Building the Business Case

You've discovered the process, collected data, and observed operations. Now comes a critical step: convincing others that improvement is worth the investment. A business case makes the argument that action is justified.

What is a Business Case?

A business case is fundamentally a cost-benefit analysis for taking a course of action. It answers the question: "Should we do this?"

Business cases are used to justify:

• Process improvement projects
• New system implementations
• Resource acquisitions
• Organizational changes
• Any investment requiring approval

The Five-Step Business Case Framework

Step 1: Assess the Need

Before proposing solutions, clearly define the problem or opportunity.

Questions to answer:

• What's not working well today?
• What are the consequences of not changing?
• What capabilities are we missing?
• What opportunities are we unable to pursue?

Example:

Need: Our order processing takes 5 days on average. Competitors deliver in 2 days. Customer complaints have increased 40% this year, and we've lost three major accounts citing delivery time.

Step 2: Define Desired Outcomes

Describe what success looks like in measurable terms.

Good outcomes are:

Outcome categories:

Step 3: Analyze Alternatives

Never present just one option. Evaluate multiple approaches.

Standard alternatives to consider:

1. Do nothing - Accept the status quo (this is always an option)
2. Minimal change - Small adjustments within current constraints
3. Moderate investment - Significant change with balanced cost/benefit
4. Major transformation - Comprehensive solution with highest investment

For each alternative, evaluate:

• Scope - How much of the problem does it address?
• Feasibility - Can we actually do this?
• Cost - What investment is required?
• Benefit - What value will it deliver?
• Risk - What could go wrong?
• Timeline - How long until we see results?

Step 4: Assess Value

Quantify the benefits and costs for each alternative.

Financial analysis methods:

Simple ROI calculation:

ROI = (Annual Benefits - Annual Costs) / Initial Investment × 100%

Example:
- Initial Investment: $100,000
- Annual Benefits: $60,000 in savings
- Annual Costs: $10,000 maintenance

ROI = ($60,000 - $10,000) / $100,000 × 100% = 50%

For non-financial benefits, use weighted scoring:

Step 5: Make the Recommendation

Present your analysis and advocate for the best path forward.

Recommendation elements:

• Preferred option - Which alternative do you recommend?
• Rationale - Why is this the best choice?
• Investment required - What resources are needed?
• Expected benefits - What will we gain?
• Key risks - What could go wrong and how will we manage it?
• Next steps - What happens if approved?

Business Case Components

A complete business case document typically includes:

Executive Summary

One page maximum. Decision-makers often read only this.

Include:

• Problem statement (2-3 sentences)
• Recommended solution (2-3 sentences)
• Investment required (specific number)
• Expected return (specific number)
• Key risks (top 2-3)
• Request (what you're asking for)

Current State & Problem

• Description of current process
• Pain points and their impact
• Root causes identified
• Cost of inaction

Proposed Solution

• What will change
• How it addresses the problem
• Key features and capabilities
• Success criteria

Alternatives Analysis

• Options considered
• Evaluation criteria
• Comparison matrix
• Why alternatives were not selected

Cost-Benefit Analysis

• Implementation costs
• Ongoing costs
• Quantified benefits
• Financial metrics (ROI, payback, etc.)

Risk Assessment

• Key risks identified
• Probability and impact ratings
• Mitigation strategies
• Contingency plans

Implementation Approach

• High-level approach
• Key milestones
• Resource requirements
• Dependencies and assumptions

Real-World Business Case Example

Situation

A manufacturing company's quality inspection process takes 45 minutes per unit and catches only 85% of defects before shipping. Customer returns cost $50,000 monthly.

Need

Reduce inspection time and improve defect detection to cut customer return costs and increase throughput.

Alternatives Analyzed

Recommendation

Hybrid approach: Automated pre-screening with human review of flagged items.

Rationale:

• Balances cost and benefit
• Lower implementation risk than full automation
• Builds organizational capability for future automation
• Acceptable payback period

Benefits:

• Reduce inspection time to 15 minutes (67% improvement)
• Improve detection rate to 97%
• Reduce returns by 75% ($450,000 annual savings)
• Free capacity for 20% throughput increase

Risks and Mitigation:

• Technology integration issues → Phased rollout with pilot
• Staff resistance → Early involvement and training
• Detection accuracy concerns → Parallel run validation

Common Pitfalls

Overstating Benefits

Be conservative in benefit estimates. If you claim $1 million in savings but deliver $500,000, the project looks like a failure—even though $500,000 is significant.

Ignoring Soft Costs

Don't forget:

• Training time
• Productivity dip during transition
• Management attention required
• Opportunity cost of resources

Cherry-Picking Comparisons

Compare fairly. If your solution looks great only against the worst alternative, you haven't done rigorous analysis.

Assuming Approval Means Success

The business case justifies investment. Realizing the benefits requires successful execution. Include realistic implementation planning.

Tips for Effective Business Cases

Know Your Audience

• Financial executives want numbers, ROI, payback
• Operations leaders want feasibility, risk, timing
• Technical stakeholders want architecture, integration, sustainability

Tell a Story

Numbers matter, but narrative persuades. Connect the dots between problem, solution, and benefit in a way that makes intuitive sense.

Anticipate Questions

Before presenting, ask yourself:

• "Why is this better than alternatives?"
• "What if it costs more or takes longer?"
• "What happens if we do nothing?"
• "Who else has done this successfully?"

Be Honest About Uncertainty

Acknowledge what you don't know. Ranges are often more credible than false precision.

Benefits: $300,000 - $450,000 annually
(depends on adoption rate and defect reduction achieved)

Business Case Checklist

Before submitting, verify:

• Problem is clearly defined and quantified
• Multiple alternatives were considered
• Costs include all relevant components
• Benefits are realistic and evidence-based
• Risks are identified with mitigation plans
• Financial metrics are calculated correctly
• Recommendation is clear and justified
• Executive summary captures key points
• Document is appropriate length for audience
• Next steps are defined if approved