Imran Siddiqi, Sr. Industry Value Advisor, Big Data and Analytics, SAP
As analytics tools and platforms continue to proliferate, a central challenge for most practitioners is how to successfully compete for funding dollars for business intelligence (BI) and analytics. Compounding this challenge, analytics is considered by many to be an enabling capability rather than a core technology. So how do we go about building an analytics business case?
Know the Business Case Definition
First of all, we need to understand that the term “business case” connotes different things to different people. According to Clayton Christensen’s book, The Innovator’s Solution, there are two definitions of the “Job To Be Done” (JTBD) by a business case:
- A strategic perspective considers a business case a vehicle for aligning multiple stakeholders to take action on a particular area.
- A tactical approach for the JTBD is to convince budget owners to allocate and/or disburse resources to implement a solution. Resources can include internal development time and spend, external spend on a solution, and any customization, implementation, training, and change management costs.
In an environment where there’s always competition for resources, developing the right type of business case will determine what gets done versus what doesn’t. However, that’s where the similarities end. We’ve seen business cases that range in complexity from two sentences in a spreadsheet, all the way to a multi-month strategy to convince decision makers.
Know the Types of Business Cases
While there is no single taxonomy for a business case, I can recommend three levels of business cases to consider based on the thousands of cases that we have built for SAP customers. Figuring out which of these you need to build should be your first step:
- Level 1(Basic) = Cost + Technical Solution Enablers/Benefits + Business Benefits (qualitative)
- This is the simplest form of business case, and one that’s suitable for items that are easy to understand and may or may not have a dollar cost. These business cases have relatively lower value and involve minimal change management. Pulling together this type of business case is fairly quick and easy – really, the only challenging part is to identify the business benefits.
- Level 2 (Intermediate) = Level 1 + Quantified Business Benefits + Implementation Roadmap
- This type of business case involves going beyond the cost side to incorporate the dollarized impact of business benefits. In many cases, the business benefits can be easily estimated, but the key is to run apples to apples analysis for three to five years.
- Level 3 (Advanced) = Level 2 + Benefits Realization Plan + Storyline
- The key aspect of this type of business case is that it has a storyline. Ideally, it starts with the strategic goals of the organization and shows how this investment will enable them. This used to be onerous to illustrate, but with SAP tools like the Value Management Center , this is now within reach of most organizations. SAP has made this a free capability, available to all organizations, so I encourage you to check it out.
Know the Strategic Intent of the Analytics Business Case
Five years ago, many of the analytics business cases were about justifying spend on external software to ramp up an analytics capability. Now that analytics is ubiquitous, there’s a need to more precisely define what the strategic intent of the analytics business case is.
The strategic intent could be any one of the following:
- Expansion of horizontal analytics to extend existing capabilities to additional parts of the organization
- Expansion of vertical analytics to deepen existing capabilities or take capabilities to the next level
- Addition of analytics capabilities, such as visualization or predictive analytics
- Standardization of analytics across the enterprise to take advantage of scale
- Establishment of an Analytics Competency Center
- Leveraging of analytics with customers, suppliers, and so on
- Management of security and risk (for example, by ensuring that decisions across the enterprise are made using the same set of data rather than multiple versions of the truth)
In almost all these analytics business cases, the crux of the case rests on identifying what the impact of analytics will be on existing business processes. In other words, once the downstream processes are enabled by that access to information, how much of a “lift” will the capability bring to the operating key performance indicators (KPIs)?
In many instances, the need for an analytics business case is actually being driven by the business, because it wants to take advantage of capabilities such as end-user visualization and predictive analytics without having to go through IT to have these delivered. In these situations, explaining the connections between analytics and core operating processes, information governance and “Big Data” is a valuable input that can be provided by IT.
What Is the Future of Business Analytics Business Cases?
While I’ve covered how business cases continue to be built for analytics, two new vectors are driving a new, enhanced approach to this building. The mushrooming of new technologies and the shift of tech spending to the business, particularly to marketing, will be covered in a future blog post.
For more information on BI strategy view our new Video series:
- Designing a BI Strategy
- Building a Business Case for a BI Strategy
- Progressing Along the BI Maturity Curve
- Developing a BI Competency Center
- Forging an Information Culture