, yet some way must be found to draw out its significance. This is where the perspectives and judgments of the sponsors come into play.”
SIX WORST PRACTICES
1. REINVENT THE WHEEL. Keep good documentation, and use history to inform your decision-making. If your company hasn't been down a particular road, benchmark against other companies.
2. PROVIDE A LONG, UNSTRUCTURED NARRATIVE. Cover the essential data in a logical sequence. Say what you mean, honestly and concisely.
3. FAIL TO CONSIDER ORGANIZATIONAL OBJECTIVES OR TO ACCOMMODATE BUSINESS CHANGE OVER TIME. The weakest business cases lack ties to strategic objectives and fail to articulate both tangible and intangible benefits.
4. WEIGHT PRICE AS THE PRIMARY CRITERION FOR VENDOR SELECTION, OVERLOOKING IMPLEMENTATION EXPERIENCE. Change drivers, key performance indicators, critical success factors and risk/reward should aid decisions.
5. WRITE A BUSINESS CASE IN A BUBBLE. Pride of ownership can get you into trouble. Involve others to garner support.
6. MAKE ASSUMPTIONS WITHOUT THE FACTS TO BACK THEM UP. Don't jump to quick solutions. State the assumptions you've made and why you've made them without hard data. Don't misstate “cost transfers” as “cost savings.”
A business case provides you better information on the product that you ultimately want to launch and makes you think rigorously about the proposition.
Scott Walsh,
Senior Manager, The Customer Group LLC, Chicago, Ill., USA
Too Much Information?
A business case for a new product launch encompasses all the steps needed in analyzing an internal problem or opportunity, but with an added emphasis on external factors, according to Atlanta, Ga., USA-based Scott Walsh, senior manager with The Customer Group LLC, Chicago, Ill., USA. “A business case provides you better information on the product that you ultimately want to launch and makes you think rigorously about the proposition,” he says. “You also really examine the market, both with a competitive analysis and the overall size of market.”
The complexity of your business case also depends on the nature of your business, the size of the proposal and the resources available to address the issues, according to Letitia Pasqualone, project facilitator, MTA/LIRR East Side Access project, New York, N.Y., USA.
Pasqualone looks at a successful business case from several angles. She includes a needs analysis and cost-benefit analysis, but focuses on resources, expected performance metrics and well-thought-out alternative solutions. She stresses the importance of stakeholder meetings and information gathering—avoiding politics at all costs.
“Frequently, people ignore the fact that they may get vendor support or other assistance within the corporation that would enable a better solution,” Pasqualone says. “You'll get the right information if people trust you and you don't punish people for telling the truth. Even if people are well-intentioned, they may be wary of certain political movements. Especially in big, government projects, political ebb and flow will color the definition of ‘what we need.’”
Getting the right information comes down to recognizing who the key players are and establishing effective working relationships with them. Interpersonal skills and an awareness of organizational politics help you maintain forward momentum. “Project managers will understand the project risks, so you should use them as subject matter experts,” Walsh says.
Ultimately, tailor the business case format to the executive and what they're used to seeing. Avoid providing a glut of unnecessary information that will stall decision-making or leave any doubt. “Your presentation and level of detail is driven by how significant an investment you're talking about, who your audience is and who you're trying to convince,” Walsh says. “Information may be valid today, but six months down the road, market conditions will change. To launch a project later, an executive will need to go back and reexamine the investment.”
Detail vs. Big Picture
Project management skills are an asset—and a liability—when writing a business case. While robust project management methods include business case monitoring and benefits realization, today's projects are measured both in terms of project outputs and business outcomes. “Project managers can be too literal in their thinking,” Fitzgerald says. “But the point of the business case is the interconnections. Good project managers see those. They see all the problems and solve the right ones.”
→ Alternately, executives must be able to question the business case. Project management skills will help them evaluate the data presented.
In the future, project managers will cultivate skills required of top management—and top management will have project expertise. “The recent call for large, complex requests for proposals (RFPs) for professional project management might be considered akin to business cases,” Fass says. “In fact, recent experience supports RFPs for business case development. More often than not, firms are turning to project management professionals to support business case development, monitoring and benefits realization.” PM
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