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How-to guide

Building a business case for

IT investment
Overcoming hurdles and turning innovation into reality

How-to guide: Building a business case for IT investment

Executive Summary
Innovation is nothing without execution. New ideas, wherever they stem
from, are worth nothing until they make it into reality. However, in todays
tough economic climate, getting budget for IT projects can be a real
challenge. The business case is the stage at which most new innovations
are likely to stumble. No budget means no execution. No execution means
no innovation. So, developing strong business-case-building capabilities is
a critical component of an innovative, business-leading IT department.
The goal of a business case is to get the support you need (budget and
commitment) to turn an idea into reality; thus, it is an essential part of the
overarching innovation process. When youre presenting a business case,
youre selling an idea and how to execute it - creating the support and
cultural groundswell you will need to gain consensus, push the business
case over the line and execute the plan.

Contents
Introduction
So what is a business case?
Planning to build a business case
Identifying the need/opportunity
Stakeholder identification
Business objectives and outcomes
Stakeholder planning
Strategic alignment
Technology Issues
Risk profiling
Business case evaluation
Key takeaways

How-to guide: Building a business case for IT investment

Introduction
The appropriate
level of stakeholder
commitment is
the single most
important factor
towards ensuring
the success of
an IT investment
project.
Dan Remenyi, IT Investment:
Building a Business Case

Many businesses today arent just supported by technology theyre

defined by technology. In digitally-defined companies like Facebook and
Amazon, the ROI of technology is indisputable, yet most organizations
have been stung by very memorable IT project failures. These failures
stick in the minds of the people who write the checks. As a result, the level
of trust in the IT department is low, and this lack of trust (combined with a
harsh economic climate) has caused business leaders to become highly
skeptical when it comes to spending big bucks on IT projects (the last time
we gave you money, you blew it!).
The barriers that stand between the IT department and the company
coffers are higher than ever before for this very reason, but the problem
is compounded by increased competition for funding from other areas
of the business (including shadow IT projects). The antidote to budgetholder skepticism is a rigorous and compelling business case that clearly
articulates the benefits in business terms and sets out how and when the
project will be executed to deliver these benefits and avoid the associated
risks.
The key to success is presenting IT investment as business investment,
e.g. how spending money on IT projects will pay dividends in terms of cost
savings, productivity increase and quality improvements; some tangible
and measurable, some less tangible and less easy to quantify.
Financial figures should show compelling reasons for IT investment, but
a traditional Cost-Benefit Analysis (CBA) is only part of a business case.
Where financial analysis may be seen as the rational part of decisionmaking, there are also other subconscious and emotional factors to
consider. How will this investment in IT make life easier for people in the
business? How will it eliminate current frustrations? The resources required
to successfully deliver an IT project go beyond the budget: people, effort,
motivation, commitment, knowledge and relationships are also critical
success factors.
It is important to consider how the business case will appeal to the values
of stakeholders and decision-makers. For example, introducing web-based
ecommerce and self-support tools in a very traditional organization that
prides itself on the personal touch may make economic sense (in terms
of cost savings) but it may not mesh well with the companys brand values.
It is essential that an IT business case is constructed in collaboration
with business stakeholders, so that conflicts that might kill an IT project
can be resolved as early as possible in the process. Understanding that
building a business case is an iterative and collaborative process - applying
continuous participatory evaluation that involves both IT people and
business people is the key to success.

How-to guide: Building a business case for IT investment

So what is a business case?

Generally speaking,
a business case is a
predictive evaluation of a
future state;
a defined vision of what could be,
given the right resources and support.
It acts as a justification for assigning
scarce resources in a particular area by
forecasting the benefits and contrasting
these against cost and effort.
Effectively, a business case is a
detailed sales brochure: selling the
concept of an innovation, outlining how
it will work, who will benefit and how
it will be made a reality. A business
case should be as much a plan as a
justification. It should include much of
the detail necessary to execute the
innovation, once it is signed-off.
For the business case project owner
(somebody has to own it) the business
plan document is the hub of the
business case process, capturing
what is to be done, when, why, how
and by whom. It is a focal point
for the engagement with business
stakeholders.

More than just a document, it is a

vehicle for gaining consensus on the
scope of a project and how it will be
executed. The goal of a business case
isnt just to get the go-ahead but to
gain support from all of the people
whose commitment will be needed to
execute the resulting IT project and
adopt the delivered innovation.

For managers of the resulting IT

project, a business case document
is a tool for keeping the project on
track. For them it is a list of objectives,
deliverables and milestones on which
a more granular IT project plan can be
hung - although again, the business
case document should not be the only
communication vehicle.

For business executives, a business

case is in theory a decision-making tool
that encapsulates all of the relevant
information needed to evaluate a binary
decision Yes or No. However, in
reality, a business case is not just a
document to be rubber stamped by
the CEO or CFO.

Relationships formed throughout the

process of constructing the business
shape should be maintained throughout
the process of developing and
deploying the solution to ensure that
what is delivered matches up with what
was promised.

It may be thought of as the end product

of a process, but that process should
involve stakeholders and decisionmakers from day one. A surprise
business case document landing on the
CFOs desk is unlikely to make the cut.

IT solutions have a tendency to evolve

during their construction, so it is
essential to keep the objectives in mind
and stay synchronized with the ultimate
customers of the innovation project.

How-to guide: Building a business case for IT investment

Planning to build a business case

The business case is the
stage at which most IT
projects stumble, so proper
planning is essential.
Most of what IT does is founded on
some process, lifecycle model or
framework, so why would you take
a haphazard approach to building a
business case?

3. Business objectives and outcomes

Defining the ultimate goals,
objectives and deliverables of the
project.
4. Stakeholder planning
Collaborating with stakeholder
groups to iteratively define and
refine the objectives and the path
to delivery (and adoption).

The production of a business case for

IT investment is a business process in
its own right.

5. Strategic alignment Defining

how the IT project will support
the broader business goals and
objectives.

Apply project management principles

and have a defined process to help
you get the outcomes you need to
take the innovation to the next stage
authorization of your plan and budget,
combined with support from all the
relevant stakeholders.

6. Technology issues Defining

the architecture, infrastructure,
hardware, software, people and
timing of delivery and associated
costs thereof.

The process
1. Identifying the need/opportunity
This stage is the initial trigger for
the project, which may stem from
a business strategy change, the
Problem Management process, or
a Voice-of-the-User program.

7. Risk profiling - Identifying,

assessing and negating associated
risks.
8. Business case evaluation The
final decision-making stage,
where the project will be either
commenced or declined.

2. Stakeholder identification Who

will be involved in/affected by the
IT project? This stage is critical
as bringing stakeholders into the
loop at a late stage can throw an IT
project back to square one.

Building a business case for an IT

investment is not a linear process.
Constructing a compelling justification
requires iterative engagement with
all stakeholder groups, building up a
business case over time that all the
stakeholders can commit to.
Stages three through seven of the
process are iterative and interrelated.
For example, changes to the scope
of business outcomes (which will
frequently occur as the business
case develops through a process
of collaboration) will have a knockon effect on other stages, making it
necessary to continually amend the
business case as a living document.
The ultimate output of the process is
a balanced business case that makes
sense in terms of realistic goals,
acceptable timescales, manageable
risks and reasonable costs.
Of course, the size and shape (and
most importantly the cost) of the IT
investment will dictate how elaborate
the business case must be and
therefore how much planning and
preparation must go into building the
case.
For very minor IT projects with limited
impact on the business, the costs may
be absorbed within ITs discretionary
budget, making a full-scale business
case process unnecessary.

How-to guide: Building a business case for IT investment

Identifying the need/opportunity

The trigger for an IT project
is the identification of a
problem to be solved or
an opportunity to do things
better.

The idea that drives innovative IT

projects might stem from a change in
business strategy, from within IT (based
on performance metrics), or from the
end user community (see our How-to
guide: Improving ITSM by leveraging
user feedback).

Once an innovation is conceived, the

process of refining the idea, developing
a solution plan and building a business
case can begin. This stage in the
broader innovation process falls outside
of the business case process itself, but
should be recognized as the preceding
event.

Stakeholder identification
Preparing a successful
business case isnt just
about economics - its also
about politics.

Clearly, for an IT-driven business

project, this will require a mixture of
business and technical knowledge,
so engagement with all impacted
stakeholders is critical to gaining the
appropriate level of understanding.

The stakeholder list will be different for

each business case, but there are four
main groups to look out for:

End users/owners the business

people using the technology.

The more stakeholder groups (business

managers, end users, IT people,
finance staff, etc.) that will be affected
by an IT investment project, the
more scope for conflicting interests
which must be resolved to remove
resistance and facilitate the passage
of the business case through to
implementation.

Stakeholder identification is an
essential part of business case
planning. Omitting this stage invites
failure.

IT people those that will

build, deploy and manage the
technology.

Finance, HR and procurement

staff those that are responsible
for buying or accounting for the
supporting hardware, software,
people or other assets.

Executive management the

decision-makers and decisioninfluencers.

Preparing a business case requires a

deep understanding of the business
context: which departments, functions,
geographies, groups, processes,
policies and governance structures will
be affected.
In order to prepare a complete and
accurate predictive evaluation of
a future situation, both the current
business context and the step towards
the future situation must be well
understood.

By proceeding with a philosophy of

continual participatory evaluation,
the business case can be co-evolved
through iterative collaboration with
all of these stakeholder groups to
resolve conflicts between stakeholder
requirements and achieve consensus
and commitment. In short: engaging
with the business.
But who are these stakeholder
groups?Analysis of the need/
opportunity will give pointers as to
which groups will hold a stake in a
particular IT project, by way of either
impact (the business people who will be
involved in the change) or responsibility
(e.g. the IT people that will build the
technology, or the budget-holders that
must account for it).

How-to guide: Building a business case for IT investment

Business objectives and outcomes

Setting out the objectives and outcomes of the IT project is the starting point of the business case process and forms an
elevator pitch that succinctly communicates the value that can be achieved. This is an essential first step, setting the direction
and tone for the entire business case and acting as an essential tool for communicating (upwards to executive management and
outwards to the stakeholder groups that will be involved in constructing/approving the other aspects of the business case).

Stakeholder planning
A successful IT investment
business case cant be
developed by IT people
in isolation and then
simply be sprung on the
business at the tail end of
the process.
If you dont engage with stakeholder
groups, you are forced to anticipate
and negate every possible objection
an impossible task when IT often
fundamentally misunderstands the
needs and wants of people out in the
business.
What is required is continuous
participatory evaluation collaboration
with a comprehensive group of
stakeholders to build the business case
from the ground up. The business case
document is the hub of the process, but
its not 100% of the final output.
The other essential outputs are
stakeholder consensus and
commitment: consensus that there is
a strong case for the IT project, and
commitment to see the project through
to fruition.
By working together with stakeholder
groups, the IT department can shape
the business case to better fit the needs
of each group. Naturally, conflicts will
arise, and changes or compromises
must be made, but it is better to resolve
issues at this stage than to face these
conflicts once a system or service has
been built and deployed.

Clearly, some stakeholders will hold

more power than others some
executive stakeholders may hold a
veto over the entire project so it is
necessary to take into account the
stakeholder power and weigh up the
influences.
For instance, where a conflict exists
between a large powerful stakeholder
group (e.g. sales) and a much smaller
back-office function, the business case
should accommodate the larger group,
taking into consideration the level of
business impact. The IT people leading
the business case project must be
equipped to deal effectively with the
politics of the situation.
When communicating with stakeholder
groups, IT must be very careful
about how they interact. When youre
presenting a business case, youre
selling an idea. Research in social
science shows that people who sense
positivity (enthusiasm, inspiration, etc.)
are more open to new ideas.
In his book To Sell is Human, Dan
Pink explains: The effects of positivity
during a sales encounter infect the
buyer, making him less adversarial,
more open to possibility and perhaps
willing to reach an agreement in which
both parties benefit.
Conversely, taking an aggressive
stance will distance you from
stakeholders and encourage active
resistance. This will stand as a barrier
to the relationships you need to build
in order to execute your business case
process and successfully run the IT
project itself.

Customers - The
Silent Stakeholder
Jeff Bezos, founder of
Amazon, likes to ensure there
is always an empty chair in
every meeting; a chair that
represents the customer of
the business. The idea is to
encourage people to always
remember the perspective
of the customer the most
important of all stakeholders.

How-to guide: Building a business case for IT investment

Strategic alignment
Every IT project should
support the organizations
company strategy in some
way, so it is important to
ensure that your business
case articulates how the
innovation will help to
achieve these goals and
objectives.
IT projects that dont align with
business priorities are routinely rejected
by business managers and end users
because they pull in the opposite
direction and add no tangible value to
the organization.
Some organizations have a welldocumented corporate strategy, giving
you a clear starting point for tying your
IT project to it.
However, many organizations do not
articulate a formulated strategy; the
strategy is implicit. In this case, it
may be more difficult to pin down the
specifics of your corporate strategy
and, thus, link your IT project to these
objectives.
Identifying the strategic alignment of
your IT project is achieved through a
systematic process. Looking at each of
the project objectives, it is necessary to
map each of these to the higher level
strategic business objectives and,
where possible, the impact on business
objectives should be represented by
estimated metrics.
Some assumptions will be made, so
it is important to clearly label these
as such: presenting assumptions as
facts invites criticism from business
stakeholders and may undermine the
credibility of the business case.

However, by working closely with other

business stakeholders to make the
link between the IT project objectives
and broader business objectives, the
strategic alignment analysis part of
the business case should be both
reasonable and palatable.
In general, the IT project should
contribute to at least one of the
following:

Reduced business costs (through

automation)

Improved business agility (by

speeding up business processes)

Improved quality of business

output (by improving process
quality and removing human error
from the supply chain)

By identifying and, where possible,

measuring the contribution of the
IT project to the businesss ability
to deliver better products, greater
operational efficiency and a superior
customer experience, you will be able
to establish the value of the IT project
in the context of strategic business
alignment.
There are a number of corporate
strategy models that can be used to
assist the process of mapping your
IT project to strategic value (e.g. The
Five Forces Model, Generic Strategies
Model, Value Chain Model, etc.);
however, the detail goes beyond the
scope of this guide.

An information
system only
acquires value
when it is used as
part of a business
process or practice
that will result in
enhancement of
the effectiveness
or the efficiency of
the organizations.
Dan Remenyi, IT Investment:
Building a Business Case

How-to guide: Building a business case for IT investment

Technology issues
An IT business case must include
a plan that discusses the main
technology challenges, details the
architecture of the solution, explains
how (and when) it will be constructed
and sets out the associated costs
against which the business benefits
that feature elsewhere in the business
case can be evaluated.

What is the proposed

technology solution?
Set out the architecture of the solution
the building blocks and how they
will interoperate to solve the business
problem/challenge.

Who will implement the

solution?
Set out which technical people will
be responsible for managing and
executing the delivery project. Use the
RACI model to clearly articulate who is
Responsible, Accountable, Consulted
and Informed.

What is the schedule?

Set out the order in which the
technology building blocks will be
deployed, linked and tested. It will also
be necessary to at least pay lip-service
to a roll-back strategy at this stage
should the implementation fail to
function in the live environment.

What are the technology-related

costs?
It is impossible to fully cost a complex
IT project to a granular level without
spending weeks on analysis, but
the material costs (those that are
significant) should be listed
including expenditure on infrastructure,
hardware, software, and manpower.
Accounting for the significant costs that
will be incurred is usually a fairly simple
process.
The technology part of a business case
is where IT people usually want to
focus. However, without the Strategic
Alignment part of the business case,
which shows the business value that
will be delivered, it is impossible to
weigh up the costs versus benefits. A
common mistake is to spend a lot of
time defining the shape of the solution
and not enough time setting out and
quantifying the benefits that the solution
will deliver.

How-to guide: Building a business case for IT investment

Risk profiling
Risk assessments are
typically a neglected part of
the IT investment business
case. IT people are, by
nature, keen to push the
merits of technology and
underplay the risks.
At the same time, many IT
professionals are not as familiar with
risk assessment methods as their
counterparts in, for example, the
finance department.
Risk mentality is not culturally
engrained in IT people; a pervasive
trust in technology means that IT
people often view IT opportunities
through rose-tinted spectacles.
Risk is something of a slippery concept,
meaning different things to different
people, but the chief characteristic
of a risk is anything that might push
the project off course, prevent the
delivery of the stated benefits, or even
cause damage to broader business
operations.

In modern IT environments, where

systems are typically interconnected
and interdependent, the risk of
extensive damage to business
operations, customer relationships and
brand reputation is very real.
Risks must be identified and
addressed. Risk is always present in
an IT project. Every silver lining has a
cloud a fact that decision-makers are
acutely aware of.
Most business leaders will have
experienced the pain of a failed
investment that they have signed off
on. Pretending there is no risk involved
will be fatal to an otherwise sound IT
investment business case.
Consequently, neglecting risk
management, or deliberately sweeping
risks under the carpet in an attempt
to get a business case signed-off is in
itself risky.

The only safe path is the honest path:

to properly (and openly) identify,
address and manage risks. Without
adequate risk assessment, the course
of an IT project is left to luck. With
substantial budget (and the reputation
of IT) at stake, nothing should be
trusted to luck.
Unfortunately, there is no de
facto model with which you can
systematically identify and address risk;
the process will be different for each
business case.
However, the nine variable approach
acts as a guide to identifying a
complete set of risks. Examining each
area will help you build up a more
complete risk profile.

Risks will be uncovered and the

credibility of the business case will
be irreparably damaged. To neglect
the risk view of an IT investment is to
sabotage your own business case.

Knowledge

Foundation

Timing

Architecture

Technical competence

Technology platform

Technology lifecycle

Development

Estimation & planning

Staff turnover

Development tools

Business

Understanding

Commitment

Business change

Business case evaluation

Business case evaluation is the decision point. At this stage, you should have a comprehensive business plan that sets out the
elevator pitch, details the business value that will be delivered, and defines costs against which to assess value. By this stage
you should also have general consensus on the worth of the IT project from each of the key stakeholder groups. In essence,
if you have followed an iterative process of continual participatory evaluation, the sign-off stage is a formality - to close off the
business case stage of the innovation process. If all due diligence has been performed, there should be no nasty surprises at
this stage and the business case should pass the final test with flying colors.

10

How-to guide: Building a business case for IT investment

Key takeaways
Source:
Business cases that outline user-driven innovations will carry more credibility than those that originate from within the IT
department, especially in organizations where the business lacks trust in IT. If the idea came from an end user group, make that
fact clear in the business case.

Process:
Building a business case is a complex process that goes far beyond simply producing an output document. Plan the process of
building a business case to maximize the chances of success.

Engagement:
Constructing a business case is a team effort. Engagement with stakeholders is the key to both pushing the business case
over the line and getting the buy-in from the people whose help you will need to execute the IT project and adopt the delivered
innovation. Any business case that is developed purely within the confines of IT is almost certain to fail, as it will lack the
necessary groundswell.

Business focus:
Dont look at an IT investment business case as an IT project; look at it as a business project (think IT-enabled business
project). How will the company be better off after this project? Articulating these benefits clearly to the business is the key to
gaining support.

Communication:
Use plain business language to communicate these benefits. Remember that the majority of the audience of a business
case will be non-technical staff. A great idea articulated badly is an opportunity missed. Your company culture, structure and
governance will dictate how deep your business case needs to be, but, in general, 20 pages is better than 200.

People:
With the success of a business case balancing on the quality of stakeholder relationships, the IT people who are managing and
supporting the process must possess a mixture of interpersonal, communication and diplomacy skills.

Risks:
Failure to address risks will fatally damage the credibility of the business case.

Assumptions:
Questionable assumptions also undermine credibility. Any and all assumptions should be checked with the relevant
stakeholders. Always presume that weak assumptions will be targeted by business people who are cynical of the value
of IT. Building a business case is difficult enough; dont give resistant stakeholders reasons to say No, so never present
assumptions as facts and always be open to adjusting assumptions based on feedback from business stakeholders.

Foundations:
When your business case passes the test and you move on to the IT project management stage, use the business case
document as a foundation guide as a starting point for planning the development project plan, to keep the project focused
throughout, and to ensure that the benefits sold to the business are the benefits that are realized.

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Axios
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Management software. With
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About the Author

Dr. Nigel Martin
VP of Global Marketing
Nigel Martin has more than 20
years of experience in global
enterprise software. Nigel has
written multiple research papers
on organizational strategy and
holds a doctorate in strategy and
organizational brand development.
Nigel can be contacted at
nigel.martin@axiossystems.com