Why Did the Business Case Fail?

Why did the business case fail? It may predict excellent results yet still fail to “make the case.” Everyone asks: Why did the Business Case Fail? 

Two Kinds of Business Case Failure

Your business case does not have to fail.

In our business case seminars we see project managers, IT directors, sales people, and others who have just had a painful experience: Their business case analysis failed.

Some of them predicted great cash flow, high ROI, and short payback, but still got a thumbs down from top leaders.

Others went through a different kind of failure. They got “thumbs up” from decision makers, but then suffered when actual business results turned out to be quite different from predictions.

What went wrong? What was missing? Why did the business case fail? These professionals represent a wide range of industries and government organizations, and they built business cases to support many different kinds of proposals for projects, programs, products, acquisitions, and other actions. Nonetheless, the cases all have several characteristics in common.

Firstly,  Lack of Self Evident Validity

When a business case comes under review, an uninvited guest always comes along with it: the credibility question. The case predicts the future, after all, and every business case audience will have questions like these:

Good-looking projected results alone do not address these questions. And, for most critical audiences, they do not “make” the case.

A strong case anticipates questions like these by conveying self-evident validity. Putting your cost model and benefits rationale in the case report, for instance, removes doubts about the completeness of cost coverage or the legitimacy of benefits. A proper risk and sensitivity analysis helps assure your audience that uncertainty is minimized and all important risks are known and measured. For more on building these elements into your case, see Business Case Essentials.

Secondly,  Unknown Risk, Unrealistic Assumptions

We are now working with an energy company in the US Midwest that is now in the fourth year of a two-year of an ERP (Enterprise Resource Planning system) initiative. Four years ago, they decided to move the company’s different software systems to a single integrated system from a leading ERP vendor. The sales proposal came with a strong “business case.” The case projected payback in 18 months and a four-year ROI over 240%.

Now, four years later, the company has yet to see a positive ROI on its investment. To date, this ERP system has been twice as costly as first expected. Why?

Among other things, the business case assumed that integration, installation, and “roll over” to the new system would go smoothly. It didn’t. The ERP system comes, for instance, with a steep learning curve for users. It took much longer than expected to build user proficiency. The firm engage in serious process analysis and process changes, in order to take advantage of ERP system capabilities. That should have been anticipated but it wasn’t. And the company’s “home grown” software environment did not cooperate with the new system during phase-in of individual ERP modules, as they had hoped.

Nobody there talks much about the original business case projections.

Unrealistic or risky assumptions, in other words, may enable the case to succeed at one level only to fail later. To minimize the risk of that kind of failure, case builder and case reviewer alike should ask:

And, most importantly:

Thirdly,  Missing Standards

Companies and organizations that score high in business case competency have standards for case content and structure. Standards can show:

Without standards, reviewers do not know what to expect or look for in the case, while case builders cannot be sure they meet requirements. And, standards bring consistency to business case practice. In brief, standards guide for case builders and they help reviewers know what they should look for.

Why Did the Business Case Fail? Take Action!

Visit the Master Case Builder Shop online. Download the premier business case ebooks and software today!

Learn and practice the premier case building methods at a Business Case Seminar.  Learn case building from our books, the Business Case Guide and the best selling authority, Business Case Essentials.

By Marty Schmidt. Copyright © 2004-2018.
Solution Matrix Limited, Publisher.
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