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Strategic Approaches and Business Cases

Internet Librarian International October 2007

Ulla de Stricker, President, de Stricker Associates (Canada)www.destricker.com

Armand Brevig, Global Category Leader, Scientific & Business Information, AstraZeneca (UK)

armand.brevig@astrazeneca.com

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Business Cases: Why and How

Ulla de Strickerwww.destricker.com

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A major challenge consistently encountered

• Business reality: Those who "sign the checks" need solid, compelling reasons why they should support our initiatives / budget requests

• If a solid, compelling case cannot be made for an investment … why would they?

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What we will cover

• The Why: Decision makers' needs

• The What: Elements it must contain - the "recipe"

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Introduction: The Why

• Decision makers' top concerns:

• Make it easy for me to say yes• Help me march the proposal up the

line• Protect me from the risk of

championing a weak case

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The Drivers of Decision Making

• Things are not done "just because" - they are done because they …

– Address a problem or opportunity– Enhance image, profits, …– Help meet agreed goals– Or otherwise support strategy

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What Motivates Decision Makers?

• Intrinsic:– Meeting existing business goals– Achieving "over and above"– Earning a reputation – Grooming for promotion

• Extrinsic:– Avoiding unnecessary hassle/risk– Being close to retirement

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Understanding Motivation

Awareness of the individual perceptual context helps choose the "pitch"

• But we must also demonstrate an understanding of other factors– Competitive pressures– Budget cuts – Imminent retirements– etc

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Questions to Ask Throughout

• How will my idea look in the current business environment?

• How will my idea mesh with decision maker's motivations and organizational strategy?

• Is the timing right?

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Document Scope must Fit the Culture

• Corporate culture dictates detail / depth / length of project justification documents

• 3 - 8 - 25: – 3 pager of bullets– 8 pager with brief narrative inserted (+

appendix)– full 25 pager (+ appendix)

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The What

• As a TOOL to enable someone else, without the detailed insight we have, to arrive at a business decision …

• … the business case contains a specific sequence of elements

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Rocky Road… But Straight

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Chapter 1: Exec Summary

• This section may be all that is read• Tip: Write this piece AFTER the other chapters are

done

• Concise statement of the precise action proposed

• Drivers: What we are fixing or reaching for

• Effort and investment: $, time, people

• Benefits

• Strategic alignment

• Readiness to proceed

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Chapter 2: Background

• This section orients readers why the case was developed and (we hope) motivates them to read it

• "This is why you need to care"

• What is the problem, need, or opportunity (PNO)

• Evidence and metrics

• Origins of the PNO

• Risks and negative consequences of continuing status quo (with metrics)

• Any previous remedial action or initiative that failed, and why

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Chapter 3: Options

• This section orients readers as to the possibilities considered

• Note: We are not discussing cost yet

• Outline of the full range of options• Reasons why some have been eliminated as

not viable• Details about the viable ones

– Key features– Key pros/cons– Key benefits– Key constraints

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Chapter 4: Environmental Analysis

• This section assures readers "we are not alone"

• Internal: Who else experienced a similar PNO• What was done or is being done, with what

outcomes• External: Who else experienced a similar PNO• What they are doing about it, with what

outcomes• Lessons learned

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Chapter 5: Proposed Approach & Method

• We explain, in detail, the viable option we recommend, and how the initiative will unfold

• We propose to … by …• Scope of activity:

– Pilot or full scale – Timeline, human resources– Any other departments / inputs involved

• Critical success factors:– Cooperation from …– Technology, facilities, skills, etc

• Implementation steps:– Step 1, Step 2, etc– Timeline to completion

• Measuring success:– Methods for gauging how close we got to the goals

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Chapter 6: Budget and Cost Analysis

• Only now do we get to the cost question - it must be seen in the light of all the foregoing

• Anticipated direct and indirect costs– Salaries/benefits; consulting fees– Purchases/licenses/equipment– Training; materials– IT support; facilities

• Implications for existing or next-year budget– Options for cost diversion or sharing– Discretionary funds?

• Staffing effort– New hire(s) & job description(s)– Seconded/reassigned personnel & length of

involvement

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Chapter 7: Benefits• Here's what readers will get for the investment

• Benefits may be the inverse or mirrors/echoes of the PNO statements

• "Measurable to a degree" benefits– time savings, risk reduction, cost cutting, apply labor to

more profitable activity, etc

• Estimated ROI – Challenging for cost centers such as libraries or intranet

shops, but it is worth the effort to calculate– E.g. # staff X hours saved X avg hourly comp

• "Soft" benefits– Better informed / more timely decisions– Enhanced competitiveness– Better-leveraged investments in technology or

information

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ROI Anecdotes

• We may all remember such spectaculars …

• Project all set to go to investigate ways to reduce precious metal loss at metallurgical lab - estimated $3 Million

• Knowledge worker found Russian article - could read enough to suspect it was relevant

• Modest cost of translation Yes, it was exactly the process needed

• Project not necessary!

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Example of ROI Estimation

• Although not provable, numbers can be effective in demonstrating we have done our homework.

• Proposition: Hire 1 information professional to assist 100 knowledge workers and to improve the usability of the intranet

• Based on an audit of the 100 knowledge workers' current practices using the intranet …

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Example of ROI Estimation, cont'd

• 60-80% (= avg 70%) say they spend 10-15 hrs/mo in avg. 10 searches/mo looking for internal documents (not always finding them)

• 40-60% in addition feel they don't have the right documents to hand when they make decisions - but no time to keep looking - element of uncertainty

• They estimate in 10% of search events, critical information is missed, and unnecessary work is done, avg. 1-5 days per event (we'll use 3 for calculations)

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Caveat

• Any illustrative number crunching must be backed up be credible assumptions / measures / averages

• There are no guarantees and absolutes

• Calculations cannot account for serendipity, lucky coincidence, exceptions, project and seasonal variations, personal memory, etc etc

• Benefits such as "information professionals train knowledge workers to know when to do their own digging vs. seek help" are likewise difficult to quantify

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Proposition

• Assistance to knowledge workers and improvement in intranet usability will reduce the amount of …

• Wasted KW time in searching• Wasted KW time doing unnecessary work or

pursuing alternate routes to needed documents

• And will in addition …

• Improve the quality of decision making, speed project completion time, etc

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Example of ROI Estimation, cont'd

• Ignoring vacation time:

• 12 mos * 12 hrs * 70% of 100 = 10,800 hrs• * avg comp of $75/hr = $756,000 cost of

"hunting time"

• 12 mos * 10 searches * 70% of 100 = 8,400 hunts, of which …

• 10% (840) miss critical info to generate 3 days extra work = 2,520 work days

• that could be devoted to productive work• * avg comp of $600/day = $1.512 million cost

of the extra work

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Example of ROI Estimation, cont'd

• Investment - 1 information professional - at $90K/yr - three areas of gain:

• (1) Could reduce "hunting time" by 50% by improving intranet = $378K savings

• That is, the IP salary has paid for itself, with $288K saving "left over"

• (2) Value of extra work avoided = $1.5 Million

• (3) Could train KW to be more proficient in using intranet tools = additional productivity gains, lowered uncertainty

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Chapter 8: Strategic Alignment

• This section assures readers we are concerned about aligning with overall direction

• How the proposed action aligns with the formal strategic goals of the organization

• What stakeholder groups will be most affected• How it may support additional initiatives and

stakeholders• Objection-anticipatory information

– List specific objections that could be raised, and deal with each

• Risk-mitigation information– Acknowledge risks and show how they will be

minimized or dealt with

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Chapter 9: Readiness to Proceed

• We stress overall organizational receptivity and what needs to happen now

• Factors that enable proceeding immediately – "The stakeholders are asking for this"

• "Go" elements: Approval, access to funds, access to people, etc

• Any timing concerns: If project not initiated by X date, these risks exist

• Negative consequences of such deadline related risks

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Appendix: Supporting Material

• Keen readers will appreciate this "foundation"

• Examples:

• List of external consultations• Other organizations already doing what we

are proposing• References to or copies of published studies,

articles, statistics

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Checklist - Our Own

• Before releasing the Business Case document, we ask ourselves these questions

• Have relevant colleagues reviewed the document as devil's advocates?

• Is the PNO as "bad/urgent" as we claim? • Would we support the case if we were in the

readers' shoes? If not, why not? • Would there be a much cheaper way to get 80%

of the claimed benefit?• Is the narrative too detailed/jargony? Could some

go in the appendix?• Concrete data, numbers wherever possible?

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Checklist - Readers

• Before releasing the Business Case document, we imagine readers thinking as follows, and ensure the document contains the answers

• I wasn't aware of any issue• If I do nothing, what's the best/worst scenario? • I see some benefits, but will all that $ REALLY

grow profits / increase market reach / etc? • Will I be laughed out of the meeting if I champion

this case? • Am I a guinea pig? • How will we know we got our money's worth?

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Thank You …feel free to be in touch!

• www.destricker.com

• ulla@destricker.com