Greater Returns Through Effective Business Cases

As economic conditions become uncertain and growth remains under pressure, the effective allocation of capital resources become more crucial.

The business will continue to request capital and operational expenditure based on the needs of the organisation. However choosing between the various capital requests requires thought and a sound rationale to make appropriate decisions.

One of the most common techniques applied is the preparation of business cases in support of capital spend requests. Here are some practical suggestions in building the capability within an organisation.

• Develop a culture within the business to recognise the importance of business cases
• Enable staff through adequate training to assess budget request against the business benefits.
• Promote the discipline of preparing reliable business cases based on accurate information
• Encourage the sharing of information among stakeholders to ensure robust business cases are prepared.
• Develop a benefit realisation plan to ensure business case benefits are realised by the business post capital spend. In mature organisations, operational budgets can be modified to take into account benefits envisaged in the business case presented for approval or employee KPIs can be linked to business case outcomes.

The preparation of an effective business case relies upon a clear understanding of the organisation’s strategic objectives, challenges, requirements and appropriate solutions. It also requires business writing skills supported by strong financial skills
Initially there will be some resistance to change especially if business executives have had discretion with respect to corporate spend or lack the time to prepare business cases over and above normal operational responsibilities. However, the gains from good governance will translate greater returns and a more effective application of the organisation’s capital.