What is a business case?
In the preceding article, we examined the Web3 Project Initiation Phase. In this post, we will look at 'What is a Business Case document?', its utility, and provide a template for immediate usage. This blog will address the following topics:
A business case is a prerequisite to initiate most projects and programs in a company. Projects can be established in response to any identified need to deliver or modify a process, product, or service, including contracts, statements of work, and other documentation. In all circumstances, the goal of a project is to deliver the intended result that satisfies the need with a valuable solution.
A business case is a project document that captures the explanation and rationale for launching a project or program.
A business case may include information regarding strategic alignment, risk exposure assessment, economic feasibility research, return on investments, predicted key performance measures, evaluations, and alternative approaches. In the business case, the projected value contribution of the project outcome may be described qualitatively, quantitatively, or in both ways.
Why Project managers need to understand a Business Case?
As per PMI PMBOK 7th edition, a business case is needed;
To know the underlying business need and project context: The business justifies the project by describing why it is being undertaken. It begins with the initial business needs, which are embodied in the project charter or equivalent governing document. It gives information regarding the organization's goals and objectives
The project justification is correlated with business requirements. It explains why the business justifies the investment and why it should be handled now. The project justification includes a cost-benefit analysis and underlying assumptions.
Business strategies the project's raison d'être is the business strategy, and all needs are tied to to produce and deliver value.
All this information is crucial for a project manager to make key decisions, tradeoffs and set priorities during various stages of a project life cycle from planning to delivery.
As per the Association of Project Management, a business case provides guidance and approach on below key aspects:
The compelling case for change in a strategic context
Return on investment analysis based on investment options evaluation.
The commercial strategy which is derived from the sourcing and procurement strategies.
Financial justification - Affordability for the organization within the time frame.
Management approach - Roles, governance structure, life cycle decision, etc.
How can a business benefit from using Web3 technology?
Some use cases in which businesses can benefit from using Web3 technology are given below:
Reducing costs by removing the need for intermediaries (enabling trust and transparency through block chain technology)
Improving data privacy and security for customers
Improving transparency and accountability of business operations through the use of smart contracts
Accessing new markets and customers through decentralized platforms
Business Case Template
Let us take a look at the key components of a typical business case which can be used for any software or blockchain / web3 projects.
This section summarizes the entire business case and should be written last. It should include an overview of the project objectives, costs, risks, and benefits.
Table of Contents:
This section lists all the components included in the business case document.
Vision and Strategic Goals:
This section outlines why this project is being undertaken, what it seeks to achieve, how it will fit into your organization’s strategy and long-term vision.
This section identifies what factors are motivating you to pursue this project such as customer demand or competitive pressure.
This section outlines what is included in the scope of work as well as any constraints or assumptions that must be taken into consideration when developing this project.
Project Schedule and Milestone List:
This section lists out tasks to be completed by specific deadlines as well as any major milestones that need to be achieved by certain dates in order for the project to stay on track.
This section outlines how much money needs to be allocated for each task necessary to complete this project.
This section explains any assumptions made while creating this business case such as timelines or cost estimates which may change if new information becomes available during development.
Costs and Benefits Analysis:
This section outlines all expected costs associated with completing this project including one-time costs (e.g., purchasing hardware) as well as ongoing costs (e.g., staff salaries). It should also list benefits that will be realized once this software is built such as increased productivity or customer satisfaction levels
This section identifies who will benefit from or impacted by completion of this project so they can be kept informed throughout development process
Risks and Issues:
This section lists out any potential risks or issues that could arise during development process
This section outlines any opportunities that may arise during development process but not pursued because resources are allocated to current project
This section defines standards for measuring success during different stages of development process
This section outlines how stakeholders will be kept informed throughout duration of project
This section identifies key personnel, equipment, facilities required to facilitate project execution like Architects, PMs, Experienced resources, etc.
This section offers suggestions for improving efficiency or effectiveness of project planning and execution at the initiation stage.
This section includes additional documents needed for comprehensive understanding of business case such as flowcharts or diagrams outlining process to be completed etc.
Download the free template here with the sections discussed: Business Case Template
A business case should be updated over time to reflect changes in the project or in the company's overall strategy. It's important to regularly review the project's progress and revise the costs, benefits, and risks analysis accordingly.
How do you ensure the business case aligns with the overall company strategy?
To ensure that a business case aligns with the overall company strategy, it is important to clearly define the goals and objectives of the project and how they align with the company's vision and mission. It's also important to consider how the proposed project fits into the company's overall business model and the role it will play in the company's growth and long-term success.
Regular communication and alignment with the company's leadership team and other stakeholders should be in place. A well-written business case can help convince investors or funders that the project is a worthwhile investment.
What are some common challenges in building a business case?
Some common challenges in building a business case include:
Difficulty in identifying and measuring the benefits of the project
Difficulty in identifying and quantifying the costs associated with the project
Limited data and information available
Difficulty in building support and buy-in from stakeholders
Limited resources and expertise available to conduct a thorough analysis.
Business Case Vs Project Charter
A Business case is not to be confused with project Charter. The Business Case justifies the project's necessity. A Project Charter provides the Project Manager with formal authorization to execute the project. A business case frequently precedes the development of a project charter. Wherever applicable both the documents act as inputs to project initiation phase or the inception meeting.
Business Case Vs Business Plan
A business case and a business plan are also related but different documents. A business case is focused on a specific project or initiative, while a business plan outlines the overall strategy and goals of a company or organization. A business case is used to justify the investment in a particular project, while a business plan describes the company's overall vision, mission, and objectives and how they will be achieved.
Creating a comprehensive business case is critical for ensuring success when embarking on software projects. It helps ensure everyone involved with a clear understanding of goals, timelines, budgets, resources needed to bring it all together. Without proper planning projects can easily fail before they even have a chance at success.
When creating a business case for your next software initiative ensure that you consider all relevant sections highlighted above so you can make an informed decision about moving forward with your project or program initiative and be guided throughout the development phase.
Adoption of Web3 technologies has a growing demand and will provide a strong business case for many domains and might be for your company as well. As now you have understood what is a business case and how to develop one, you can effectively pitch your ideas along for project approvals.
Creating bulletproof business cases - A PMI article.
How To Write the Perfect Business Case - Article from Adobe.
A short video from Online PM Courses - Mike Clayton, explaining what is a business case.
Coming up in the next blog - 'A Guide to Setup a Web3 Project Team and Start Product Development'.
Note 1: This blog is part of a 100 Days of Learning Series on Web3 Project Management frameworks and best practices published on Program Strategy HQ. For more details on the 100 days of blogging campaign check out Blog 0.
Note 2: Reach out to info@programstrategyhq for any queries.
Note 3: Program Strategy HQ Disclaimer for Reference.
Asana. (n.d.). The Beginner’s Guide to Writing an Effective Business Case • Asana. Asana. https://asana.com/resources/business-case
Association for Project Management. (2019, September 13). What is business case? | APM. Www.apm.org.uk. https://www.apm.org.uk/resources/what-is-project-management/what-is-a-business-case/
Bridges, J. (2022, July 5). How to Write a Business Case. ProjectManager. https://www.projectmanager.com/blog/how-to-write-a-business-case
Herman, B., & Siegelaub, J. M. (2019). The Need for a Business Case. Pmi.org. https://www.pmi.org/learning/library/need-business-case-6730
Project Management Institute Project Management Institute. (2021). A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Seventh Edition and The Standard for Project Management. Project Management Institute.
Putnam, E. (2022, May 25). What is a Business Case and Why Would You Need One? (Video). Edison365. https://edison365.com/what-is-a-business-case-and-why-would-you-need-one/