I’d like to focus on a topic that continues to come up and has been the source of debate in many companies. In this challenging economy, is important to continue to focus on delivering value to the business. Many organizations continue to re-align resources to meet the demands of their business. Business is complex, dynamic and changes daily. With all the things going on in the past couple months I’ve had to remind myself not to focus on all those other things, just focus on delivering value.
I’ve recently seen an organization re-invent itself to be more focused on core deliverables. Those deliverables have value associated to them which is aligned with the organization’s business objectives. The value behind those deliverables comes from a business case. The topic of much debate has been, what is a business case in relation to justifying and prioritizing product requirements that improve the customer’s experience. There was lengthy debate on business case and return on investment (ROI) and what those are and might look like. To be fair it is a difficult exercise, many people throw out the words business case and ROI as buzzwords. But very few people take the time to truly understand what those things actually mean to the business. What does a business case look like in your line of business? What is a healthy ROI to justify change? There is no silver bullet, but I’m interested in other people’s experience.
The purpose of a business case is to capture the reason behind why something should be done. Are we trying to transform the business, grow the business or run (maintain) the business? A business case should demonstrate value for the intended audience; after all there should be some business benefit. Does the business case increase revenue or decrease cost? What does value look like to your business?
Business cases often lack demonstrating strategic importance and are often built on questionable or incomplete ROI data. When justifying product requirements, it becomes even more difficult when the business benefits initially estimated from this data often dissipates through a product’s lifecycle. This can happen for a few reasons; it can be very difficult to make that one to one correlation to trace the impact of the requirement on the business benefit (revenue or cost savings). Second, the customer whom we received the requirements from can not make objective requirement prioritization decisions; this could cause a mis-prioritization of requirements leading to value leakage. Another reason could be due to the lack of a consistent approach for making decisions for finding the right or best solution for the requirement, this results in high lifecycle costs and diminishing ROI.
Many resource allocation decisions to develop products are typically tied to formal planning cycles aligned with strategic initiatives. That is why it is important to communicate the business case and the requirements in a language similar to the business and in a context that aligns with the strategic importance of the business. Making the right decisions depends on clear, objective, and consistently applied value language (or metrics). The value of the requirements may lie in their reflection of the strategic goals of the company and the resulting benefits that accrue to the company, like revenue, competitive advantage, market share, etc.
It is important to develop the link between a requirement and the business benefit. It enables product teams to prioritize business requests and present the business with time, cost and business benefit trade-offs. Requirements should go through an analysis that starts with the strategy. Then see how that strategy is broken down into particular business objectives. Break apart the business objectives into drivers of business value. Next apply a methodology that quantifies the impact of the requirement against these objectives and prioritize them accordingly. Then evaluate the lifecycle costs of the requirement and choose the solution that best satisfies the requirement. Keep in mind these steps or other steps you take should be conducted in a language similar to the intended audience.