name	business-case-development
description	Build compelling business cases to justify investments and secure funding. Quantify benefits, assess costs, manage risks, and present compelling ROI arguments to leadership.

Business Case Development

Overview

A strong business case combines financial analysis, strategic alignment, and risk assessment to justify investment decisions and secure leadership approval.

When to Use

Requesting budget approval
Justifying technology investments
Planning major initiatives
Evaluating vendor solutions
Resource allocation decisions
Strategic priority setting
Change management planning

Instructions

1. Business Case Framework

Business Case Template:

Project: Customer Portal Modernization
Date: January 2025
Prepared By: Product Manager
For: Finance & Executive Review

---

## Executive Summary

Proposal: Modernize customer portal with cloud-native architecture,
improve UX, and enable real-time features.

Investment Required: $800K (one-time)
Annual Operating Cost: $150K (vs $200K current)
Payback Period: 18 months
NPV (5-year): $2.1M
IRR: 45%

Recommendation: APPROVE - Strong financial case with strategic benefits

---

## Strategic Alignment

Corporate Goals:
  1. Increase customer lifetime value (align)
  2. Reduce operational costs (align)
  3. Improve competitive positioning (align)
  4. Digital transformation (align)

This project directly supports 4/4 strategic priorities.

---

## Benefits Analysis

Quantifiable Benefits (Annual):

  Benefit 1: Reduced Support Costs
    Current: 50 support hours/week at portal issues
    Future: 20 support hours/week (60% reduction)
    Calculation: 30 hours × 52 weeks × $75/hour = $117K savings
    Confidence: High (proven UI improvements reduce support)
    Timeline: Months 4-6 (ramp up to full savings)

  Benefit 2: Increased Conversion
    Current: 2.5% checkout completion rate
    Future: 3.2% estimated (28% improvement)
    Current Revenue: $10M annual, 100K users
    Additional Revenue: $280K annually (3.2% - 2.5%) = 12.5K × $22 ARPU
    Confidence: High (UX best practices proven in industry)
    Timeline: Months 3-4 (full realization)

  Benefit 3: Reduced Infrastructure Costs
    Current: $200K annual (on-premise)
    Future: $80K annual (cloud)
    Annual Savings: $120K
    Confidence: High (cloud cost data validated)
    Timeline: Month 12 (full migration)

  Benefit 4: Faster Time-to-Market
    Current: 8-week feature release cycle
    Future: 2-week cycle
    Value: Enable 2 additional features/quarter
    Estimated Revenue per Feature: $50K
    Annual Additional Revenue: $400K
    Confidence: Medium (dependent on product strategy)
    Timeline: Month 6 onwards

  Total Quantifiable Benefits: $917K annually (Year 1: $500K)

Intangible Benefits:
  - Improved brand perception
  - Better employee productivity
  - Competitive positioning
  - Customer satisfaction improvement
  - Data-driven decision making

---

## Cost Analysis

Capital Expenditure (One-Time):

  Development:
    Portal redesign & development: $300K
    Backend API development: $150K
    Data migration: $80K
    Infrastructure setup: $70K
    Subtotal: $600K

  Implementation:
    Testing & QA: $80K
    Deployment & training: $50K
    Contingency (15%): $120K
    Subtotal: $200K

  Total CapEx: $800K

Operating Expenditure (Annual):

  Cloud Services:
    Compute & Storage: $45K
    Database Services: $25K
    CDN & Analytics: $15K
    Subtotal: $85K

  Staffing:
    1 DevOps engineer (0.5 FTE): $35K
    Maintenance & support (0.5 FTE): $30K
    Subtotal: $65K

  Total OpEx: $150K (vs $200K current = $50K savings)

---

## Financial Summary

Investment: $800K (Year 0)
Annual Operating Cost Savings: $50K
Annual Revenue Increase: $450K (conservative Year 1)
Total Annual Benefit Year 1: $500K

Payback Period: 1.6 years
5-Year NPV (at 10% discount): $2.1M
IRR: 45%
Breakeven: Month 19

---

## Risk Assessment

Risk 1: Development Timeline Delay
  Probability: 30%
  Impact: 3-month delay = $100K additional cost
  Mitigation: Experienced team, proven architecture, 20% timeline buffer
  Contingency: Phased rollout approach

Risk 2: Lower Than Expected Adoption
  Probability: 20%
  Impact: 50% benefit realization = $250K loss
  Mitigation: Strong change management, user training, incentives
  Contingency: Alternative feature prioritization

Risk 3: Technical Challenges
  Probability: 25%
  Impact: 50% performance benefit = $150K loss
  Mitigation: Early POC, performance testing, expert architecture
  Contingency: Fallback to legacy system

---

## Alternatives Evaluation

Option 1: Status Quo (Recommended: No)
  Cost: $0 investment
  Benefit: $0
  Risk: Competitive disadvantage, customer churn
  Verdict: Unacceptable

Option 2: Minor Upgrades (Recommended: No)
  Cost: $200K
  Benefit: $150K annually
  Payback: 16 months
  Risk: Insufficient competitive response
  Verdict: Insufficient

Option 3: Cloud Migration + Modernization (Recommended: Yes)
  Cost: $800K
  Benefit: $500K annually (Year 1)
  Payback: 18 months
  Risk: Manageable
  Verdict: RECOMMENDED

---

## Implementation Plan

Phase 1: Setup & Planning (Weeks 1-4)
  - Infrastructure provisioning
  - Team onboarding
  - Architecture finalization

Phase 2: Development (Weeks 5-20)
  - Core features
  - Testing
  - Integration

Phase 3: Pilot & Validation (Weeks 21-24)
  - Beta testing with 10% users
  - Performance validation
  - Final optimizations

Phase 4: Production Launch (Weeks 25-28)
  - Phased rollout
  - Monitoring
  - Support

---

## Success Metrics

Measure 1: Time to Market
  Target: Reduce feature cycle from 8 weeks to 2 weeks
  Baseline: Currently 8 weeks
  Measurement: Track release dates

Measure 2: Customer Conversion
  Target: Improve from 2.5% to 3.2%
  Baseline: 2.5% (baseline)
  Measurement: Google Analytics, transaction data

Measure 3: Support Cost
  Target: Reduce from 50 to 20 hours/week
  Baseline: 50 hours/week
  Measurement: Support ticket system

Measure 4: System Performance
  Target: <2 second page load, 99.9% uptime
  Baseline: 4 seconds, 97% uptime
  Measurement: Monitoring tools

Measure 5: User Satisfaction
  Target: Improve NPS by 20 points
  Baseline: NPS 35
  Measurement: Quarterly surveys

---

## Recommendation & Approval

Financial Analysis: APPROVED
  Strong ROI, 18-month payback, $2.1M NPV

Strategic Alignment: APPROVED
  Supports all 4 strategic priorities

Risk Assessment: APPROVED
  Risks manageable with mitigation strategies

Recommendation: PROCEED with Customer Portal Modernization

Executive Approvals:
  CFO Signature: _________________  Date: _________
  COO Signature: _________________  Date: _________
  CTO Signature: _________________  Date: _________

2. Financial Analysis

# Business case financial calculations

class FinancialAnalysis:
    def calculate_npv(self, cash_flows, discount_rate=0.10):
        """Calculate Net Present Value"""
        npv = 0
        for year, cash_flow in enumerate(cash_flows):
            npv += cash_flow / ((1 + discount_rate) ** year)
        return round(npv, 2)

    def calculate_irr(self, cash_flows):
        """Calculate Internal Rate of Return"""
        # Approximate IRR calculation
        for irr_guess in range(0, 100):
            npv = self.calculate_npv(cash_flows, irr_guess / 100)
            if npv <= 0:
                return irr_guess / 100

    def calculate_payback_period(self, initial_investment, annual_cash_flows):
        """Calculate months to break even"""
        cumulative = 0
        for year, cash_flow in enumerate(annual_cash_flows):
            cumulative += cash_flow
            if cumulative >= initial_investment:
                remaining = initial_investment - (cumulative - cash_flow)
                months = (remaining / cash_flow) * 12
                return year + (months / 12)
        return None

    def create_financial_summary(self, investment, benefits, costs):
        """Create comprehensive financial analysis"""
        cash_flows = [-investment]  # Year 0

        for year in range(1, 6):  # 5-year projection
            annual_benefit = sum(benefits.values()) * (year / 2) if year < 2 else sum(benefits.values())
            annual_cost = costs['annual']
            cash_flows.append(annual_benefit - annual_cost)

        return {
            'investment': investment,
            'annual_benefit_year_1': cash_flows[1] + costs['annual'],
            'annual_cost': costs['annual'],
            'net_benefit_year_1': cash_flows[1],
            'payback_months': self.calculate_payback_period(investment, cash_flows[1:]),
            'npv_5_year': self.calculate_npv(cash_flows),
            'irr': self.calculate_irr(cash_flows),
            'roi_percent': ((sum(cash_flows[1:]) - investment) / investment) * 100
        }

3. Business Case Presentation

Presentation Structure:

Slide 1: Executive Summary (1 min)
  - What: Portal modernization
  - Why: Competitive advantage, cost reduction
  - How Much: $800K investment
  - Return: $500K annual benefit, 18-month payback

Slide 2: Strategic Context (2 min)
  - Business goals alignment
  - Market trends
  - Competitive pressure
  - Customer feedback

Slide 3: Current State (2 min)
  - Current system limitations
  - Operational costs
  - User experience gaps
  - Support burden

Slide 4: Proposed Solution (2 min)
  - Cloud-native architecture
  - Feature improvements
  - Timeline overview
  - Team approach

Slide 5: Financial Analysis (3 min)
  - Investment required
  - Benefits quantified
  - Cost-benefit summary
  - Payback period

Slide 6: Risk Management (2 min)
  - Key risks identified
  - Mitigation strategies
  - Contingency plans
  - Executive sponsorship

Slide 7: Implementation Timeline (2 min)
  - Phased approach
  - Key milestones
  - Go-live plan
  - Post-launch support

Slide 8: Recommendation & Next Steps (1 min)
  - Clear recommendation
  - Next steps
  - Timeline to decision
  - Questions?

---

Key Messages to Emphasize:
  1. Strong financial case (45% IRR)
  2. Strategic necessity (competitive pressure)
  3. Manageable risk (experienced team)
  4. Phased approach (reduce execution risk)
  5. Customer focus (improved experience)

Best Practices

✅ DO

Tie business case to strategic goals
Quantify benefits wherever possible
Be realistic about timelines and costs
Include detailed risk assessment
Show multiple scenarios/alternatives
Get stakeholder input early
Executive sponsor support
Use professional presentation
Address tough questions proactively
Define success metrics upfront

❌ DON'T

Over-promise benefits
Underestimate costs
Ignore alternative solutions
Skip risk assessment
Rely solely on intangible benefits
Present without executive support
Use overly optimistic assumptions
Forget to include contingency
Present incomplete financial analysis
Ignore competitive pressures

Business Case Tips

Conservative assumptions perform better
20% cost and timeline contingency standard
Always present best/worst case scenarios
Link to strategic priorities explicitly
Include experienced project leaders

business-case-development

Install Skill

SKILL.md

Business Case Development

Overview

When to Use

Instructions

1. Business Case Framework

2. Financial Analysis

3. Business Case Presentation

Best Practices

✅ DO

❌ DON'T

Business Case Tips