Writing Business Cases: 6 Things You Should Know About Identifying Project Benefits
Business cases are often required to justify the need to launch new products/services, initiate projects or invest funds on business initiatives. While some companies identify business benefits with the sole intention of getting business cases approved, mature companies tend to devote their resources to tracking and measuring realised business benefits after the projects have been concluded. The nature of the benefits identified in your business case can certainly make a difference to whether it is approved or not. It is important to understand the nature of benefits that need to be identified in your business case and whether or not the benefits you have identified are enough to secure funding approval.
When identifying benefits particularly for the purpose of calculating Return on Investment (ROI), keep in mind that calculating ROI for a single project can be tricky as some process metrics or financial gains tend to be influenced by process changes, software implementation and other projects happening in parallel.
So, if you’re a BA charged with preparing a business case or identifying benefits for one, here are some key facts about business case benefits to be aware of:
Benefits tend to be phased in over a period of time. This implies that benefits can accrue from year-to-year and may not necessarily be one-off. This is particularly important to note when developing a cost-benefit analysis.
Identifying benefits is only the beginning. As part of project governance, it’s important to establish a benefits realization process or framework to measure results on an ongoing basis and identify when an intervention needs to be made.
Understand the current state and document current key performance indicators to ensure benefits can be measured after the project is implemented. This is particularly central to fostering continuous improvement. Source of data is important here and can have an impact on the overall accuracy of your results.
Business cases are not static and should be constantly assessed for relevance at specific milestones throughout the course of the project
Document accountability for the benefits by identifying which business units or roles are responsible for ensuring those benefits are realized.
While benefits are commonly classified as tangible (hard benefits that are quantifiable in monetary terms, for example, a reduction in headcount) or intangible (soft benefits that cannot be directly converted to cash, such as greater customer satisfaction), intangible benefits can translate to tangible benefits over time. You will however, need to trace the "chain of consequences" of delivering the intangible benefit to arrive at the tangible benefit, for example, improved customer satisfaction can lead to improved customer retention, which has a quantifiable impact to the business such as a lesser amount of money devoted to attracting new customers.
Business cases are not static but assessed for relevance throughout the life of the projects they spin off. They require a supporting benefits realization model or framework to ensure benefits identified in the business case can be reaped and measured further down the track.