EDITION 009
Learning Tree
Management Insights
Expert Advice from Today’s Top Professionals
Creating and Proving Business
Benefits in Six Simple Steps
Is this a familiar scenario? You need to get management
approval for your project to proceed. In a panic, you look for
the last proposal you wrote—or get a copy of the last successful
one—and use it as a template. To be persuasive, you frame the
benefits of the initiative by advancing “the numbers”, believing
it’s what the business cares most about.
But here’s the catch: You don’t have a clue how to prove your
initiative’s benefits using “the numbers” because there are
intangible benefits that are difficult to quantify in both the short
and long term. You struggle with determining the cash value
of “increased efficiency” and “improved morale”. Plus, your
knowledge of the financial factors affecting the return from this
project is limited—so even the value from the tangible benefits
is suspect. Your recourse is to invent numbers for the intangible
benefits and mix them in with the tangible ones. You do all this,
all the while knowing full well that cash is historically the least
effective predictor of project success.
On the up side, generating costs for the project is simpler, and
once you have your cost and benefit numbers, you can provide
a cost/benefit analysis. However, since the benefit numbers you
invented are qualitatively different from your cost numbers,
your analysis is suspect at best.
Nevertheless, you persevere and submit the proposal. One of
two things happens:
1. Your proposal is approved because the key decision had
already been made. Writing the proposal was simply an
internal process requirement and it was never actually read.
2. Your proposal is read but rejected. While it had many
numbers, it never made a strong case for pursuing the
project, so management didn’t fully trust the cost/benefit
analysis.
For the purposes of this article, let’s presume the latter
outcome. In a proposal, tangible costs and benefits do need
to be compared to each other, but many businesses are also
seeking to achieve benefits that are harder to quantify. For
example, “improved efficiency” is valuable, but how do you
prove (or quantify) that value?
Rather than start with the numbers, consider the real goals
of any proposal:
• Clearly outline what is being proposed
• Demonstrate the ways in which the proposal benefits
the business
• Make sure your proposal is understood by all stakeholders
(not just those with finance degrees)
This is what’s involved in creating a successful business case,
and it can be easily done using a simple six-step process called
ADAPTS.
Peter Dillon-Parkin
Able Solution UK Ltd
Our Management Insights article for this month addresses the
fundamentals of creating a clear and persuasive business case. Author
Peter Dillon- Parkin, a documentation specialist and business analyst,
offers a six-step process for success.
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Learning Tree
Management Insights
Expert Advice from Today’s Top Professionals
ADAPTS: A Six-Step Process for Creating and Proving Business Benefits
Applying the ADAPTS Process to
Create a Successful Business Plan
Step 1: Agree on the Scope
Your first step is to harvest the stakeholders’ key perceptions
and opinions to build a clear set of business requirements.
Next, write a clear statement of the problem or opportunity
that has engendered the proposed initiative and compare that
to the requirements. Requirements that address the problem
or opportunity are the key requirements while the remaining
are “nice to have” and rarely cause the initiative to fail if
they’re not met.
Step 2: Develop the Initiative
Now you can add detail to the key business requirements by
identifying all stakeholders, understanding their goals and
activities and getting more detailed information. This step
provides two important insights: First, an understanding of
the user scenarios that will be affected by implementing the
initiative and, second, possible alternatives for meeting the
business need that engendered the initiative.
Step 3: Analyze Costs and Benefits
The first part of this step corresponds to a traditional proposal
where you compare tangible costs with tangible benefits.
Because you are comparing apples to apples, standard
financial measurement tools such as return on investment,
payback period and net present value are helpful here. The
degree to which you’ll deal with the financial aspects of a
business case is directly related to the exposure to risk for the
business caused by the sums involved. If you’re unsure about
this aspect, involve the finance department or an outside
expert for their expertise.
In a business case, you must also go beyond the “the numbers”
to measure intangible benefits by tying those benefits
to business drivers and their Key Performance Indicators
(KPIs). A business driver is one or more of your business’
critical success factors, grouped into areas such as market
attractiveness or operational efficiency. For instance, in the
“customer satisfaction” area, a key business driver might be
“increasing our responsiveness in dealing with client needs”.
Having identified a driver, you can tie it to a measurable KPI.
For “customer satisfaction”, a KPI measurement could be
“average call response time”. If you can demonstrate that your
initiative will result in a measureable improvement in a KPI
tied to one of the company’s critical success factors, then your
initiative demonstrates a benefit to the business.
Step 4: Prioritise Risk
Here’s where you help the business recognise areas of
potential deviation in the business case. You should use
behaviourally anchored ratings (BARs), which are anchored
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to those factors that the business worries about. For instance,
a cash rich business might not care about cash overruns but
care very much about missed deadlines. Using BARs lets you
synchronise the evaluation of risk in your initiative with the risk
profile of the business.
Step 5: Target Alternatives
Now you must ensure that your initiative (and the alternatives
you generated back in Step 2) are culturally compatible with
the way the business, and/ or its management, operates. To do
this, you must profile the decision-making processes of the key
stakeholders and satisfy the selection criteria they use, thus
establishing that you’re presenting appropriate alternatives.
For instance, presenting an alternative that stresses “increased
throughput” for a company that values “care and quality” is
unlikely to succeed.
Step 6: Sell the Business Case
Finally, pull together the knowledge you’ve collected from the
previous steps to create a compelling reason for implementing
your initiative. Remember: Without a strong rationale for
implementing your initiative, readers will distrust any numbers
you provide. More business cases fail because of this than for
any other reason. To further help your cause, consider writing a
clear, concise executive summary that focuses on the key points
the decision makers are interested in. It is often the best place to
make your case.
Following the ADAPTS process, you’ll produce a business case
document that accurately represents the real value that your
initiative provides to the business and, more importantly, enables
informed decision making.
About the Author
Peter Dillon-Parkin is the author of Learning Tree’s Course 212, “Building an
Effective Business Case: Analysing and Communicating Business Opportunities”.
Peter is a consultant specialising in documentation, business analysis and
communication skills, and works in Europe, the USA and the Middle East.
pdillonp@yahoo.co.uk
CALL 1-800-843-8733
OR VISIT www.learningtree.ca
CA0903_Business Benefits