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What is a Business Case?

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The Business Case is a document that facilitates a decision to start or continue, a new project, major product development or feature enhancement. . It should contain the information necessary for the business to make a decision. The Business Case is the one place where all relevant facts are documented and linked together into a cohesive story that has to convince the decision maker. This story tells people about the what, why, how, when, where, and how much.

A word of caution, the Business Case should be short and concise instead of a thesis or you’ll find that many will not read it.

Here are some other thoughts on what a Business Case is:

“The purpose of a Business Case is to provide the minimum amount of information required to facilitate a decision to perform some activity that will somehow impact the product, its customers or the business.“
Nick Coster, co director of Brainmates

“A Business Case is used to define, assess and evaluate the best approach to either proceed or not proceed with a product delivery program or initiative. The business case is an examination of a potential market opportunity on a product level”
Gabriel Steinhardt, writer of “The Product Managers Toolkit” and Blackblots’s managing director

“The Business Case seeks to qualitatively and quantitatively rationalize an investment, while considering elements of market needs, proposed solutions, and economic outcomes.
It is a living document that evolves from the concept phase, through Feasibility, and is base lined in the definition phase. Its assumptions are continually re-evaluated throughout the product’s life. “
Steve Haines, founder and President of Sequent Learning Networks and the author of “The Product Manager’s Desk Reference”.

Product Development Phases and the Decisions Points

There are many phases during a product development cycle from ideation to launch.

During these phases there are a couple of decisions points on which the business has to make a decision to continue or to stop the development or perhaps move in another direction. Questions that the business needs to consider are:

  • Will we explore this Market Potential?
  • Is the Business Opportunity valid?
  • Which solution will we implement? Or, does the solution derive a profit for the business?
  • Will we continue with the implementation?

At every decision point a “Business Case” is completed and archived with the decision that was made. For the next decision point the former Business Case becomes the base and a new document is created.   For the different decision points during the product development cycle different documents are required:

  • “Business Case 1”: Market Potential Paper
  • “Business Case 2”: DRAFT Business case
  • “Business Case 3”: Preliminary Business Case
  • “Business Case 4”: Baseline Business Case

In the Day-to-Day Product Management phase the Baseline Business case will be used to test the actuals against the assumptions made (the Baseline Business Case).  Based on this analysis a decision should be made to continue with the product as is, enhancement the product further or in the worst case, potentially withdraw the product from the market.

The Document Structure

To be able to make a proper decision the documents must only contain the minimum amount of information. In the Idea phase for instance, the information will be high level. In the Product Strategy phase more research and analysis is done and this results in better information upon which the next decision can be made. The accuracy and depth of the information will differ for the different documents but the overall structure of the Business Case should be the same:

  • Summary
  • Market Potential and the Market
  • Financials
  • Risks and Issues
  • Recommendations

To avoid the Business Case becoming too big it is recommenced to incorporate the outcomes and highlights in the Business Case with a link to the research, analysis and background information. The Business Case will only have the important information but the supporting research, analysis and background information can always be looked into.

To Summarise

The Business Case facilitates business decisions. The Business Case is the one place where all relevant facts are documented and linked together into a cohesive story. This story tells people about the what, why, how, when, where, and how much. Just like the product development a Business Case goes through different phases resulting in different strongly related documents:

  • “Business Case 1”: Market Potential Paper
  • “Business Case 2”: DRAFT Business case
  • “Business Case 3”: Preliminary Business Case
  • “Business Case 4”: Baseline Business Case

All these documents have the same structure but a different level of depth and accuracy.

Do you have any other pointers? Please share them with us.

If you would like to know more about creating Business Cases, Brainmates has two training solutions that you may be interested in.

Please add your feedback in the comments below.

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