Ode To The Business Case
In the fall of 2001 things changed. We had been flying high – there was this thing called The New Economy and it was being driven by this new entity loosely referred to as dotcoms. Then a couple of jumbos were flown into skyscrapers in Manhattan and a whole bunch of things tumbled along with those buildings. Dotcoms resurged on the coattails of the Web 2.0 revolution and we seemed to be headed into another version of The New Economy, but we just didn’t call it that. We were flying high again, until that industry virtually located a block away from those two toppled skyscrapers took its own tumble.
When we were flying high we were able to get a lot of stuff accomplished. We identified business needs and we got the funding. If we could make a good argument for what we wanted to go off and build, we were given the investment capital. Following each of the two aforementioned tumbles, that investment funding got really scarce. If you wanted money you had to build an extremely solid business case.
As a consultant I see a clear correlation between the health of the general economy and the effort put into the development of the business case in order to justify investments. When money is tight, some programs still move forward, but they are the ones with the best chance of producing results. If we take this logic a bit further, we might deduce then that when things are good and money easier to come by, projects that are not as sound will also get funded. This bugs me.
So, I would like to offer up a couple of things. First, when times are good, and we could be heading in that direction again, I think we should push to have the business case become a standard. We don’t need to get lax on this just because funding is easier to come by. Let’s stop bad projects in good times – it hurts us in the long run. When we go for funding in bad times the people with the checkbooks will not be timid in reminding us about those bad investments.
Second, I have a suggestion for approaching the business case effectively, especially now while things are still a bit tight. There are multiple approaches to building a case for getting the funding. I am not talking about the different ways of calculating ROI such as the concept of net present value and other financial terms that I don’t really understand. I am referring to a more fundamental set of approaches. We can take a spreadsheet orientation, a very sterile, financially oriented, cell by cell calculation of where the value derives from regarding the money invested in programs. I don’t really like this approach because I am not an accountant. Also, I don’t like this approach because I think these types of financial modeling don’t appeal to people all that well because they are sterile and hard to fathom. We see a lot of numbers but we have to trust they are derived in a way that is real according to the way the business actually works. You can show me a rocket fuel formula, but it does not make me believe I can fly.
The second approach is the political orientation to business case development. It can take a little longer, involves more people, still relies on tables of calculations, but in the long run there is less math theory and more reality within the calculations.
In the world of CRM we typically make changes to the way work is performed. We deal in the world of emotion and perception. Acceptance of change is as critical as the logic of the change. Millions in investments can be lost because of irrational reaction to the approach taken. The business case needs to take this into account. Those who are going to take on the change, and sign up for the potential gains, need to define what they will be before they are held accountable for achieving them. So, I like to build my business case with the key stakeholders and thought leaders of the targeted business units and not the financial analysts assigned to support them.
First, have them identify very clearly the areas that a program will improve, such as pipeline management, for example. Second, explore what the improvement in the pipeline management process will produce – is it something like faster deal closure or higher probability of conversion? Next, ask your stakeholders to estimate what the improvements could realistically amount to. Is it an extra deal per rep every month; is it an extra deal per week?
Finally, once you have this list of quantified business benefits it is time to march into the finance department and request that they calculate the financial values according to whichever formulas they will accept. If you follow this path, you will satisfy the business and the bean counters and produce a business case the folks will believe and sign up for.
So, my proposal is that we build this into the standard program scoping process. Develop a business case even if you get the funding ahead of time. This will drive stronger sponsorship with your management team and that will always be good for adoption.
