I’m not sure why, but business cases have gotten a bad rap in recent years. It seems that more executives I speak with are becoming less inclined to develop a business case for their digital transformation initiatives.
In years past, it seemed that leadership and project teams understood the need for business cases – even if they were often superficial or unrealistic. They at least understood the value as a tool to justify the investment or to estimate the return on investment.
Now, I seem to hear more excuses for not creating a business case or cost-benefit analysis. One hypothesis is that companies have under-invested in their enterprise software for so long that they have reached a breaking point of needing to upgrade their systems out of necessity, so organizations don’t see the need to develop a business case. In other words, more companies are implementing new ERP software and other technology because they have to, not because of a strategic expectation surrounding ROI.
Whatever the reason, this isn’t a good trend. A business case is key to a successful digital transformation, and here are a few reasons why:
1. Because you have to.
It is important that you define and quantify the exact business benefits that you expect to realize from your digital investments. From there, you can assess whether or not the investment is a wise one and make adjustments to your plan as needed. This is also the first step to holding your team accountable to actually realizing the expected business benefits and achieving the ROI that you would like to see.
2. You won’t achieve what you don’t measure.
The popular adage is true: if you don’t measure it, you won’t achieve it. Defining performance measures and targets for each area is a first step toward achieving the ROI potential of your digital transformation initiative.
3. You can’t improve business benefits without measuring and understanding where you might be falling short.
Most organizations don’t realize business benefits right away. It can take months or years to realize the full potential of new ERP software. But, you won’t ever achieve many of those potential benefits if you don’t understand where you’re falling short and continuously improve to optimize those benefits.
Then, you can identify the root causes of suboptimal benefits and take corrective action to remediate them. Most of the time, I’ve found that these are very simple fixes, such as refresher end-user training, tweaks to business processes or modifications to the way the software is implemented. After spending so much time and money on your implementation, why not take this small (and relatively easy) step to ensure you improve your business benefits? This is an area where independent ERP consultants can help.
4. A business case is a key project governance risk management tool.
If the long-term, post-implementation advantages of a business case still isn’t enough, then perhaps the value during implementation will convince you. It’s no secret that many ERP implementations fail, and poor project management and governance is one of the leading reasons for this phenomenon.
A business case will help rationalize key decisions that haunt so many project teams. For example, is that customization request really worth it? There’s no way to answer this question without a solid business case. Without it, you’re making tough decisions in the dark, but with it, you have clear direction on how to keep your project on track.
5. You need to accept that you will be disappointed with your benefits realized – at least initially.
It’s common to fear business cases because they expose the areas where you will inevitably fall short of your expected business benefits. It’s okay to admit it: you’re going to fall short at first, no matter what – we all do. A business case will ensure you eventually get to where you want to be. So, it’s important to view this as a positive rather than a threat.