Captain’s Log, Entry 7542.1—Business Case Analysis is center stage in business decision-making and planning. However, few people in business understand the nature of BCA. And few know how to build convincing business case proof. As a result, wise case builders take care to learn how to earn trust for case results. Business Case results are credible when they include cash flow forecasts, serious risk analysis, and reasoning that makes the case for action. In other words, cash flow forecasts alone are not a business case.
Decision-makers rely on BCA to build the understanding and confidence they need to take action. You know this already if your recent funding request or project proposal failed. You know this also if you serve on committees for budgetary planning, capital spending, or strategy.
The Business Case is Mandatory Almost Everywhere. Why?
Deploy and deliver business case cash flow forecasts, financial metrics, risk analysis, and tactical advice for actions and investments. In brief, build a compelling rationale that turns business case results into convincing business case proof.
The business case is becoming mandatory in organizations of all kinds, everywhere. Why? In short, because of three unmistakable trends.
- Firstly, shareholders, boards, and and corporate officers are fast losing tolerance for management error.
- Secondly, these groups now demand that individual decision-makers, influencers, and leaders face rock-solid accountability for their actions.
- Thirdly, in the current economy, the competition for scarce funds is intense and becoming more so.
Therefore, managers and decision-makers at all levels are finding they must now show in why the course they choose is the best course, and they must show this in concrete business terms. As a result, everyone talks about the business case these days. However, surprisingly few really know what that means.
Prepare for All the Questions
Most businesspeople do know the following about business case analysis. The business case is an analysis for addressing this question: “What happens if we take this, or that action?” As a result, the internet today is awash with books, training, templates, and consultants promising to help you answer the “What happens?” question.
For credibility, accuracy, and practical value in real-world business, however, be aware that your case must also address questions like these:
- Is funding your proposal a good business decision?
- Will we really see these results?
- Can we expect significant non-financial impacts?
- Which risks and contingencies should we know about?
Business case proof is compelling and defensible only when case builders address all the questions. In other words, decision-makers are looking for business case results with:
- Trustworthy forecasts about the timing and magnitudes of cash inflows and outflows they expect to follow from an action.
- Quantitative risk and sensitivity analysis, that identifies likely risk factors that may have significant impact.
- Reasoning and evidence that make the case for choosing one action over another, or for choosing “Action” over “No Action.”
Most case-building resources on the market today are blind to this need and most cannot answer credibly. Most provide little more than a few cost and revenue forecasts for a proposal action or investment. Know that forecasts alone are not a business case! In business today, real-world managers ask all the questions, and they expect answers they can trust.
Business Case Analysis: Who Needs It?
Senior managers are acutely aware that solid case-building skills are in demand, but rare. Consequently, those who master case-building skills have a real advantage over their professional colleagues. This means they have the advantage in business areas such as the following:
- Managing Projects and Products.
- Acquiring assets, managing asset performance.
- Finance and financial control.
- Strategic decision-making and strategic planning.
- Budget planning.
- Corporate governance and accountability.
- And, they have a special advantage in the job search.
For more on the “business case advantage,” see for instance our feature article Business Case Analysis. This is a complete introductory guide to business case analysis. Start there for answers to questions like these:
- How do I show that my proposal is a good business decision? Can I prove this in compelling terms?
- How do I convince the skeptics we’ll really see the results I project?
- Can I value important non-financial business benefits?
- How do I show that the case includes all relevant costs?
- Is it possible to measure risk for proposal outcomes? Are there good methods for reducing risk? Which risks must we watch for?
- How do we find the critical success factors we must manage to target levels?
- How do I show what happens if we don’t take action? And, how do I show what happens if we choose other proposals instead? Also, which alternative actions should my case compare?
- Finally, very importantly, what is the best practical advice to deliver with case results?
Where to Go From Here: Take Action!
First-time and veteran case builders alike can start with our article online Business Case Analysis. After that, learn case design and development from the Business Case Guide or the best-selling Business Case Essentials. Download these resources and more from The Master Analyst Shop! Or, take the 3-day fast track: Learn and practice the premier case building methods at a Business Case Master Class Seminar.
To learn more on the IIBA International Institute of Business Analysis click here. For info on the IBF Institute of Business Forecasting click here. See also the Forbes Guide to GAAP Generally Accepted Accounting Principles click here. For a brief summary of Six Key Principles of Decision making click here.
By Marty Schmidt. Copyright © 2023.
Solution Matrix Limited, Publisher.
