Overall Project Business Case Report

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Business Case Report

High Technology Project

Virtual Reality Module

Month 01 Year 2000


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Copyright 2002 MOBIPRO

This document is protected by European copyright law and the law of confidentialityand the comparable laws of other countries. It contains valuable informationproprietary to MOBIPRO. No part of this material may be copied, stored ortransmitted in any form, electronic or otherwise, without the prior written consent of

MOBIPRO.


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High Technology Project Virtual Reality Module Business Case Report

Table of Contents

NOTES TO AUTHOR........................................................................................1

0.1 Introduction.......................................................................................................1

0.2 Tailoring the Template......................................................................................1

0.3 General Hints....................................................................................................1

1. OVERVIEW....................................................................................................2

1.1 Purpose.............................................................................................................2

1.2 Related Documentation....................................................................................3

1.3 Related Phases.................................................................................................3

2. EXECUTIVE SUMMARY...............................................................................3

2.1 Background .....................................................................................................32.2 Needs Summary .............................................................................................3

2.3 Proposition Summary.......................................................................................3

2.4 Options Evaluated ..........................................................................................3

2.5 Method of Evaluation .......................................................................................4

2.6 The Recommended System Acquisition/Development ...................................5

2.7 Delivery.............................................................................................................5

2.8 Potential Risks..................................................................................................5

2.9 Impact of not Proceeding..................................................................................52.10 Next Action......................................................................................................5

2.11 References/Appendices..................................................................................5

3. BUSINESS OVERVIEW.................................................................................6

3.1 Background ......................................................................................................6

3.2 Need Statement ...............................................................................................6

3.3 Need Justification..............................................................................................6

3.4 References/Appendices....................................................................................6

4. OBJECTIVES & PARAMETERS....................................................................6

4.1 Proposal Description.........................................................................................6

4.2 Objectives To Be Achieved...............................................................................6

4.3 Target Markets ................................................................................................6

4.4 Constraints........................................................................................................7

4.4.1 Costs.......................................................................................................................7

4.4.2 Timeframe...............................................................................................................7

4.4.3 Investment...............................................................................................................7

4.4.4 Standards................................................................................................................7

4.4.5 Other.......................................................................................................................7

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4.5 Infrastructure Investment Required...................................................................7

4.6 Class of Investment Project..............................................................................8

5. SCOPE OF PROPOSAL................................................................................8

5.1 Scope Inclusions...............................................................................................8

5.2 Scope Exclusions..............................................................................................8

5.3 Assumptions & Provisos...................................................................................9

6. ALTERNATIVES.............................................................................................9

6.1 Option 1 Do Nothing........................................................................................9

6.1.1 Overview.................................................................................................................9

6.1.2 Approach.................................................................................................................9

6.1.3 Pros & Cons............................................................................................................9

6.1.4 Risks........................................................................................................................9

6.1.5 Costs.....................................................................................................................106.1.6 Benefits.................................................................................................................11

6.1.7 Strategy Fit ...........................................................................................................11

7. ALTERNATIVES...........................................................................................12

7.1 Option 2 - Develop a new system.................................................................12

7.1.1 Overview...............................................................................................................12

7.1.2 Approach...............................................................................................................13

7.1.3 Pros & Cons..........................................................................................................13

7.1.4 Risks......................................................................................................................13

7.1.5 Costs.....................................................................................................................13

7.1.6 Benefits.................................................................................................................16

7.1.7 Strategy Fit............................................................................................................16

8. COSTS SUMMARY ....................................................................................17

8.1 General Costs.................................................................................................17

8.2 Implementation Costs.....................................................................................18

8.3 Total Annual Operating Costs.........................................................................18

8.4 Change Management Costs...........................................................................18

8.5 Other Costs.....................................................................................................18

8.6 Investment Appraisal......................................................................................19

9. BENEFITS SUMMARY................................................................................19

9.1 Benefits Sought & Achieved or not Achieved.................................................19

9.2 Benefits Applicable.........................................................................................19

10. RISKS SUMMARY.....................................................................................19

10.1 Traditional Risks...........................................................................................19

10.2 Extended Risks.............................................................................................20

11. RECOMMENDATION................................................................................20

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12. NEXT STEPS.............................................................................................21

13. APPENDICES............................................................................................21

13.1 Appendix A, Customisation ..........................................................................21

13.1.1 Additional Mandatory Features............................................................................21

13.1.2 Additional Desirable Features ............................................................................21

13.2 Appendix B - Cost Benefit Analysis Worksheet............................................23

13.3 Appendix C - Cost Sub Report......................................................................23

13.4 Appendix D - Benefit Sub Report..................................................................23

13.5 Appendix E - Risk Sub Report......................................................................23

13.6 Appendix F - Strategy Match Sub Report.....................................................23

13.7 Appendix G Change Management Strategy..............................................23

13.8 Appendix H: Overview Of Phases................................................................23

13.9 Appendices...................................................................................................25

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Notes to Author

0.1 Introduction

This skeleton Business Analysis Report contains Notes to the Reader in italics ineach section. This information is not normally included in the final Business

Analysis Report and is intended only to provide assistance to the team creating aBusiness Analysis Report.

These notes describe the intended content and scope of the section. In addition,each section contains information about which team members usually write thesection. This is based on past experience and is not intended as a firm rule, merelya guideline. Each team should decide how each section should be completed andby whom.

Additional information may be required to accommodate the specific needs of aproject. Likewise, information may not be relevant to the specific needs of a projectand should be omitted. Each team should address this early in the creation of aBusiness Analysis Report.

0.2 Tailoring the Template

Search for the following information and make the changes which are appropriate toyour specific situation. Each of these has been used consistently within thisdocument.

Company Name: MOBIPRO

Project Name: High Technology Project

Module Name: Virtual Reality Module

The usage of a company name in this report has been deliberately minimisedbecause we consider this to be a security issue.

0.3 General Hints

Include (in appendices) any relevant information that helps clarify thecase.

Ensure the report is realistic, factual, useful and above allunderstandable.

Apply the So What? and Is This Us? tests. If it fails the test, thendrop it.

Avoid any and all jargon, and explain any necessary terminology.

It is important to have a clear path forward so that the business case is

not put into the too hard basket. Make sure that there is reference towhat will happen next. For example, the audience may have a week tolook at the report before a meeting to decide if the recommended optionis accepted.

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Unless there is major padding in the costing, it is likely the budget needto rise over time. Common sense tells us that there will be thingsunknown at this point in time, which will become apparent in the futureand cost additional money. Unless there is a contingency in the budget,there is no facility to pay for the unknown.If approval of the business case is a major exercise in the organisation,it may be useful to gain agreement that there will be no furthersubmissions unless the budget is exceeded by x%. If costs do exceedx%, there will be a supplementary submission. It is important theapproving body realizes the costs are based on what you know at thispoint in time.Another approach is to have a contingency fund which is approved bythe board, and on which the project team reports expenditure separatelyto the board.

References & Guides

Before commencing the process, the Sub Reports should be completed.These will provide the foundation for the Business Case Report. TheSub Reports are the explanation behind the calculation of details.

The Sub Reports are used as a prompt to ensure ALL the informationrequired is discovered, and documented.

There will be overlap in the Sub Reports and this is to be expected. Forexample, achievement of a Strategic Objective may also be a benefit.Use your own discretion as to how it should be included in the BusinessCase Report. Do not slavishly transfer information from the SubReports. Distil the details.

One failure of major projects is that managing the expectations of theusers is neglected because there is no money. Nobody thinks about it

until after the budget is approved. It is important to have completed achange management strategy and built the costing into the businesscase.

1. Overview

Justifying an investment in technology requires a rational business case. That casetakes organisational benefits into account without ignoring costs, benefits, return oninvestment and risk. Strategic and other benefits need be balanced against cost andrisk. All proposals furthermore have alternatives, including inaction or do nothing.An assessment of alternative options helps the business better understand therelative value of a proposal and whether to support it.

The Business Case Report then - Scans the range of business system options available

Examines their advantages and disadvantages, both financial and non-financial

Estimates the Costs, Benefits Risks and Strategic Match of each option

Recommends a relative best option or the do nothing option

1.1 Purpose

The Business Case Report serves to -

Clarify, size and choose between competing business system options.

Quantify the cost and benefits of each option.

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Present a clear review of the options and recommend a course ofaction.

1.2 Related Documentation

Business Case - Benefits Sub Report

Business Case - Risks Sub Report

Business Case - Costs Sub Report

Business Case - Strategic Match Sub Report

Business Case - Cost - Benefit Worksheet

Key Memos

1.3 Related Phases

Business Analysis phase

2. Executive Summary

This section in 3 pages maximum is a precise of the report, major recommendationsand benefits. This information is usually written by the whole team.

Include the following paragraphs in brief, precise style -

2.1 Background

A short description of the project history

Example :

The project was initiated in June last year at the request of the Board. The drivingforce was the need to cope with Year 2000....

2.2 Needs Summary

What are the needs that are driving the project. eg a need to comply withlegislation; a need to match competitors.

Example :

There are two major needs behind the project to move office:

Proposed seminars require larger training room

Staff growth cannot be accommodated in current office premises

2.3 Proposition Summary

Brief details of the requirements for the system. eg Objectives, scope, timeframes,

investment, standards etc.Example :

The requirements of the system are

Close to public transport

Client Server

Must be able to issue invoices.

Has ADSL available

Must link to our existing financial package.

etc2.4 Options Evaluated

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A few lines to outline the options that were examined. If options were not evaluatedfor any reason, explain why they were excluded.

Example

The team looked at two scenarios varying the scope, resources, cost and time.

1. Development using SofwareDeveloper and 5 developers2. Development using SofwareDeveloper and 8 developers

Scenarios 1 & 2 will ensure the transfer of SoftwareDeveloper skills, as well asdelivery of the system. Scenario 2 shows there is little benefit to adding extradevelopers.

A comparison of the two scenarios is shown in the following table:

Scenario

Scope Developer s

Time

(elapsed)

Cost

1 Module 1(2200 FP)

5 23 weeks 287.5K

Module 2(2500 FP)

5 20 weeks 250K

Totals 4700 FP 5 43 weeks 537.5K

2 Module 1(2800 FP)

8 20 weeks 400K

Module 2(3200 FP)

8 15 weeks 300K

Totals 6000 FP 8 35 weeks 700K

Both scenarios include the use of SoftwareDeveloper. Using SoftwareDeveloper forthe development ensures SoftwareDeveloper of quality systems in an incrementalmanner to fixed timeframes. SoftwareDeveloper incorporates changes rather thanfighting it and because SoftwareDeveloper is business driven, business will getwhat it needs at time of delivery. The SoftwareDeveloper deliverables are also wellengineered to satisfy the technical requirements of IT.

The SoftwareDeveloper blends the three components of software development,People/Process/Technology via a framework of techniques to integrate

management, business users and IT as partners. It manages the process ofapplications development by using common sense, incorporating change (insteadof fighting it), manage expectations through training, provides a transfer of skills andfocuses on quality (doing the right thing in the fastest possible time). Quality, fromthe users perspective, is ensuring that the business users get what they need attime of delivery and from the IT perspective, is ensuring that the deliverables arewell engineered.

2.5 Method of Evaluation

Outline by whom and how the evaluation was carried out.

Example :

The evaluation was carried out by a team consisting of the following people duringJune and July this year.

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John Smith - IT Manager

etc

2.6 The Recommended System Acquisition/Development

Document the recommendation and give a brief outline of the key issues. eg

Description, how it fits with Business/IT Plans, costs, benefitsExample :

After looking at packages available, we recommend in house development for thefollowing reasons.

No package has more than a 60% fit with our requirements

Four of the five packages do not have a client server version.

The fifth consists of the LAN based version with a screen scraper

etc...

2.7 Delivery

Provide details of the proposed delivery schedule if they are available.

Example:

The Modules will be delivered in the following order:

1. Virtual Reality

2. Reality

The plan involves incremental delivery of the above Modules to reduce risk and toobtain business benefit as early as possible.

2.8 Potential Risks

These can be picked up from the Risk Sub Report

Example :

The following are the main risks.

Lack of expertise in VB.

Business requirements are vague.

etc...

2.9 Impact of not Proceeding

What happens if we do nothing.

Example :

Unless we move now, we will not be able to guarantee the system will be modifiedbefore the year 2000

2.10 Next Action

The path forward.

Example :

A meeting will be held next week to discuss the options and agree thedevelopment proposal

2.11 References/Appendiceseg Sources, Timetable and Resources

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3. Business Overview

This section in 2 pages maximum expands the information contained in theExecutive Summary..

Include the following points -

3.1 BackgroundExample :

In 1996, we first looked at modifying the existing system to cope with new productsproposed for 1999. The result was a report included as Appendix C whichrecommended...

3.2 Need Statement

Briefly, what is the need being addressed in the Report.

Example :

We need to replace the aging Wang system with a Windows based System.

3.3 Need Justification

Outline the justification for the need.

Example :

The Wang hardware, on which the current system runs, is being phased out as amatter of corporate policy. The data maintained by the existing, aging system nolonger adequately meets current business needs. None of the modules of thesystem are integrated which, in many instances, necessitates duplicate data entry.Aspects of the system handled manually are no longer manageable for current andgrowing staff levels.

3.4 References/Appendiceseg Business Plans, Surveys, Costs, Technical Environment, etcetera

4. Objectives & Parameters

4.1 Proposal Description

Summarise the proposal, for example, as follows-

Example :

To evaluate, select and acquire an efficient, integrated and modular enterprisemanagement system that addresses the needs today of the finance, purchasing,payroll, human resources and engineering business areas, and that incorporates

current best practices in these areas. Such a system will preferably be a singlepackage-single vendor solution. Options such as package use as is, package usewith customisation, and in-house development in part will be considered. The caseof inaction or do nothing will also be considered.

4.2 Objectives To Be Achieved

State the goals to be achieved clearly.

Example :

The primary objective is to satisfy ad-hoc queries, add new data and delivervalued-added information services to clients in a much shorter time frame than iscurrently the case. The secondary objectives are (list) ...

4.3 Target Markets

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List target markets where market entry is enabled or market share is expanded bythis proposal.

Example :

The new functionality will enable the package to be used in New Zealand as we willnow be able to handle GST.

4.4 Constraints

State the limits on the proposal clearly.

Example :

As we have a major project underway which will take 18 months to complete, wewill not have experienced development staff available internally.

4.4.1 Costs

State the budgetary limits that apply. eg Initial, annual or total cost limits.

Example :

The budget allocated is $1m with a payback period that must not exceed 2 years.

4.4.2 Timeframe

State the time limits that apply.

Example :

Implementation of core systems on or before 1997 financial year

implementation in full by latest 1998 March quarter.

4.4.3 Investment

State any investment criteria that apply, for example-

Example :

Maximum payback period of three years

Minimum internal rate of return of 15%.

4.4.4 Standards

State any business or technical standards where conformity is required -

Example :

Financial systems conform to Australian G.A.A.P. practices

Accounting packages conform to NSW Government G.S.A.S.

recommendations

Technical platform conform to corporate IT &T standards (list) ...

4.4.5 Other

State any other constraints that apply, for example-

Example :

No protracted run-off of legacy systems beyond two months duration.

Policy is to implement packaged solutions rather than to developsystems.

4.5 Infrastructure Investment RequiredSummarise the size of any prerequisite investment required.

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Example :

A high initial investment in data, software, hardware, staff, training ormanagement will be required to create the infrastructure needed for theproject. Substantial changes in IT & T service delivery will be required inseveral areas. These are (list) ...

A medium-to-small initial investment in data, software, hardware, staff,training or management will be required to create the infrastructureneeded for the project. Minor changes in IT & T service delivery will berequired. These are (list) ...

The proposal uses existing IT & T services and facilities. No investmentin infrastructure is required.

4.6 Class of Investment Project

Classify the nature of the investment project.

Example :

Must DoInvestmenteg Compliance with legislation, statutes, regulations, or replacement ofobsolete, costly high-risk systems.

Core Business Investmenteg. Development or extension of products and services, opening ofnew channel of distribution like telemarketing, automation of operations.

ITInfrastructure/Services Investmenteg. Upgrade of aging printers & terminals to cut maintenance costs,linking with electronic commerce networks, or consolidation of systems.

Prestige ProjectInvestmenteg. Move to prestige address, joint venture in high profile technology orsupport of a multi-media event.

Research & DevelopmentInvestmenteg. Tax-effective investment in document management systems forexisting clients, the local market and exports.

Othereg. Change or consolidation of offices to cut rental & manpower costsbut requiring one-off refurbishment and rewiring costs.

Note that a project may have several facets eg. core business and ITinfrastructure investment. Refer to pertinent sections of corporate plansand strategies.

5. Scope of Proposal

5.1 Scope Inclusions

State clearly what is included in this proposal.

Example :

The proposal includes all database changes required to avoid year 2000problems.

5.2 Scope Exclusions

State clearly what is excluded from this proposal, adding any provisos or

assumptions necessary.Example :

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6.1.5 Costs

Much of this information comes from the Costs Sub Report. It should besummarised down to a few lines as the detail is in the Sub Report. The Sub Reportgives the how the costs were derived. This section gives the what in a few lines.Totals should be included for each section.

Pre-Implementation Costs

What needs to be spent prior to an implementation. In this case,nothing.

Capital Costs

Costs to be incurred in Capital Equipment. Once again, only a fewlines. The detail is in the Sub Report. If the option is to donothing, there is probably no cost.

Customisation/Development Costs

If customisation is required, what will it cost.

Implementation Costs

The costs associated with acceptance testing, training andimplementing the solution.

Fixed Operating Costs

What were identified as direct operating costs in the Sub Report.Example :If we do nothing the existing system costs will remain constant.For the next three years, they are as follows:Year 1 $60,000 Year 2 $65,000

Year 3 $70,000 Variable Operating Costs

The Variable Costs associated with running the new system.These will have been detailed in the Sub Report. If there arepoints which should be explained, they should be done briefly.Example :By doing nothing the Variable Costs will remain on a par with thecurrent expenditure.Year 1 $21,000 Year 2 $46,000 (includes $20,000 for the new interface to the XYZ System)

Year 3 $25,000 Indirect Project Costs

A listing of the costs indirectly generated by the development. Itshould be noted whether these are costs as a consequence of theproposal, or are costs that would have been generated anywayand may have been brought forward. There are probably noIndirect Project Costs if the option is to do nothing.

Opportunity Costs

There are usually some opportunity costs which may be hard toquantify. As these are usually not quantifiable, they are not

included in the Sub Report.Examples :

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Inability to improve the level of service or increase the scope ofservice to clients. Savings planned via new initiatives are notmade.

Cost of errors, rework and lack of reconciliation. Likelihood thatwork procedures become increasingly inefficient and inaccurate.

Data that would enable a more accurate costing of goods andservices is not captured. Pricing is not optimised.

Deterioration of morale resulting in higher staff turnover.

Contingent Liabilities

Sometimes an option is attractive in the short term, but only putsoff the inevitable. As these are usually not quantifiable, they arenot included in the Sub Report.Example :The current financial package does not comply with GovernmentG.S.A.S. application guidelines and recommendations. In time, a

replacement will be necessary. The estimated remaining lifetime ofthe system is the current five year planning period.

6.1.6 Benefits

The information in this section is a summary from the Benefits Sub Report. As it isa summary, keep it short. In the case of do nothing, there may be no benefits

Tangible Benefits

The tangible benefits are those that have been quantified in theSub Report.

Intangible Benefits

Enter a short statement to indicate the benefits that have not beenquantified.Example :By not doing anything at this point we have the opportunity toincorporate recently announced legislative directions when theybecome statutes.

6.1.7 Strategy Fit

Summary

The strategy fit is taken from the Strategic Match Sub Report.Only bring out the key points as the Sub Report will be an

appendix and contain the detail.Example :The option does not contribute towards meeting CorporateObjectives.

Corporate Strategy

The issues that support or dont support the way the organisationdoes business.

Business Strategy

The strategic issues relating, or not relating to the Business arelisted here.

IT Strategy

The issues that support or dont support the IT strategy.

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7. Alternatives

7.1 Option 2 - Develop a new system

Having looked at doing nothing, we now move onto the first option to do something.We will only produce one example although there may be two, three or four optionsexplored.

7.1.1 Overview

Provide a thumbnail sketch of the option.

Example :

Develop a complete financial system in-house using OO technology andPowerbuilder as the language of choice. The system would run on the existingDEC Alpha system although an upgrade to the storage would be required.

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7.1.2 Approach

Detail the way the project would be approached.

Example :

The project would start on the completion of our new sales management system

and utilise the same development team. We will need some outside contractors butwe do not see that as a restriction. The project would follow standardSoftwareDeveloperand an outline of the next phase which is System Definition isfound in the System Definition Plan - Appendix B

7.1.3 Pros & Cons

Advantages

What are the advantages of the system? As we are examiningoptions, concentrate on the advantages that one or more of theother options do not have. For example if all options provide aGUI front end, do not mention it as the purpose of examining

options is to differentiate between them. It may be appropriate tohave a Generic Options section in the report if the audience forthe report is not familiar with the project.Example :Human Resources would eventually benefit from having a newsystem which addresses their specific needs. These being.....

Disadvantages

The same comments as for Advantages apply toDisadvantages.Example :Resource lack. The significant time, staffing and costs that would

be required to develop and test a new system from scratch. Noresources are available for the timeframe required. Resources arealready stretched to meet current work levels.

7.1.4 Risks

Much of this information comes from the Risks Sub Report. It should becategorised into High, Medium and Low risks.

Example :

High Risk

By the time we are ready to commence development, we may have been forced toundertake a data warehouse exercise for our parent company and staff may notbe available to undertake the work.

7.1.5 Costs

Pre-Implementation Costs

What needs to be spent prior to an implementation.Example:Prior to implementation, we need to train ten people. $5,000

Capital Costs

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Costs to be incurred in Capital Equipment. Once again, only a fewlines. The detail is in the Sub Report.Example :New Server (Compaq XYZ model)

$25,000Network Upgrade $34,000

Customisation/Development Costs

If customisation or development is required, what will it cost.Example :Modification to Input Screens

$2,000Additional Reporting

$10,000Estimated sub-system development costs

$100,000

Implementation Costs

The costs associated with acceptance testing, training andimplementing the solution.Example :User Acceptance Testing $34,000 Training of users $12,000

Fixed Operating Costs

What were identified as fixed operating costs in the Sub Report.Only exceed a line for each cost if explanation is required.. Thesecan all be rolled into one figure for each year, or if it is felt they canbe grouped into a few key categories, they can be detailed.Remember that they are detailed in the Sub ReportExample : Year 1

$100,000Year 2

$110,000Year 3

$120,000

Variable Operating Costs

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The Variable Costs associated with running the new system.These can all be rolled into one figure for each year, or if it is feltthey can be grouped into a few key categories, they can bedetailed. Remember that they are detailed in the Sub ReportExample :Year 1 - Transaction processing

$12,000- Distribution Disks

$4,000TOTAL

$16,000

Year 2 - Transaction processing$16,000

- Distribution Disks$1,000

TOTAL$17,000

Year 3 - Transaction processing$18,000

- Distribution Disks$1,100

TOTAL$19,100

Indirect Project Costs

A listing of the costs indirectly generated by the development. Itshould be noted if these are costs as a consequence of theproposal, or are costs that would have been generated anyway

and may have been brought forward.Example :Cost of errors, rework and lack of reconciliation. For the additional... months to develop a new system, the quality of work producedwill be compromised. It is becoming increasingly difficult toreconcile the old systems. We have carried out a costing estimatewith the department and have agreed the additional cost

$150,000

Opportunity Costs

A listing of the costs indirectly generated by the development. Itshould be noted whether these are costs as a consequence of the

proposal, or are costs that would have been generated anywayand may have been brought forward. As these are usually notquantifiable, they are not included in the Sub Report.Example :Development will take longer than purchase of a package and assuch, we will not be able to enter the market for at least threemonths after the estimated implementation date for a package.

Contingent Liabilities

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Sometimes an option is attractive in the short term, but only putsoff the inevitable. As these are usually not quantifiable, they arenot included in the Sub Report.Example :Development from scratch will mean that we will not be able toupgrade our reporting system until late next year. The newreporting system would be part of a package solution and hadbeen scheduled for the next quarter on the existing system priorto this project.

7.1.6 Benefits

The information in this section is a summary from the Benefits Sub Report. As it isa summary, keep it short.

Tangible Benefits

The tangible benefits are those that have been quantified in theSub Report.Example :Reduction in Help Desk Staff

$42,000Pre-printed stationary elimination $12,000 etc...

Intangible Benefits

Enter a short statement to indicate the benefits that have not beenquantified.Example :The new system will :

Provide a competitive edge over others in the market by

providing EDI to Government Clients.

Enable faster turnaround of stock.

etc...

7.1.7 Strategy Fit

Summary

The strategy fit is taken from the Strategic Match Sub Report.Only bring out the key points as the Sub Report will be anappendix and contain the detail.Example :

The option enables us to push meet many of the OrganisationalCorporate Objectives. Specifically, they are :

Expansion into Asian Markets

Faster development of new products

etc

Corporate Strategy

The issues that support or dont support the way the organisationdoes business.Example :The new reporting system will allow the organisation to meet its

objective of providing daily sales figures to State Managers.

Business Strategy

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The strategic issues relating, or not relating to the Business arelisted here.Example :The organisation is currently entering the Annuity market and thenew client system will support that Business Strategy by allowingcross selling of superannuation products to retirees.

IT Strategy

The issues that support or dont support the IT strategy.Example :Whilst the strategic direction of the organisation is to move awayfrom mainframe to client server, the new development will notsupport that move.

8. Costs Summary

The purpose of a Cost Summary is to put down all the options in one table forcomparison purposes. The method (the how) of calculation is in the Sub Report.Each option has a brief explanation (the what) of the costs associated with theoption. The Summary compares all the options without going into any detail.

8.1 General Costs

This covers the cost of developing or purchasing a new system and all thoseactivities up to the point of implementation. As they are detailed in the Sub Report,they only need to be summarised into one figure or perhaps a few categories. It issuggested they be put into a table

Example :

Option 1 Option 2 Option 3

Completion of Business Requirements(System Definition)

25,000 25,000

Sizing Planning and Selection Phase 5,000

Development 100,000

Purchase Software 82,000

Total $30,000 $107,00 0

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8.2 Implementation Costs

The cost of implementing the new system. Once again, a few figures for eachoption are required as the detail is in the Sub Report.

Example :


System Implementation Costs 40,000 55,000

Testing 10,000 5,000

Training 15,000 15,000

Total $65,000 $5,000

8.3 Total Annual Operating Costs

Details come from the Cost Sub Report so only a summary is needed. The fixedand variable costs are combined.

Example :


Year 1 25,000 12,000 12,000

Year 2 30,000 10,000 12,000

Year 3 35,000 10,000 12,000

Total $90,000 $32,000 $36,000

8.4 Change Management Costs

Following the preparation of a Change Management Strategy, there will be somecosts associated with implementing Change Management as part of the project.These should be included. It may also be appropriate to include the ChangeManagement Strategy as an appendix.


Staff Communication 12,000 12,000

Supplier Liaison 10,000 12,000

HR Consultant 20,000 20,000

Etc.

Total

8.5 Other Costs

A summary of the other costs which have been quantified.

Example :


Data Cleansing 42,000 42,000 Temps to do manual reconciliations 52,000

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Travel to USA to view Package Solution 15,000

Total $52,000 $42,000 $57,000

8.6 Investment Appraisal

An appraisal of the financial implications if they are relevant. It may include cashflow, Return on Investment etc. Details come from the Cost Benefit AnalysisWorksheet.

Example :

The total cost for Option 2 is $150,000 which would be incurred over two yearsstarting first quarter next year. The operating costs are $23,000 per annum andbased on the costing of our current system the payback period is 18 months.Budget requirements would be $100,000 in year 1 and $50,000 in year 2 for thedevelopment.

9. Benefits Summary

Refer to Business Case - Benefits Sub Report for the information to be included inthis section. As the benefits have already been outlined in each option, concentrateon the key differences under each heading.

9.1 Benefits Sought & Achieved or not Achieved.

Refer to section 3.2, Objectives To Be Achieved.

Identify and list the primary benefits sought from the Objectives listed earlier, andany benefits sought that will not be achieved by the proposal. This is a generalsection as benefits are discussed in each option.

Example :

The proposed solution will meet the objectives of providing an online cashreceipting facility to process renewal payments. It will not however generate areceipt showing the next scheduled renewal date and the premium payable at thattime.

9.2 Benefits Applicable

Identify and list any other spin off benefits applicable.

Example :

Although not a required benefit, the project will enable us to raise the skill levels inPowerbuilder within the organisation.

10. Risks Summary

Refer to Business Case - Risks Sub Report for the information to be included in thissection. As the Risks have already been covered in the Alternatives, concentrateon the differences.

10.1 Traditional Risks

Operational

Identify any risks that relate to the operational aspects of thecompany both in a Business and IT sense.Example :A high level of SQL skill will be required during the development.

We cannot be sure present staff have the skill and acomprehensive training program may be required.

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Financial

Identify any Financial risks involved. The costs should show whatthe estimates are for the project but there may be risks inherent inthe estimation.Example :

The cost of the system has been quoted in Yen. We are subjectto exchange rate fluctuations.

Technology

What are the Technological risks.Example :It is not clear if the network capacity will enable us to support thenew system. We may need to upgrade our ISDN links.

Change Management

Change Management Risks are those involved in theimplementation of a new system or package. They often relate to

the perception of people, or the readiness of users to accept thenew system.Example :The system is due to go live on January 1 and staff training willbe difficult due to leave over the Christmas/New Year period.

10.2 Extended Risks

Inaction

What are the risks associated with doing nothing.Example :If we do nothing, we will risk the hardware failing and as it is no

longer supported by the manufacturer, we may not be able toresurrect the system within a reasonable time.

Structural change

Detail the risks relating to the organisational or work structure.Example : Adaptation of telemarketing technology in the finance sectorsignificantly changes the day-to-day operations, skills andmanagement required in these industries, challenging andreplacing the those in place.

Business Environment

Outline risks associated with the line of business in which thecompany operates.Example :Adaptation of electronic data interchange in the import/exportsector or in the manufacturing sector greatly changes the officeprocedures, business relationships and commercial positions ofparticipants, with clear winners and losers.

11. Recommendation

We now get to the point of outlining the recommendation from amongst the options.As there has already been a substantial amount of comparison, this is only arecommendation and should highlight the key points. The detail is in the previous

sections and in the Sub Reports. The recommendation should cover a page atmost and outline the key factors that influenced the decision.

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Example :

Following an analysis of business needs and an investigation of alternativesolutions to best meet those needs, the recommendation is to replace the currentsystems with the integrated Human Resources and Payroll software packageHR2000 provided by ABC Software. The vendor will also develop and integrate into

HR2000 additional functions which are required but which are not currently includedin the standard product. Refer Appendix A, Customisation.

The option to pursue a package solution with customisation, rather than develop ourown system, is expected to best meet business requirements in both the short andlonger terms. While certain crucial functionality will need to be developed for thesystem to be complete and to replace the existing Wang systems, the amount ofdevelopment will be minimal compared to the standard core functions alreadyavailable in HR2000.

The impact of inaction or rejection of recommendations is stated in Option 1, donothing. Next steps are outlined in the following section.

12. Next Steps

It is important to point a path forward. Too many reports end up gathering dust on ashelf. Outline the next steps to be taken, as appropriate.

Example :

A meeting will be held on the 20th June at 2:00 to discuss the proposal and eitheragree or select an alternative as the preferred solution. The proposal will then beput to the next Board Meeting in July, and a budget and implementation date forthe package agreed with the board.

13. Appendices

The appendices should include any relevant documents produced during the

development of the Business Case. It will of course, include the Sub Reports. Itmay be details of a package, specifications, or costing and memos generatedduring the analysis. One example is given below.

13.1 Appendix A, Customisation

13.1.1 Additional Mandatory Features

List and briefly describe any mandatory or must have functionality required aboveand beyond that provided in standard off-the-shelf packaged solutions. Whereverpossible, list in order of priority and cost. Rank from highest to lowest.

Example :

The following additional functionality is required.Mandatory : Additional file for distributor details $10,000

Input screen for distributor details $5,000

Three additional reports for distributor details $3,000

13.1.2 Additional Desirable Features

List and briefly describe any desirable or nice to have functionality required aboveand beyond that provided in standard off-the-shelf packaged solutions. Whereverpossible, list in order of priority and cost. Rank from highest to lowest.

Example :

Desirable : 1) Screen display of distributor sales by month by

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distributor for the last 12 months. $12,000

2) Commission system for distributors

Automatic Calculation of Commissions $40,000

Generation of Cheques $15,000

Generation of Statements $10,000

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13.2 Appendix B - Cost Benefit Analysis Worksheet.

Include the Cost Benefit Analysis Worksheets

13.3 Appendix C - Cost Sub Report

Include the Cost Sub Report

13.4 Appendix D - Benefit Sub Report

Include the Benefit Sub Report

13.5 Appendix E - Risk Sub Report

Include the Risk Sub Report

13.6 Appendix F - Strategy Match Sub Report

Include the Strategy Match Sub Report

13.7 Appendix G Change Management Strategy

It may be appropriate to include the change management strategy.

13.8 Appendix H: Overview Of Phases

It is appropriate to include an overview of the work still to be carried out underSoftwareDeveloper. Remember that the people reading the Business Case mayhave little knowledge of SoftwareDeveloper.

The proposal is that the project proceed using SoftwareDeveloper.SoftwareDeveloperbreaks the project down into phases. Listed below are thephases and what is achieved in each phase.

System Definition Phase

The objectives of the System Definition Phase are to:

Capture the requirements for a specific system or Module

Scope the Development effort

Undertake logical design activities

Capture sufficient information to enable the system to be sized

The System Definition Phase focuses on the requirements of a particular system. Itidentifies the specific functionality that is to be developed, tested and deliveredduring the Development Phase or that is to be available in a package selected.

This Phase will identify: The specific business functions to be provided

Application components to satisfy these functions.

The system is analysed into its component functions, and business descriptions ofeach function documented. Consideration is given to the scope of Development andthe acceptance criteria which will need to be met. The business case is stated andcost factors impacting the system identified. Technical information produced such asmodels are included as appendices.

Sizing, Planning and Selection Phase

The objectives of the Sizing, Planning and Selection Phase are to: Size the development effort

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Select the development tools

Select the development techniques

Select the style of development

Address technical design issues

Produce a development plan.

The purpose of the Sizing, Planning and Selection Phase is to determine the size ofthe development effort, what tools and techniques will be used during developmentand to construct a plan for completing development.

The size of the development effort is expressed in function points. The functionpoint count is determined from the information on functionality and complexitycontained in the System Definition Report. An initial estimate of effort for developingclasses, subsystems and the application system is made from the informationprovided from the System Definition Phase. This is updated once the technicaldesign issues have been considered in this Phase.

After the size of development is known, it is important to select the tools andtechniques that will allow for development to proceed in a manner best suited for theproject. The tool selected should be able to deliver the type of functionality requiredby the business on the platform most suited to the application. Anotherconsideration is the techniques that can be used effectively with the tools identified.

The selection of the style of development to be used is based on more than thetools and techniques identified. Factors such as the business urgency, culture ofthe business, and comfort and experience with the tools and techniques identifiedare considered. Selecting the style of development is needed to determine theresources required to complete development.

There are three styles of development supported by SoftwareDeveloper:

1. Rapid Prototyping

2. Tailored Rapid

3. Modified Waterfall

These styles may be used individually, or combined in a large project to allowportions of the development effort to be performed in the most appropriate way.

Development Phase

The objectives of the Development Phase are to:

Build the software within the defined scope

Test the software

Deliver software which meets the business user needs at the time ofdelivery

Provide software which is ready for Implementation

Obtain business acceptance of the software

The Development Phase constructs the business application. During this Phase,the specific business functionality is developed, tested and delivered.

Three types of development are catered for:

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Documents

Overall Project Business Case Report