The Business Case
Our System Selection infoKit also has further information on building a business case.
Building a Business Case for a Business Intelligence (BI) System is made more than normally difficult because the data you need for your business case are those that you need the BI system to gather.
Benefits Measurement is intimately linked to the Business Case. A Business Case often includes a set of predicted benefits; Benefits Measurement is identification and capture of the actual benefits, measured at two or three points after the BI system has been installed. Both depend on a baseline that expresses what your processes cost now.
A Business Case takes the baseline of present costs and says 'our proposed system will affect [reduce, you hope] these costs by X and Y'. A Benefits Measurement says "our new system [perhaps after 6, 12 and 24 months] has affected these baseline costs by W and Z".
The way to make progress is to figure out what you want the BI system to do. What teams, processes and areas of work will it affect in the first and subsequent phases and then to identify the baseline costs for the teams and processes likely to be affected.
JISC infoNet has produced a freely available 'Impact Calculator', a tool specifically designed to help you predict and measure the benefits (both tangible and intangible) of any change initiative, such as the implementation of a BI system. The Impact Calculator requires you to accurately measure the baseline 'as is' performance of the processes in question - as suggested above - and then allows you to identify an (unlimited) series of benefits which you hope to achieve through the change initiative being undertaken. Each of these benefits can then either be predicted (as part of the kind of business case being discussed here) and/or measured based on actual performance changes: thus making it possible to compare the actual benefits realised with those predicted as part of the initial business case.
What will the BI System Do?
A good place to start is by asking yourself and your colleagues what the BI system is needed to do. It will help to divide your BI goals into phases and to focus the initial Business Case on the earliest goals. Consult as widely as possible within your Institution, and make sure you include Senior Management (Vice-Chancellors, Principals, Deans...), Student Records, Academic Departments (Schools or Faculties), Finance, Facilities Management, HR, IT and Planning (or Management Information).
Even if all of these units will not be involved in the first implementation phase, they should comment. You also want to be sure your project does not create accidental barriers to future expansion and that you do not accidentally clash with other information or data management projects.
Good summaries of goals are given in the Survey responses. Some of the goals can probably be measured quantitatively; others will almost certainly need qualitative (anecdotal) evidence. These distinctions are indicated in the lists below.
Likely Phase 1 goals for a BI system include:
- Improved decision-making (anecdotal)
- Better strategic planning (anecdotal)
- Better risk management (anecdotal)
- Competitive advantage (quantitative)
- Income generation (quantitative)
- Efficiency gains (quantitative)
- Performance benchmarking (anecdotal and quantitative)
- Student satisfaction (quantitative)
- Student retention (quantitative)
- League table ranking (quantitative)
Of course, a successful project is unlikely to attempt all of these at once. Pick the few that are most important to your institution, and place the remainder in Phase 2 or Phase 3 of your BI project.
Present Baseline
Gather as many data as you can to define the present baseline costs and performance of your management information processes. Again, you may find the JISC infoNet Impact Calculator a useful tool for achieving this. Ask (if you can):
- How many people are directly employed on data gathering? (for statutory reports, for internal reports, for finance, facilities, or student management, ...)
- How many people are directly employed producing reports (both statutory and other)?
- How much time from other administrative and support staff is used in data gathering? In preparing or formatting or distributing reports?
- How often do staff or departments disagree about data values or data meanings? How much time does this use?
- How often are reports late? Do these or other delays cost you money or opportunity?
- What are the costs of preparing reports and data for your intranet and your public website?
- What are your present software costs? What do you pay for Reporting software? (Include reporting modules in Finance, HR and other systems.) What do you pay for other software that gathers, shares or reports on data?
Ask the questions relevant to the goals you have identified for your Institution:
- Improved decision-making (level of satisfaction with decision-making speed, quality and accuracy at present)
- Better strategic planning (level of satisfaction with planning speed, quality and accuracy at present; any evidence of the success of plans)
- Better risk management (level of satisfaction with risk estimation and alleviation speed, quality and accuracy at present; any evidence of risks successfully managed; or of risks that were not managed)
- Competitive advantage (Are you receiving more applications from students, faculty, staff? Are the candidates better? Are more of them accepting your offers? Are you getting more research funds? Competing better for grants, events? )
- Income generation (Is your income, by category - such as undergraduate faculties or schools, graduate faculties or schools, housing, food, events, research etc - up or not?)
- Efficiency gains (By whatever measures you have available now (before your BI system!) what are your costs per unit output?)
- Performance benchmarking (anecdotal and quantitative comparisons with similar and competing institutions)
- Student satisfaction (quantitative survey results)
- Student retention (quantitative)
- League table ranking (quantitative)
Have a free-wheeling ideas session (a 'brainstorming session') to identify any other places where the BI system may affect your costs and processes and gather any baseline data that you can.
A side benefit of this exercise, if it is supported from the highest management, is that it may find areas where secrets are kept, and may help to introduce transparency and open discussion into your institution's management discussions.
Role of a Business Case
Your Business Case will be more convincing if you include full, realistic costs for the proposed BI system. However, experience shows that if senior management is committed to a project, the Business Case is often purely a box to tick. Equally, if senior management is opposed to a project, no Business Case will ever be accepted. No Business Case is ever beyond question; the assumptions can always be criticised.
This does not mean you should be careless with your Business Case: it is an essential tool to understanding your BI project. Just don't think it will magically generate support and remove opposition.
Realistic Costs of the New BI System
To calculate the real costs of a new system, ask (and get answers for) the following questions:
- Is new computing hardware needed? (include costs for buying, installing, operating, managing and maintaining the hardware)
- Is supporting software needed? (Include costs for any new operating systems, database software, etc.)
- Are there any licence costs of your BI software?
- Are there any annual maintenance costs of the BI software?
- Any installation and configuration costs? (include internal staff time as well as consultants)
- Any training costs? (include internal staff time, and internal trainers, if they will be used)
- Managing the BI system (will internal staff be devoted to, or partly assigned to, the BI system?)
Have a free-wheeling ideas session (a brainstorming session) to identify any other costs of the BI system and to predict costs for 3 to 5 years into the future.
Predicted Benefits: the Business Case
The Business Case is the balance of predicted costs and predicted benefits.
Use the baseline measures collected above with information from your BI system supplier, from the literature, and from colleagues, to estimate the benefits you will receive from your BI system. (It can be helpful to estimate benefits at 1, 2 and 3 years after implementation.)
Realistically there are two hierarchies of benefit for any BI project. In the first, actual cash savings have the most weight:
- Cash savings (e.g. from retired software and hardware, from redeployed staff)
- Income generated
- Improved speed and efficiency
- New capabilities and opportunities
- Improved quality and reduced risk
Most organisations, reviewing a business case, will give more weight to well-demonstrated cash savings, and less weight to improved quality and reduced risk.
The second hierarchy depends on your budget-holders and senior management. They will tell you which benefits they are most concerned about. That is an important order of priorities for estimating and demonstrating likely benefits.
Actual Benefits
Once your Business Case has been accepted, and your BI system is installed, you will have two ways of measuring benefits. Both should be used, and benefits should be measured more than once. Measuring benefits at 1, 2, and 3 years after implementation allows you to show the positive effects of staff training and familiarity, and the incremental improvements as people begin to use the BI system in new ways. It also gives you a basis to forecast future benefits, and to propose further phases of the BI system. Our Impact Calculator allows actual benefits to be measured for up to 5 years.
The first way to measure benefits, is to use (as close as possible) the same measures you used on your baseline for the Business Case and the Benefits. Even though these initial measures were not taken with the BI system, and might therefore be inefficient or cruder than information which the BI system could provide, it is important to measure changes (and therefore benefits, good changes) by the same measure that was used for the baseline.
The second way to measure benefits is to use the BI system. If you identify new benefit measures which the BI system could give you, gather a baseline measurement (or a 'near-baseline measurement') as quickly as you can after the BI system is installed. Then repeat the measurement at intervals to obtain the benefit and its trend in time.
