Lies, damn lies and… business cases

How do you feel when you’re asked to write a business case? If you are like most people, you see it as neither a pleasant, nor a worthwhile task. Most people see the business case process as a form of medieval torture administered by accountants. They also, with some justification, question the quality and value of the business case once created.

The dismal state of the business case process today

Gartner says “Business cases are generally viewed only as documents for gaining funding. Once approved they are put away…few track the business benefits the projects actually achieve”[1]. Bent Flyvbjerg, BT Professor and Chair of Major Programme Management at Said Business School, argues that the result is “the planned, systematic, deliberate misstatement of costs and benefits to get projects approved.” When I was at school, this was called lying!

It is no wonder that a 2006 Cranfield University School of Management study[2] found that while 96 percent of respondents developed business cases for most investments involving IT, 69 percent were not satisfied with the effectiveness of the practice.

The reality is that the business case should NOT be seen simply as a bureaucratic hurdle, but as one of the most powerful tools available to business leadership – providing the foundation that sows the seeds for success or failure.  As enterprises move into the digital age, the current approach to business cases pretty much guarantees failure.

As McKinsey recently reported[3], most organisations have only a basic grasp on the value that digital can create, need to understand better how to match priorities and investments with the areas of highest value, and must work to ensure that their structures and business processes are set up to take full advantage of the opportunities that digital efforts offer.

We can, and must, do better

A well developed and intelligently used business case is one of the most valuable tools available to management – the quality of the business case and the processes involved in its creation and use throughout the economic life cycle of an investment has an enormous impact on creating and sustaining value. It describes a proposed journey from initial ideas through to maximising expected outcomes for beneficiaries (i.e. those whose money is being invested and for whom the return should be secured) and other affected stakeholders.

Who’s on first?

In the case of IT investments – or, more accurately, investments in IT-enabled change – the responsibility for business cases, and the accountability for the promised return, cannot be abdicated to the CIO and the IT function. Boards, executive and business management must “step up to the plate” and take ownership.

After all, it’s not technology itself that delivers value, it’s how the business – directed by the Board, Executive and Business Management – uses the technology that delivers value and they must be held accountable. I’m certainly not letting the IT function off the hook here – they must also be held accountable for delivering the required technology services reliably, securely and cost-effectively but they cannot be held accountable for how they are used or the results of their use/misuse.

What do they need to do?

Boards, executive and business management must:

1. Stop seeing IT as something separate from their core business – technology today is embedded in, and an integral part of most, if not all parts of the business.
2. Focus, not on the technology, but on the value that can be created and sustained through the business change that technology both shapes and enables.
3. Insist on complete and comprehensive business cases, including desired outcomes, benefits, costs and risks, and clear explanation of how each benefit will be achieved with unambiguously assigned accountabilities, supported by relevant metrics.
4. Demand rigorous analysis of every proposed business change investment, whether or not IT is involved. Ensure that the leadership team know and can clearly define expected outcomes, that there is a clear understanding of how value is going to be achieved, that all relevant stakeholders have bought in to the required changes, and that they are capable of making or absorbing them and delivering on the expected outcomes.
5. Recognise that benefits don’t just happen and rarely happen according to plan – outcomes and plans will change. Business case approval is not the end of the story – it is the beginning of a “journey”. Mandate that the business case be used as the key operational tool to “manage the journey”, updated to reflect relevant changes, and regularly reviewed.
6. Recognise when it’s time to stop throwing good money after bad, or when there are better uses for the money, and “pull the plug.”

We need a call to action!

The failure of enterprises to step up to governing and managing IT-enabled change is disturbing. The consequences are often catastrophic, with the costs being borne by taxpayers and shareholders, and the opportunity cost – the value not being delivered – having huge economic and social impacts on all of us. It doesn’t have to be way – fixing the business case process would be a good start! 

APM’s upcoming 2017 APM Benefits Management Summit has “Developing Better Business Cases” as one of its three Themes. The Summit provides a great opportunity for attendees to gain further understanding of the role and importance of the Business Case.

Without the Business Case providing a solid foundation, success in the other two themes, “Benefits-led portfolio management”, and “Achieving transformational change” will continue to be elusive.

[1] Source: Gartner, Building Brilliant Business Cases

[2] Source: Ward, John; ‘Delivering Value from Information Systems and Technology Investments:  Learning from Success’, Forum (the monthly newsletter of Cranfield School of Management), August 2006

[3] The digital tipping point. McKinsey Global survey results 2014