*Provide Value to the Organization.
*Be Agreed Upon
Easier decision-making during the project (e.g. Does this feature/functionality align with our overall strategy?).
Money saved with internal or external team efforts by reducing costly change requests or budget overruns caused by “surprise” variables.
2, Identify the desired value of the IT Project
3. Develop an Appropriate Metric (numeric)
▪provides the project team with a performance target or directive ▪sets expectations among all stakeholders, and
▪affords a means for evaluating whether the project is a success later on.
Marchewka, Jack T.. Information Technology Project Management, 5th Edition (Page 64). Wiley. Kindle Edition.
4. Time Frame for achieving MOV
5. Verify and Get Agreement from Stakeholders
6. Summarize the MOV in a clear concise statement
The project will be successful if ______
Or use a time table (in year ___ we will ____, and so on)
▪Agreement—If you develop a business case in isolation, it is very likely that you will have to defend your assumptions and subjective judgments in a competitive or political setting.
▪Bridge building—The business case team may serve as an effective tool for handling critics of the business case.
2: Form a Cross-Functional Business Case Team
▪Credibility—Access to people from various organizational areas or departments can provide critical expertise and information that may not be readily accessible to others outside that particular area.
involved who will ask the right questions
▪Alignment with organizational goals—Higher level managers can help connect the business case with the organization’s long-term strategic plan and mission.
▪Access to the real costs—The members of the business case team with certain expertise or access to important information can help build more realistic estimates with respect to salaries, overhead, accounting and reporting practices, training requirements, union rules and regulations, and laws.
3: Identify Alternatives
4: Define Feasibility and Assess Risk
5: Define Total Cost of Ownership—The
6: Define Total Benefits of Ownership—Similarly,
7: Analyze Alternatives
8: Propose and Support the Recommendation
▪Identification—What can go wrong? What must go right? ▪Assessment—What is the impact of each risk?
▪Response—How can the organization avoid or minimize the risk?
Consider the following:
▪Other feasibilities—Depending on the situation and the organization, a business case may include other issues, such as legal and ethical feasibility.
TCO includes such costs as:
▪Direct or up-front costs—Initial purchase price of all hardware, software, and telecommunications equipment, all development or installation costs, outside consultant fees, etc.
▪Ongoing costs—Support, salaries, training, upgrades, supplies, maintenance, etc. ▪Indirect costs—Initial loss of productivity, time lost by users when the system is down, the cost of auditing equipment (i.e., finding out who has what and where), quality assurance, and postimplementation reviews.
life. Benefits can arise from: ▪Increasing high-value work—For example, a salesperson may spend less time on paperwork and more time calling on customers.
▪Improving accuracy and efficiency—For example, reducing errors, duplication, or the number of steps in a process.
▪Improving decision making—For example, providing timely and accurate information.
▪Improving customer service—For example, new products or services, faster or more reliable service, convenience, and so on.
▪Purchasing an off-the-shelf application package from a software vendor.
▪Custom building a new application using internal resources or outsourcing the development to another company.
The most commonly used cash flow models include payback, breakeven, return on investment, and net present value..
2. Future value (FV)
3. Net present value (NPV)
4. Payback period
5. Internal rate of return (IRR)
6. Cost-benefit analysis
8. Risk analysis
Calculated using the formula: NPV = −I O + ∑( Net Cash Flow (1 + r) t ) Where: I = total cost (or investment) in the project r = discount rate t = time period
Total Score = ∑n i=1 wi ci Where: wi = criterion weight ci = criterion score 0≤wi ≤1
▪Weights and scores can be subjective
▪Financial models can be biased toward the short run
▪Some criteria can be reverse-scored
▪Past experience may help create a more realistic business case
▪The project must provide measurable organizational value that can be verified at the completion of the project.