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Business Case Competency for the Organization: Maturity Level Matters

The organization's business case competency resides in (1) the knowledge and skills of all individuals in the organization, and (2) business case written standards and procedures.

What is business case competency?

The terms business case competency and maturity level refer to the skills, knowledge, and case-building capabilities of a business organization. As an organization's competency (maturity level) rises, case building efficiency and the quality of business case results improve.

This article further defines and explains the business case competency and maturity level concepts, presents a simple checklist for rating an organization's maturity level, and outlines essential requirements for a competency-raising program.

What is the business case comptency maturity level concept?

Everyone involved with your business case or ROI study is likely to have serious questions in mind about the case building process. The project manager, the outside consultant, and senior management all want to know what they are in for and whether or not the results will be worth the effort. Those involved in building the case will want to know, specifically:

  • How long will it take to prepare the business case?
  • How many hours of work and other resources will be needed?
  • Will the results be accurate?
  • Will the results give us confidence that we're making the best business decision?

You might expect the answers to depend on such things as the complexity of the project or investment under analysis, or the level of funding involved. Answers are surprisingly predictable, but they usually depend little on those factors. Answers depend on—and are more predictable from—knowledge of the organization's competency maturity level, as well as the skills of the individual leading the business case project. WIse managers planning a case-builing project and trying to "scope" resource requirements and likely outcomes, will first assess the case building competency of both the organization and the individuals.

Yellow trapezoids in the image below are meant to suggest the relationship management can expect between (a) the organization's competency maturity level, and (b) the cost and quality of business case results.

As maturity level increases:

  • The credibility, accuracy, and practical value of business case results increase.
  • Management ability to use case results effectively for decision support, planning, management and control, and accountability purposes, increases.
  • The time, effort, and other resources needed for case building decrease.

What are the five competency maturity levels and what is their meaning?

A checklist for scoring the organization's competency maturity level

The nature of each of five maturity levels is best illustrated through presentation of a simple "checklist." Bullet points at each level describe typical actions of organizations at that level.

Maturity Level 1. Unaware

  • There is little or no awareness of the value of business case analysis in decision making and planning.
  • Proposals and funding requests do not need to provide financial justification, cost benefit analysis, or return on investment projections.

Maturity Level 2. Aware but Uninformed

  • There is an awareness that the company needs business case competency, but only that.
  • "Customer ROI" may figure prominently in the company's marketing messages.
  • The company still makes bad, costly decisions that could have been avoided with good business case analysis.
  • No one knows ROI on training, marketing, R&D, or projects.
  • No one knows gross profit or contribution margin by product, product line, or service offering.

Maturity Level 3. Ad-Hoc

  • Business case analysis is performed for planning and decision support, but it is not standardized and not re-usable.
  • Elaborate Total Cost of Ownership (TCO) models are developed, but only cost savings are captured and strategic benefits not quantified.
  • There is much talk of business case analysis and ROI but most people don't know how to do them.
  • Financial results are modeled in Excel, but the results are not re-usable, not standardized.
  • There is a recognized need for business case training.
  • ROI on training, marketing, R&D, and projects are partially known, from a few ad-hoc case studies.

Maturity Level 4. Standardized

  • There are established internal business case standards.
  • ROI on training, marketing, R&D, and projects are partially known from case studies, but not through established, continuing monitoring.
  • Business cases measure risks and identify critical success factors, using dynamic financial models and Monte Carlo simulation.
  • There is a cross-functional, cross-organizational "Core team" with business case expertise.
  • Funding requests above a specified level require business case support.

Maturity Level 5. Optimized

  • Business case results are reviewed by top management, and people are held accountable for results.
  • The company contracts with its customers based on service level agreements and projected customer business performance.
  • Business case projections and models are used for management and control throughout the life of the project or investment.
  • There is a library of previous business cases and business case resources accessible to all.

Management or an outside consultant can easily assess an organization's competency maturity level simply by checking each bullet point that describes what is done in the organization. The results may in fact include check marks at more than one level, but for most organizations, there will be a concentration or cluster of checks in the level that best describes the organization.

How can organizations raise business case competency maturity level? Think Program

It's not a quick fix of point solution. It's a program and it takes time.

What does it take to establish good business case practice in real-world organizations? Training? A good business case tool? Management directives? For most organizations, the answer is: all of the above and more. Establishing good business case practice requires a programmatic effort with several components.

Organization's that reach for a quick-fix point solution fail usually fail to establish long-lasting competency that benefits the organization. Sometimes, for instance, a senior manager (usually in Finance) creates business case templates, puts them on a website, with instructions, and requests that people use them. Management may even direct people to "get with the program" and require that proposals and funding requests use the approved templates. The usual result from this kind of point solution is that incoming business case reports seem to fit the required format, but do nothing to improve the quality of decision making, or the confidence of decision makers.

Movement towards improved business case competency for the organization begins when people throughout the organization understand fully that:

  • Establishing good business case competency calls for a program of coordinated actions. The program requirements below suggest actions that may be considered essential.
  • Establishing a higher maturity level of business case practice takes time. It is very difficult for large organizations to bring themselves up two levels on the maturity scale in less than a year.
  • The Business Case Competency Program has to be a multifaceted, cross-organizational Initiative, involving senior management, project managers, capital review committee members, product managers, strategic planning staff, Finance, Accounting, the Budget Office, and anyone else who submits funding requests.

The business case competency program: Essential requirements.

Experience shows that companies and government organizations succeed in raising their competency maturity levels have done so through a program that includes all of the following components:

  • A champion

    The program has to be driven by one or more individuals who put a high priority on improving business case practice in the organization, who have the time, resources, and motivation to coordinate and drive the other program elements below.
  • High level management support and attention

    Learning and compliance move forward more quickly if top management and other influential leaders let it be known continuously that they expect funding requests and other proposals from now on to come with business case support.
  • Clear standards for what constitutes an acceptable business case

    Established standards or acceptability criteria produce the consistency that submitters and reviewers need in order to evaluate proposal after proposal. They also provide focal points for reviewers to explain to submitters why their proposal was or wasn't approved.
  • Carrots and sticks (In other words, consequences for using or not using good business case practice).

    Senior management communicates clearly that successful proposals and acceptable plans require business case support that meets locally established business case standards. Proposals that do not have this support will not be approved or funded.
  • Well-publicized "success" cases, developed early in the initiative.

    These serve as examples for other case-builders. They also signal that this kind of case is within reach of everyone who needs to produce one. They say loudly and clearly that compliance with the business case program is already underway. This is not something to start at some indefinite future time.
  • Online case-building resources

    Readily accessible tools including example cases, but also templates and sample financial models and commonly-needed case building data such as labor costs, criteria for prioritizing capital requests, spending policies, etc..
  • A source of help when case-builders run into problems

    This need not be a full-blown help desk--but it should be at least a person with good experience and knowledge who can be called by case builders who are stumped or suddenly "out of their depth."
  • Business case training

    Good business case training gives case builders and case reviewers confidence, based on classroom experience and a clear understanding of business case essentials (essential components of business case design, important differences between strong and weak cases, how to legitimize benefits for the case, how to be sure all the relevant costs are included, and so on).
  • A common vocabulary

    Those who build cases, those who review cases, and those who use the results for decision support and planning need to share a common understanding of essential business case structure and contents, described based on a common business-case vocabulary (such as that presented in the Business Case Essentials or the Business Case Guide).

Experience shows that no single point above by itself guarantees business case competency in the organization. Establishing the capability and the habit for good case-building practice is a program of coordinated activities, not a point solution.

Does business case competency maturity level matter?

Does it really matter where your people and your organization stands on the maturity scale? The benefits from achieving higher maturity levels are tangible, measurable in financial terms, and large. There is, in other words, a strong "case" for building case building competency.

As maturity level rises, management will find measurable evidence of ...

  • Fewer bad decisions, which result in projects over budget, late, and missing targets.
  • Much less effort on business case analysis, developing decision support and planning information.
  • Decision makers acting with a high level of confidence.
  • Projects and programs successfully managed for lowest risk and maximum return.