How to Prepare Business Cases

This book guides accountants through the processes they need to understand to develop and present a high-risk business proposal with success. This compact guide outlines every issue surrounding a business case, from profit benefits and beyond. Will the proposal change the way the business operates, and how can these changes be predicted? What risks are involved, how can they be understood, and how can they be prevented? Who will manage the investment benefit delivery? How can technology be best used to make the venture work? All are explained succinctly and illustrated with case studies, check lists and templates. * Learn which business proposals make good business sense * Learn how to explain to others which business propositions they should invest in * Learn how to present ideas convincingly to senior management

Dr Dan Remenyi is a Visiting Professor in the School of Data and Systems Studies at Trinity College in Dublin and a visiting academic fellow at Henley Business School in the United Kingdom. He has written a number of books and papers in the field of IT management and regularly conducts courses and seminars as well as working as a consultant in this area. Brendan Remenyi has developed numerous business cases over the past 20 years. He has applied his knowledge inside a diverse range of companies from a specialized ICT bureau offering computer aided design facilities to the clothing industry to one of a kind retail boutiques. In recent years his focus has shifted to cases involving cultivating growth within e-Business enhanced applications.

Preface	p. xi
About the Authors	p. xiii
How to Use this Book	p. xv
Why a Business Case for Investment?	p. 1
Introduction	p. 3
The comprehensive business case	p. 8
A business case as a model	p. 9
Definition of a business case	p. 10
Corporate culture is central to a business case	p. 12
A caution	p. 13
Who owns the business case?	p. 14
Summary	p. 15
Different Investment Decisions and the Business Case	p. 17
Investment decisions and the business case	p. 19
Must-do investments	p. 20
A core business investment decision	p. 20
Investment in a prestige project	p. 23
Investments in research and development	p. 25
Investment matrix and the business case	p. 26
Intangible benefits	p. 28
The Protean nature of investment business cases	p. 28
Summary	p. 29
Preparing a Business Case	p. 31
Introduction	p. 33
The elements of a business case	p. 34
The consensus issue	p. 36
The acceptance of change	p. 36
Accuracy of estimation	p. 39
Strategic alignment	p. 40
Technology	p. 40
Risk - project and system	p. 41
An investment business case as a process	p. 41
Multi-stage large scale investments	p. 42
Summary	p. 44
The Art of Evaluation	p. 45
Introduction	p. 47
Evaluation and the business case	p. 47
Traditional business evaluation	p. 48
Dimensions of evaluation	p. 50
Other evaluation issues	p. 54
A professional approach to the evaluation process	p. 55
A word about assumptions	p. 55
Summary	p. 56
The Business Outcome	p. 59
Introduction	p. 61
Outcome statement or statements	p. 62
Another example of the macro-model for a sales administration system	p. 67
Meso-model	p. 69
How to develop a meso-model	p. 72
Generic categories of benefit	p. 73
Micro-model	p. 75
Summary	p. 77
The Stakeholders	p. 79
Introduction	p. 81
The importance of stakeholders	p. 82
The stakeholder	p. 82
The three major groups of stakeholders	p. 83
The investment owners as stakeholders	p. 83
Technical professionals as stakeholders	p. 85
Financial managers and administrators as stakeholders	p. 85
Different stakeholders - different views	p. 86
Stakeholders - for and against	p. 88
Stakeholder mapping	p. 90
Stakeholder management	p. 93
The stakeholders and the business case	p. 96
Summary	p. 98
Strategic Alignment and Benefit Identification	p. 99
Introduction	p. 101
Strategy? What strategy?	p. 101
Approaches to strategic thinking	p. 103
The five forces model	p. 103
Generic strategies model	p. 104
The value chain model	p. 105
Strategy and the value package	p. 109
The question of strategic alignment	p. 112
Shifting sands	p. 115
Summary	p. 115
Technology Issues	p. 117
Introduction	p. 119
Understanding required by the principal stakeholders	p. 120
A difficult challenge	p. 120
Create a technology statement	p. 121
Checklist to assist completing the technology statement	p. 125
Summary	p. 126
Risk-Conceptualising and Measuring	p. 127
Introduction	p. 129
Defining risk	p. 130
A 3 x 3 risk framework for project risk	p. 131
Other types of project risk	p. 132
'Bad' ideas	p. 136
Incorporating risk in the business case	p. 137
Quantifying and managing risk	p. 138
Another approach to risk quantification	p. 140
Summary	p. 143
Business Case Accounting	p. 145
Introduction	p. 147
Basic approach	p. 147
Cost framework	p. 148
Basic concepts required for business case accounting	p. 150
Detailed cost items	p. 157
Pattern of costs	p. 159
Sources of cost estimates	p. 160
Sources of benefit estimates	p. 160
Different approaches to business case accounting	p. 161
Combining these approaches to business case accounting	p. 169
Difficulty in estimating investment variables	p. 169
Using deterministic analysis	p. 171
Using risk analysis	p. 173
A risk analysis example	p. 174
Investment decision rules	p. 176
Leasing	p. 177
Summary	p. 179
Evaluating a Business Case	p. 181
The preparation of a business case is challenging	p. 183
The hallmark of a professionally produced business case	p. 184
Summative and formative evaluations	p. 185
A checklist for evaluating a business case	p. 186
Weighting and scoring for prioritising projects	p. 189
Summary	p. 191
Using the Business Case as a Project Management Tool	p. 193
Introduction	p. 195
Phases of investment project management	p. 196
A reiterative process	p. 196
A route to successful IT implementation	p. 197
Summary	p. 201
Appendices	p. 203
Business outcome details	p. 205
Stakeholder details	p. 209
Strategy	p. 211
Technology	p. 213
Cost benefit analysis	p. 215
Evaluating a business case	p. 223
Dealing with risk	p. 225
Financial measures used in cost-benefit analysis	p. 227
Glossary of terms	p. 231
Bibliography	p. 239
Index	p. 245
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How to Prepare Business Cases

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