Business Case Analysis – A Daily Practice

Business cases are well understood as a rationale for making a change (IIBA® BABOK® GUIDE V3). Most organizations develop formal, well-documented business cases (also known as cost benefit analysis or proposals) for large, expensive, and mission critical projects. But business case analysis should not stop there. Business case analysis can be thought of as decision analysis and, since we make decisions every day, we should be analyzing business cases as a daily practice.

Why do you stop for coffee?

Become aware of how many decisions you make every day. For example: Should you stop for a coffee on the way to work? How do you make this decision? Without being aware, you are probably performing business case analysis. Do you have time to stop for coffee (tangible cost) or will the stop make you late for work (intangible cost)? Should you spend money on coffee (tangible cost) or save the money towards your next vacation (long term benefit)? Would your favorite coffee drink put you in a positive mood to start the day (intangible benefit)? If you stop for coffee are you also tempted to buy a pastry (add on cost and calories!)?

Often, we make these daily decisions unconsciously, sometimes out of habit. But for our organizations to thrive and succeed in the current, fast-paced, disruptive environment we need to carefully think about every decision – making sure we are moving the organization towards its long-term goals and breaking old patterns which hold us back. (Remember the six most expensive words in business: We’ve always done it this way.)

Do you really NEED that widget?

Consider software development work where teams make hundreds of decisions about placement of data on screens, the logic to edit data, and the wording of user error messages and instructions. Each decision should be made using rationale business case analysis. Consider the decision to add a new widget to a screen. Why do we need this widget (expected benefit)? How much time will it take to create and test it (tangible cost)? How much maintenance will be required (long term cost)? Is this a true business need or a “nice to have”? Is there an alternative way to meet the need? Are there other widgets which are more valuable?

Make Rational Decisions

Thinking about tradeoffs isn’t difficult, it requires you to get in the habit of doing business case analysis every day and asking your team to think about each decision. As you ask questions about value and costs and tradeoffs in your elicitation sessions and team meetings, you will help your team make rational decisions. You will also help other team members get in the habit of asking these questions in their daily work. Next time you stop for coffee, think about how you are making the decision, is the benefit worth the cost?