Solution Matrix • Cost-Benefit-Analysis

Business case

Business Case SchemeA business case is a tool that supports planning and decision making–including decisions about whether to buy, which product to bring to market, which projects to fund, which vendor to choose, or when to implement, for instance. Business cases are generally designed to answer the questions: What will be the financial consequences if we choose X or do Y? And, what important non financial outcomes can we expect in either case?

A good business case shows expected cash flow consequences of the each decision alternative, over time, and it includes the rationale for quantifying benefits and costs. The projected cash flows are analyzed with financial metrics that the financially astute manager looks for, such as net cash flow, discounted cash flow (NPV), payback period, and internal rate of return (IRR).

A good business case also identifies critical success factors and contingencies that must be managed to target levels, in order to achieve projected results. And, the case should also identify risks--factors that cannot be controlled or managed, but which can cause different results to appear. 

The organizing backbone of the case is a time line extending across months or years, as the figure suggests. This provides a framework for giving management practical guidance on how they can  implement financial tactics: reduce costs, increase gains, accelerate gains.

A good business case in a complex environment requires assumptions, arbitrary judgments, and the development of new data–new information that go beyond existing budgets and business plans. This means that two people working independently can evaluate the same proposed scenario, use correct financial arithmetic and still produce quite different business case results.

What's a Business Case?

For a complete, high level introduction to the nature of business case analysis and the essence of what it takes to "Make the Case," read Chapter 1 of Business Case Essentials, "What's a Business Case?"

Click here to open the 9-page PDF document, "What's a Business Case? in your browser. Read onscreen or save on your computer.

Improve your Business Case skills with one of the New Solution Matrix Books on the Business Case!

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Learn how to calculate the ROI of so-called "soft" benefits and find out how to cut your Business Case preparation time in half! 
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Cost/Benefit Newsletter

Read newsletter past issues

  • ROI Users Survival Guide
  • Getting a Yes from the CFO
  • Business Case Critics:
    De-Clawing the Cat
  • Do "Soft" Benefits Belong in a Business Case?
  • And more...

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Business Case Essentials: A Guide to Structure and Content

New edition just published!

The concise, complete guide to what belongs in a business case and why—The world's most popular introduction to business case analysis. With nearly one million copies in circulation, Essentials is also the leading trusted authority (Search Google to see thousands of citations). Clear step-by-step guidance for building a compelling case, complete with ROI, TCO, and other important financial and non financial outcomes. Available in printed, ebook (PDF), and Kindle editions. Order the printed edition online, or download the worlds most frequently cited business case resource today as an e-book.

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Business Case Guide

The Recognized Standard

Business Case Guide The in-depth practical Guide to successful cost benefit analysis and business case presentation. Adoped as the standard source by Cisco Systems, the US Department of Defense, and hundreds of other organizations. 255 pages. Download the recognized standard source.

Financial Metrics Pro

Financial Metrics Pro The complete financial metrics resource: clear, easy
to follow spreadsheet instructions, comprehensive handbook, usage and interpretation, and working examples. Covers all important cash flow metrics, including Net Cash Flow, NPV, IRR, ROI, Payback Period, and all financial statement metrics, from Working Capital and Quick Ratio, to full DuPont System analysis. Ready to copy templates for more than 100 important financial metrics. Download today!

Financial Modeling Pro

Financial Modeling Pro Step by step guidance for building the financial model at the heart of the business case. Includes model design strategy, best practice spreadsheet programming, designing for usability, and the dynamic model for risk and senitivity analysis.

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