Where the rubber hits the road

So you’re sponsoring a transformation programme and you and your team have spent the past six months setting up governance, understanding what needs to change, gathering requirements, selecting suppliers, building programme management and solution design capability, preparing for change, and defining your vision, objectives and design principles. Now it’s crunch time, you need to ask the Board for investment, you need a business case.

Alongside a carefully constructed solution design, a robust business case is one of the most important outputs from the scoping phase. It’s one of the primary documents used to assess the viability of the transformation and is typically essential to securing investment and buy in from the executives running the organisation.

Business Case Design

Most organisations will have standard business case and/or investment appraisal templates. It’s always worthwhile adopting these wherever possible so executives making investment decisions receive information in a familiar format. However, you may need to supplement the standard business case template with additional information.

Unlike a simple project investment decision that looks at the balance of costs, benefits, risks and timescales for delivery, a transformation programme should be considered within the wider strategic context. You should ensure that strategic outcomes delivered or enabled by transformation are included and considered as part of the investment decision. Programme or portfolio level costs should also be included to ensure there is adequate funding in place to co-ordinate the various projects/programmes, as well as to manage the business change required to effect the major shift in culture and working practices that transformation entails.

It’s More Than Just Numbers

Transformation programmes can be set on a path to failure by their business cases. Too much focus on easy to measure, cashable benefits risk underplaying the changes required to deliver the organisation’s strategic objectives. The result can be an overly simplistic cost cutting exercise. While the programme may be delivered on time and on budget, it fails to engage the hearts and minds of people affected by the change. New ways of working are not adopted, costs creep back in over time, and more importantly, the programme fails to deliver on the strategic objectives of the organisation. At the other end of the spectrum, a business case overly focused on strategic, value based, non-cashable benefits can lead to unintended increases in future operating costs, poorly contained programme costs, and a lack of measurable benefits that demonstrate success.

Transformation business cases should therefore include a mix of ‘hard’ cashable and non-cashable ‘value’ benefits, as well as all the costs associated with delivering the change. Non-cashable ‘value’ benefits should be reviewed and challenged internally by senior members of your finance team prior to presenting the business case for executive review. Even better, they agree to present the business case alongside you during the appraisal meeting.

Finally, it’s essential that the executive sponsor of the transformation knows the detail of the business case. They need to be 100% comfortable and familiar with the baseline for current costs, the design decisions and assumptions that are driving future costs, the planned duration and implementation costs, the cashable and non-cashable benefits, the costed risks, the strategic benefits, the financial treatment of capital and operational costs and the criteria used to evaluate the investment decision (Net Present Value, Internal Rate of Return, Pay Back Period, Return on Investment etc.).

We’ve all seen a great pitch on Dragons Den or Shark Tank fall to pieces when the person asking for investment isn’t 100% sure of their numbers. It’s the executive sponsor who is accountable to the Executive Board for delivering the promised outcomes and expected business benefits detailed in the business case. So, if you are an executive sponsor, make absolutely sure you are comfortable with what you are signing up to. Your career may depend on it!

So that’s it, the end of the beginning. You’ve secured the budget to transform your function, your solution design is robust and you’ve initiated a well-defined programme of change. So all you need to do now is design, build and test a set of new processes, systems, operating models and team capabilities. Should be pretty straight forward, right?

What’s next?

We’ll be publishing the next 10 point checklist covering the Build phase soon. You will find more practical guidance from people who have not only implemented transformation programmes but held operational accountability for some of those functions after we’ve transformed them.

To hear more invaluable real world experience and hard won lessons learned directly from transformation sponsors and practitioners, search out our new podcast series ‘Underscore Transformation’, wherever you usually find your podcasts.

In the meantime, to read the full 10 point Transformation Scoping Checklist click here.

This article on creating a successful Business Case is the tenth and final critical success factor in scoping a functional transformation programme. Other articles in this series include:

  1. The first article covering the first three points from our scoping checklist, namely Sponsorship, Problem Definition and Preparing for Change
  2. The second article focuses on Requirements Gathering and the importance of looking beyond technology
  3. Governance and Decision Making is the topic of the third article and the financial impact of governance that breaks down
  4. We cover Vision, Objectives and Design Principles in our fourth article
  5. Our fifth article looks at the Methodology and Approach used for transformation and the difference between a project, programme and portfolio
  6. The need for highly effective Programme Management Capability is described in our sixth article
  7. The importance and challenges of building Solution Design Capability is covered in our seventh article

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