Proving Business Benefits 6 Simple Steps


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In today's economic climate, the process of proposing-and acquiring support for-any project has become a far more rigorous exercise. In this month's Management Insights by Peter Dillon-Parkin, learn how to use the six-step ADAPTS process to build a successful business case for your project that ensures a return on investment.

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Proving Business Benefits 6 Simple Steps

  1. 1. EDITION 009 Learning Tree Management Insights Expert Advice from Today’s Top Professionals Creating and Proving Business Benefits in Six Simple Steps project, so management didn’t fully trust the cost/benefit Is this a familiar scenario? You need to get management analysis. 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 For the purposes of this article, let’s presume the latter one—and use it as a template. To be persuasive, you frame the outcome. In a proposal, tangible costs and benefits do need benefits of the initiative by advancing “the numbers”, believing to be compared to each other, but many businesses are also it’s what the business cares most about. seeking to achieve benefits that are harder to quantify. For example, “improved efficiency” is valuable, but how do you But here’s the catch: You don’t have a clue how to prove your prove (or quantify) that value? initiative’s benefits using “the numbers” because there are intangible benefits that are difficult to quantify in both the short Rather than start with the numbers, consider the real goals and long term. You struggle with determining the cash value of any proposal: of “increased efficiency” and “improved morale”. Plus, your • Clearly outline what is being proposed knowledge of the financial factors affecting the return from this project is limited—so even the value from the tangible benefits • Demonstrate the ways in which the proposal benefits is suspect. Your recourse is to invent numbers for the intangible the business benefits and mix them in with the tangible ones. You do all this, • Make sure your proposal is understood by all stakeholders all the while knowing full well that cash is historically the least (not just those with finance degrees) effective predictor of project success. This is what’s involved in creating a successful business case, On the up side, generating costs for the project is simpler, and and it can be easily done using a simple six-step process called once you have your cost and benefit numbers, you can provide ADAPTS. 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 Peter Dillon-Parkin two things happens: Able Solution UK Ltd 1. Your proposal is approved because the key decision had already been made. Writing the proposal was simply an Our Management Insights article for this month addresses the internal process requirement and it was never actually read. fundamentals of creating a clear and persuasive business case. Author Peter Dillon- Parkin, a documentation specialist and business analyst, 2. Your proposal is read but rejected. While it had many offers a six-step process for success. numbers, it never made a strong case for pursuing the 1-800-843-8733 CALL OR VISIT
  2. 2. EDITION 009 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 to those factors that the business worries about. For instance, a cash rich business might not care about cash overruns but Create a Successful Business Plan 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 1: Agree on the Scope Your first step is to harvest the stakeholders’ key perceptions Step 5: Target Alternatives and opinions to build a clear set of business requirements. Now you must ensure that your initiative (and the alternatives Next, write a clear statement of the problem or opportunity you generated back in Step 2) are culturally compatible with that has engendered the proposed initiative and compare that the way the business, and/ or its management, operates. To do to the requirements. Requirements that address the problem this, you must profile the decision-making processes of the key or opportunity are the key requirements while the remaining stakeholders and satisfy the selection criteria they use, thus are “nice to have” and rarely cause the initiative to fail if establishing that you’re presenting appropriate alternatives. they’re not met. For instance, presenting an alternative that stresses “increased throughput” for a company that values “care and quality” is Step 2: Develop the Initiative unlikely to succeed. Now you can add detail to the key business requirements by identifying all stakeholders, understanding their goals and Step 6: Sell the Business Case activities and getting more detailed information. This step Finally, pull together the knowledge you’ve collected from the provides two important insights: First, an understanding of previous steps to create a compelling reason for implementing the user scenarios that will be affected by implementing the your initiative. Remember: Without a strong rationale for initiative and, second, possible alternatives for meeting the implementing your initiative, readers will distrust any numbers business need that engendered the initiative. you provide. More business cases fail because of this than for any other reason. To further help your cause, consider writing a Step 3: Analyze Costs and Benefits clear, concise executive summary that focuses on the key points The first part of this step corresponds to a traditional proposal the decision makers are interested in. It is often the best place to where you compare tangible costs with tangible benefits. make your case. Because you are comparing apples to apples, standard financial measurement tools such as return on investment, Following the ADAPTS process, you’ll produce a business case payback period and net present value are helpful here. The document that accurately represents the real value that your degree to which you’ll deal with the financial aspects of a initiative provides to the business and, more importantly, enables business case is directly related to the exposure to risk for the informed decision making. 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 About the Author initiative demonstrates a benefit to the business. Peter Dillon-Parkin is the author of Learning Tree’s Course 212, “Building an Step 4: Prioritise Risk Effective Business Case: Analysing and Communicating Business Opportunities”. Here’s where you help the business recognise areas of Peter is a consultant specialising in documentation, business analysis and potential deviation in the business case. You should use communication skills, and works in Europe, the USA and the Middle East. behaviourally anchored ratings (BARs), which are anchored 1-800-843-8733 CALL OR VISIT ©2009 Learning Tree International. All Rights Reserved. CA0903_Business Benefits