It is time to replace the traditional IT business case with a Business Investment Plans. Why? For the simple reason that they do not work, at least they do not work from the perspective of helping an organization realize benefits from IT investments and projects. Part of re-imagining IT is taking a hard look at common practices and their effectiveness and ability to remain relevant without change in a changing world.
Benefits realization is one area that is in need of re-imagination.
According to more than 2, 000 CIOs responding to Gartner’s annual CIO survey, an IT business case is among the most frequently used technique for realizing business benefits. These CIOs also rank an IT business case as among the least effective at supporting the organizations realization of business benefits. Here is why?
IT business cases, in practice, concentrate on justifying an IT project by demonstrating that its projected benefits outweigh implementation costs. These cases are the object of intense focus at the start of the project and in the early stages of governance.
Ask a team about the business case and its influence on their work and you find out that the solution is engineered to meet its specification rather than solve a specific problem or enable an opportunity.
Discuss how the business case is translated into operational metrics and management goals and you can see that the traditional case concentrates on one thing – justifying the project.
We need to replace a business ‘case for investment’ with a business investment plan.
It may sound like semantics but a ‘case for investment; is exactly that a case to support a decision, whereas a plan is a set of decisions that commit the organization to operate in a different way.
Characteristics of a business investment plan include:
- An actual expected return, measured in terms of specific changes in cost, capital, cycle time, revenue and capabilities.
- A business performance model outlining the current and future operational metrics for the process or capability undergoing change.
- A set of new management metrics that define how the organization should operate its processes and the solution.
- The new commercial relationships, inter-company activities, service levels , commitments, job designs and the other elements required to sustain the intended higher level of performance.
A business plan should have a similar weight as a P&L budget as the returns from the investment determine the organization’s performance. Fail to make the investment plan work and it will impact their bonus.
A business plan should be a basis for making commitments and assuming responsibility for the business result. That is the test of a solid business investment plan. If you are not willing to put your career and job on the line then you have a plan.
Many organizations have IT business cases that function as proof of the validity of the project. That is useful in getting a project approved, but is not the best basis for benefits realization. That is what CIOs are saying when they say that they use business cases but they are not particularly effective at benefits realization.