Business Case Ganesh Botcha, Ajoy Chatterjee 16 Nov ’15, Monday

Agenda # TopicSpeakerMinutes 1What is Business CaseGanesh B2 2Key Value Drivers and Life CycleGanesh B3 3Business Case ElementsGanesh B5 4Description of each BC ElementGanesh B 10  Problem, Alternatives, etc., 5What happens when BC is submittedGanesh B 5 6Business Case TemplateGanesh B 5 7Business Case in AgileAjoy C5 8Agile ROIAjoy C5 9Agile ImpactAjoy C5 10ReferencesAjoy C5 11Q&AGanesh B, Ajoy C 10

What is a Business Case?  Business Case is created to convince a decision maker to approve the Investment for a Project.  Business Case explores all feasible approaches to a given problem and enables business owners to select the option that best serves the organization.  It provides the reasoning for initiating a Project with various details viz., problem definition or new opportunity, alternative solutions considered, expected costs, expected benefits/returns and risks involved.

Why to create Business Case?  Business Case helps Senior Management to evaluate and prioritize the Project Proposals based on Strategic Alignment with Organizational Goals and Business Objectives; Expected Costs vs Benefits, etc.,

Key Value Drivers for a Business ORGANIZATION Productivity, Operational Efficiency, Agility, Low Costs, High Profits, Reduce Risks CUSTOMERS Product Features, Timely Delivery, Low Price, Warranty, Politeness, Relationship EMPLOYEES Job Security, New Learnings, Career Growth, Work Life Balancing, Better Pay, Ethics INVESTORS Low Investment, High and Quick Returns SUPPLIERS - Order Volumes, REGULATORY - Compliance, SOCIAL, etc.,

Value Lifecycle Phase 1 Value Identification Phase 2 Value Delivery Phase 3 Value Realization Business Cases CreatedProjects ExecutedROI Calculated

Business Case Elements Business Case Problem / Opportun ity Future State Alternate Solutions Recomme ndations Resource Requirem ents Timeline Investmen t Costs Expected Returns Next Steps

Problem Definition  What Business Problem we are trying to solve? E.g.:  Install new hardware and software to improve our customer service to world class levels  Vs  Respond to 95% of our customers’ inquiries within 90 seconds with less than 5% callbacks about the same problem.  Define In Scope and Out of Scope  Why we need to take this up at this time (what value it will add to the business)?  What are risks to Business if we do not take up this initiative now and what decisions need to be made to move forward?

Future State, Alternate Solutions, Recommendations Future State Desired State and Goals Gaps between current and future states Alternate Solutions These are various paths available to solve the Business Problem at hand or to get to the Desired state Analyze Alternatives based on Functional Features offered, Product Performance, Service Level Agreements, Product Cost, Market Share, Gartner Quadrant Rating, Successful Case Studies, Customer References, etc., Provide Recommendations on Preferred Alternatives.

Resource Requirements, Timeline Resource Requirements – Hardware – Software – Network – Project Team and Skillsets – Office Space Phones, Printers, etc., – Conference Rooms Projectors, WebEx, Video, etc., – Access Timeline – What is delivered and when – When do we want each resource

Cost/Budget Capital Expenditure (CAPEX) – Direct up front Development Costs – Labor, Non Labor, Training, Travel, etc., Operational Expenditure (OPEX) – Direct Ongoing Maintenance Costs for running a product, business, or system. Indirect Costs – Facility expenses such as rent and utilities, etc., Total Cost of Ownership – Direct Costs (CAPEX + OPEX) + Indirect Costs

Approaches to Calculate Returns Tangible Break Even - How much revenue/units does the business need to produce in order to become profitable (more the better) Payback Period - The time required to recoup the funds spent on an investment, or to reach the break-even point. Net Present Value (NPV) - difference between the present value of cash inflows and the present value of cash outflows Positive NPV is better Internal Rate of Return - Internal rate of return (IRR) is the interest rate at which the net present value of all the cash flows (both positive and negative) from an investment equals zero. Intangible Improved Customer Satisfaction, Risk Reduction, etc.,

What happens after Business Case is submitted? Governance Team reviews proposed Business Cases from the point of view of strategic alignment, business unit priorities, effectiveness of solution to the problem, required capabilities, efficiency improvement, costs vs returns to each stakeholder, etc., Uses selection criteria to rank the proposals and determine which business cases need to be funded Governance BC 4 BC 5 Funded Projects BC 3 BC 2 BC 1

Business Case Template

Business Case in Agile Business Case in Agile is based on one basic fundamental – GEGS Good Enough to Get Started – Which means, you are good to start a project upon an initial cost, which is fund the initial investigation into the product and a couple of achievable timebox-ed iterations Which also means, do not over estimate, beyond a point that you can not see As the product or work toward the product progresses, more value is injected in terms of features. Hence it’s a value driven benefit which is reviewed constantly during the life cycle Less Risk Faster ROI and continuous evaluation Full return may not materialize, but faster return reaches to business in form of MVP It’s the Budget, not the Cost It’s not the cost to deliver the full return upfront but the budget available to the sponsor, or that sponsor is willing to fund based on his/her evolving goals Does not mean Estimation is not the Key Right Estimation and Right Stakeholders at Right Time

ROI in Agile Faster Return Faster Value Faster Time to Market Faster and Higher Profit Higher Flexibility Higher Quality

Agile Impact “The Business Value of Using Agile Project Management for New Products and Services” by Dr. David Rico

References  Business Case Analysis Book  By James W. Brannock  Business Case Analysis   Business Case Essentials   Business Case 

Questions?