Do Business Cases for "Must Do's"? Absolutely!

I am periodically asked whether a business case should be required for those projects that fall into the "must do" category - projects such as those required to meet regulatory or auditing needs, bring a system up to security or other standards, or migrate off of end-of-life platforms. Why do a business case for these? you might ask.  We know we're going to do them, and since there's no incremental business benefit, an ROI calculation is not practically calculated.  So why go through the effort?

My view is simple - even without a quantifiable business benefit, the business case analysis helps in three ways:

  1. The business case clarifies the alternatives.  There are often multiple ways to accomplish the desired outcome. Evaluating each possible scenario using a standardized methodology clarifies the advantages and disadvantages, cost and time differences, and resource requirement differences in each choice. While a go/no go decision may be preordained, planners will be better prepared to pick the alternative that is least onerous to the organization.
  2. The business case exposes differences in risks.  Each alternative will likely have a different risk profile. A seemingly less expensive alternative requiring custom internal development may be more risky - both from cost and benefit perspectives - than a cloud-based COTS alternative with a higher list price.  Documenting the risks associated with each alternative, something we recommend in any business case analysis, will point to the optimum solution.
  3. The business case can highlight future option possibilities. To solve a reporting mandate, an organization can tactically execute that which is required to meet the existing needs. Alternatively, the organization can install a data warehouse or data mart and run the required report against that data set. Although the latter is likely more costly, the organization is better prepared to meet future reporting needs - with lower costs in future years. Only a thorough analysis of the flexibility options created in each scenario will give decision makers the information required to make the best long-term decision for the organization.

It should be no surprise that the three categories of analysis outlined - costs, risks, and flexibility - are three of the four categories we use in our Total Economic Impact methodology.  In fact, the fourth category, benefits, have also been discussed, though not explicitly quantified. However, in each of the scenarios analyzed, benefits remain a constant and what will be analyzed are the changes in the other three categories.

So, how do you analyze and communicate the factors around your "must do" initiatives? Do you bother with business case or other forms of analysis?  How do you communicate the reasons you're adding specific "must do" projects to your strategic plan? Please feel free to share your insights and experiences in the comments to this blog post.

Chip Gliedman