Building a business case for IT investment
by Dr Nigel Martin, on 21-Oct-2017 15:30:00
Many businesses today aren’t just supported by technology – they’re defined by technology. In digitally-defined companies like Facebook and Amazon, the ROI of technology is indisputable, yet most organizations have been stung by very memorable IT project failures. These failures stick in the minds of the people who write the checks.
As a result, the level of trust in the IT department is low, and this lack of trust (combined with a harsh economic climate) has caused business leaders to become highly skeptical when it comes to spending big bucks on IT projects (“the last time we gave you money, you blew it!”).
The barriers that stand between the IT department and the company coffers are higher than ever before for this very reason, but the problem is compounded by increased competition for funding from other areas of the business (including shadow IT projects).
What's the antidote to budget-holder skepticism? A rigorous and compelling business case that clearly articulates the benefits in business terms – and sets out how and when the project will be executed to deliver these benefits and avoid the associated risks.
The key to success is presenting IT investment as business investment, e.g. how spending money on IT projects will pay dividends in terms of cost savings, productivity increases and quality improvements; some tangible and measurable, some less tangible and less easy to quantify.
Financial figures should show compelling reasons for IT investment, but a traditional Cost-Benefit Analysis (CBA) is only part of a business case. Where financial analysis may be seen as the rational part of decision-making, there are also other subconscious and emotional factors to consider. How will this investment in IT make life easier for people in the business? How will it eliminate current frustrations? The resources required to successfully deliver an IT project go beyond the budget: people, effort, motivation, commitment, knowledge and relationships are also critical success factors.
It is important to consider how the business case will appeal to the values of stakeholders and decision-makers. For example, introducing web-based ecommerce and self-support tools in a very traditional organization that prides itself on “the personal touch” may make economic sense (in terms of cost savings), but it may not mesh well with the company’s brand values. It is essential that an IT business case is constructed in collaboration with business stakeholders, so that conflicts that might kill an IT project can be resolved as early as possible in the process. Understanding that building a business case is an iterative and collaborative process - applying continuous participatory evaluation that involves both IT people and business people – is the key to success.
Find out more about how you can develop your business case capabilities in the How-to guide: Building a business case for IT investment: