Think Business Case Not Sales Proposal
Would you be surprised to know that many large organizations require a business case for purchases of as little as €20,000? Probably not.
As one salesperson told us recently; ‘I have seen more business cases in the past year than I have in the previous 19 years’.
With budgets being squeezed in response to the economic slowdown, projects and purchases must increasingly compete for scarce organizational resources. That means the business case is more important than the salespeople’s proposal.
The Salesperson as Business Case Facilitator.
The emergence of the business case as the prime factor in organizational spend decisions presents advantages for those sellers who can demonstrate the business justification for their solution.
The reality is that buying decisions are made when the salesperson is not in the room, by a skeptical audience that the sales person may not have met, based on information which the salesperson has had little, if any input to. That means traditional feature led sales pitch is very much out of touch.
Whether your sales goes ahead will depend on a ‘to the point’ value equation, that reflects not only costs, benefits and risk, but also how the project will contribute to the achievement of broader organizational goals and strategies. That is the new reality of the business case sale.
A compelling business case is not just important in getting the sale, it is also essential to ensuring successful implementation, or delivery as well as to building a long term client relationship. That is because of its increasing role in guiding, tracking and managing project success.
A Review of Business Case Best Practice.
In order to guide you in your new role as business case facilitator to your prospect we have reviewed the work of 9 of the leading experts in this space – the list is at the end.
Specifically, this article presents an overview of the key advice from specialist books written for buyers on how to develop a business case and sell their projects internally.
Let us take IT projects as an example. Everybody knows that most IT projects run in to problems – the Standish and other figures are familiar to us all. However, the cause of those problems is often misdiagnosed.
Indeed, most of the experts suggest that the number one reason for the failure of IT projects is a poor business case, or no business case at all. That is not just failures in terms of delivering on time and within budget, but more fundamentally for IT to impact on business success.
For example cost overruns are often not the result of overspending, but of underestimation of costs at the planning and budgeting stage. Indeed, the problems with most projects can be traced back to their inception and planning. The business case has an important role to play in making sure projects get started, but also stay on track.
Some of the experts suggest that expenses claims are subjected to more scrutiny than are business cases for the purchase of multi-million pound IT systems.
All too often it is a bureaucratic, as opposed to a strategic exercise. As a result, where business cases are prepared they are often created simply to justify a desired choice of action, as opposed to presenting management with the information required to evaluate, select, manage and track projects in terms of their impact on the organizational success.
Whether it is an external purchase, or an in-house solution, the development of a robust business case is essential. All too often however this gets neglected, with a misguided focus on the how (the features and the technology) as opposed to the why (the business case).
12 Telltale Signs of Poor Business Cases
1.Lack of skills, discipline, or more importantly objectivity
7.Failure to address how the project fits with the organization’s strategy, past decisions, etc.
The Full Life cycle Business Case.
All too often a business case document is hastily prepared and then once the project is given the green light it is put aside. However, a business case should be a living document, that:
The business case must also address how achievable it is, including for example a register of risk, as well as details of implementation, governance and control.
When it comes to the economic analysis, it is important to realize that people often have a genuine difficulty with numbers and in particular in working with spreadsheets. That is not withstand the challenges that may be presented in terms of the monetization of benefits, particularly in the case of less tangible ones.