How to get your IT project funded: Build a Solid Business Case: Step 2, Criteria Part 2

When we left the last post I talked about developing a sort of criteria triangle with the bottom layer being systems/data layer, mid-layer being the objectives and tactics layer, and then the peak of the triangle being the strategic results layer.

When we left the last post I talked about developing a sort of criteria triangle with the bottom layer being systems/data layer, mid-layer being the objectives and tactics layer, and then the peak of the triangle being the strategic results layer.  The objective here was to make sure the criteria that you select hits in the mid and upper layers of the triangle where these folks work in the realm of business results day in and day out.

So the quick and easy way to make sure that your criteria are hitting the right areas on the triangle, I use a value matrix.  It's a simple thing really, just an Excel-based tool that I can align decision criteria with the decision maker groups, like CEO/CFO, Sales/Marketing, IT, etc.  This gives me a visual way to see patterns that may evolve that will provide signals concerning the validity of distribution and balance of criteria among the groups.  Make sense?  This matrix is very valuable on the front end of business case development as a brainstorming tool.  I have found it to also be useful at the end of a business case engagement as a way to show the decision makers, visually, the nature of the criteria used.  I had a time when my laptop crashed and I actually had to draw this out by hand and use sticky notes, so if you want to take the "low-tech" approach, it's another great way to engage in conversation.

Crucial Relationships

The value matrix shows two types of crucial relationships between payoff opportunities and investment functionality that will make the payoff possible.

  1. Who cares about what? This links potential payoff areas to the interests of different decision makers.  If you look at the matrix, these relationships are shown horizontally.  So for instance, a CEO concerned with enterprise strategy and operations is more likely interested in different benefits than an accounting communications manager responsible for reducing costs of phone services.  Make sense?
  2. What causes what?  This is the cause-and-effect link between payoffs of interest to different types of stakeholders.  For instance, lets say a group in your company is enthusiastic about reducing communication and printed material costs but the CEO is not.  Now if these costs were significant enough to make a noticeable improvement in profits, then the CEO will take notice.  Make sense?

One other method that I use quite often is the Balanced Scorecard approach to this value matrix.  If you aren't familiar with Balanced Scorecard, you can check it out here.  To give you a short version explanation the Balanced Scorecard is a very popular technique for aligning busines objectives with business strategy.  I used this extensively at HP and then also when I left.  What I have done here at times is to remake the matrix to somewhat resemble the Balanced Scorecard for those clients that use that technique.  It has helped tremendously in giving a view that some clients are used to seeing.  I basically rename the levels and then assign the payoff areas to match those levels.  I split the left and right sides of my matrix, with the left side being more revenue oriented "Market Success" category and the right hand side Cost Savings.  I then readjust the decision criteria to match the sections.

Key Themes

Your business case should ultimately have one primary message of value, supported by no more than two or three related messages.  In other words, a dozen or two pages of analysis should be able to be summarized into a couple of specific messages.  My mentor at HP told me this:  "good business cases, like good movies, improve their impact when they can be summarized in a few sentences."  Words to live by folks.  I have taken an example of one of my engagements a while back to show you what I mean.  This case was rather detailed, but we put it into a short, concise message that really got the point across:

"Improving engineering productivity and loyalty are the main, core advantages of the intranet solution.  These benefits translate into improving the quality and quantity of new products, a key for enhancing XYZ's competitive advantage, and thus its revenue and profits."

Crucial Criteria

If you have gone through the project funding process before you know how competitive it is to get your project funded.  In today's tough economic times it is even more crucial that you make sure you have every criteria possible.  What if you have missing criteria during business case development? Or the criteria that you do have is not explained properly or in a convincing way to the decision team.  In either case, the business case team has inadvertently devalued its own efforts.

To make sure this doesn't happen, here are three ways that have helped me in the past to assure that key criteria are not missing:

  1. Use focused brainstorming sessions
  2. Test criteria for language, breadth, depth, and relevance
  3. Review best practices criteria from similar business cases

So let me cover brainstorming first as I've seen this just go down a rat hole quickly.  To make sure this doesn't happen to you conduct a brainstorming session with team members and decision makers (recommended) or their representatives (second choice).  During these sessions, ask these questions for each value matrix level (CEO/CFO, Sales & Marketing, Information Systems, etc):

  1. What vision/value/goals does this group have?
  2. What challenges must be overcome?
  3. What future opportunities of importance are available?
  4. What risks are to be avoided or minimized?

The next important task we have in this step is to test the criteria.  When you create a value matrix, generally each level (decision-maker group) should have at least two criteria.  If they don't, then that group really isn't that important to the decision at hand, or more criteria need to be discovered and added.  You need to make sure that for each criteria you express it in terms of a benefit to be realized using language with maximum impact upon the group at whose level the criteria will be placed.  This is very important.

The next task is to review best practices.  Now let me put a disclaimer here.  Just because it's printed doesn't mean it's true.  Please take what you review and read with a grain of salt and apply the concepts to your situation.  Ok, now what do I mean by best practice?  I do a lot of research through business articles profiling similar cost-benefit analyses.  I review publications from vendors, consultants and other groups that are knowledgeable in the area that I'm evaluating in the business case. Thirdly, I ask questions of subject matter experts of the content of the business case.

Intangibles

This is the concept that is the most misunderstood when it comes to decision criteria.  We all know what 'tangibility' means right?  It is an attribute indicating the extent that decision makers believe a payoff can be quantified in monetary terms.  Would you agree?  Let me give you an example of this:

Let's say that you have a criteria called "reduce the average price of XX" and it can be classified as tangible if decision makers believe it could save $100,000 per year by cutting $5 from the unit price of 20,000 widgets you buy."

But if the decision makers felt that those savings could not realistically be quantified, then that criteria is labeled 'intangible'.  The reality here folks is that any criteria in the world can be classified as either tangible or intangible.  So here are five questions to determine 'tangibility':

  1.  Premise. Basically a fundamentally held belief by your decision makers
  2.  Cause and Effect.  Given X, then Y can occur
  3.  Formulas.  Mathematical in nature to calculate such a benefit
  4.  Metrics. Values assigned to variables that enable the formulas to be calculated into a monetary value
  5.  Proof.  Anything that can back up and substantiate the claims of the components above

So to make this simple, if you only have one of these per criteria, then it's an 'intangible'.  It's the ladder effect really, so the more of these you have for each criteria, the more it makes it to 'tangible'.  Remember this:  the only answer that counts is that which the decision makers will use during investment decision time.  Misgauging the relative importance of tangible and intangible factors is easy to prevent.  Your best bet here is to have your business case team do an educated guess and then review that classification with executive sponsor and decision makers.

Filter your criteria

So when I first started this post, I stated that we would look for 30 to 40 criteria and then filter it down to the top 6 to 12.  Now it's time for 'survival of the fittest'.  So you are probably asking why 6 to 12 right?  Well based on experience there is a lot of work that goes into determining and proving value for each criteria selected.  Having more than a dozen to analyze will overwhelm your business case team, not to mention anything more than 12 will completely overwhelm the decision makers.  My experience has shown that typically 3 or 4 (out of the 12) will ultimately drive the decision to invest or not.

Here are some quick tips for you to filter the 30 to 40 original criteria down to the 6 to 12:

  • do not use more than four criteria per decision maker group
  • look for decision criteria candidates that cover the same criteria but use different words.
  • ask yourself if the tangible or intangible value of a given criteria is likely to be large enough to value.  For instance, a value of $10,000 over 5 years is probably not worth including if every other criteria provides at least $500,000 in value.
The next step in my seven step process is Align, meaning connecting the dots by taking all the decision criteria and linking to key business goals.

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but your article on stocks was far far far more interesting !
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LMAO...well no one said that building a business case was sexy!!!  It's a lot of work.  Just wanting to share my best practices.  I'll continue to write about the markets don't worry.  I think it lends itself to the whole "what the heck is going on in the industry" conversation.


I do appreciate your feedback so thanks for replying.  If you find a way to make business case development sexy please let me know.  If I find it before you, I promise to use it.


Cheers
Michael

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I too find the series of articles quite boring....dull writing infact...can't you summarise instead of going on and on and on ?

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Some of us actually work in large enterprises where Citrix products compete with other vendor products, and so we have to build a business case showing why the Citrix product wins out.  This is especially true for products such as WanScaler, Provisioning Server, etc. 


So please keep posting, and don't be scared of giving too much detail.  It will matter to someone. 


Everyone else can copy/paste into Microsoft Word and click 'Summarise'.

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thats right many companies especially the boss  ( not all of them are ignorant in the IT world )needs to be specific why we choose "this product insted of this" there must be an option. and many more 


the bottom line is thank you michael for the sharing your best thoughts with us i will wait for the next 5 steps


never mind those guys


cheers eba    

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Thank you to the folks that find what I put out here worthwhile and my apologies to the folks that don't get great posts all the time.  Like I said in the first person's reply.  I wish that business case building was sexy and I could spin it in a way that sounded so cool everyone would jump right in and do it.  But if I did that, I wouldn't have a job, and I can't because it's not sexy and cool.  So sorry some of my posts are borish and long-winded at times, but it is important to some folks that have to build the case for one technology over another.

Thanks again for reading and replying.

Cheers
Michael 

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Don't worry about whether or not it is 'sexy'!  People who expect it to be sexy have missed the point.  It won't ever be sexy.  But making the case and succeeding means you get all the sexy you want.
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I must admit I find these articles quite dull, preferring more technical articles.  That's just my opinion.  I would like these articles separated out, maybe in a different area ....or site?
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How about "good blog posts, like good movies, improve their impact when they can be summarized in a few sentences."  I'm off to watch my newly painted fence dry for a bit of excitement after reading this.
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Have to agree - one in a while is worth a read, but it seems a lot of techies are leaving here and even the comments on this site has dropped a lot.


Where has everyone migrated to?  I fancy joining them!

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otherwise we wouldn't come here!!!!


create a seperate link or post it on YOUR  web site....

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I'll make this really simple for you technical folks.  Don't read my stuff then.  There are people out there that do want this information, and I can't satisfy everyone.  Sorry bout your luck guys. I'm pushing forward.

Cheers

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Michael, I'm liking it, but your scope is big and you're having to generalize, and if somebody hasn't had to write one of these, it's hard to internalize the issues. Could you take us through a (redacted) example?

In the spirit of the guest above, here's my try at a summation: "Figure out what the decision makers are interested in, and make your case in terms of what they want, not what you want. And if you want to do better than a just making *** up and putting it in a list, here are some techniques for making your arguments more quantitative and more impactful."

jtroyer@vmware

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John

Thanks for chiming in my friend.  I would be happy to share an example in each section and I think you're right, it probably would lend some more specificity to it.  

I had to be general and take a large scope in order to make sure I gave the overall view, but I like your idea on a redacted example.

As for your summation:  I couldn't have said it better myself.  Thanks for sharing and helping out.

Great to hang with you at VMWorld.  Looking forward to next year...

Cheers
Michael

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i got more benefit from that post than pages and pages of blah blah blah
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yeah and if you delivered that summation to your management team they would laugh you out of the conference room and you would be spending the rest of your career rewiring the data center like some cable monkey.  I am sharing this information with everyone so that you can get your VDI project funded, your enterprise-wide deployment of Provisioning Server, your increase of VMware or XenServer project funded.  Don't you people get it?????

Get real people.  No matter if building a business case is what you do or not, it's important, especially in today's climate of business critical projects getting funded.

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because our customers (my managers) see the benefit of technologies like Virtualisation, VMWARE , sbc by themselves, because it simply makes sense....the technologies are simply that compelling...


we do NOT need to bore them to death with a 7 series x 5 pages theory explanation !

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I work in the data center as a server guy and I take extreme offense being called a cable monkey ! how unprofessional ! we are not all geniouses like you talking about business cases ! what audacity !
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Theory?  Dude, this is anything but theory.  This is years of experience in doing this for some of the largest corporations in the world.  If you have a company where you don't have to justify why you choose one technology over another, then congrats to you.  To be honest you are the one-off situation.  With that, thanks for posting, but your input really isn't valuable so I'd appreciate it if you would just not read my stuff
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because we disagree with you?because there is a voice saying we come to this site for TECHNICAL info? because we are not YES MEN to say we love your stuff?


 your attitude is arrogant in how you denounce people who disagree as "not valuable"

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You can disagree with me all day long, I don't care.  But to say that building a business case is a waste of time and just a bunch of theory is just plain wrong.  There is plenty of other technical information on this site.  The titles of my posts are pretty self explanatory.  Don't read it if don't want to see what I'm putting up.  It's just that simple.  I enjoy and welcome CONSTRUCTIVE criticism.  That's the only way I can become better.  But to some of these replies are just plain short-sighted and uninformed.  If you don't have to worry about creating business cases or care about how IT and Business converge and make the company you work for more profitable, then don't read my stuff.  It's just that simple.

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