With no Business Case your proposals are limited to features, benefits and price. A business case immediately lifts the quality of your discussions with your customers, as it quantifies how your solution will impact the customer’s business. Better yet, it connects your solution to the finance and senior business executives whose KPIs your solution will impact, broadening your engagement well beyond the procurement team.
What exactly is a business case?
It’s the quantified justification for the decision to buy. What exactly does that mean? Well think about it this way – on large deals, a proposal often reaches a stage when you are no longer pitching solely against your direct competitors. Your proposal is being considered as an investment and judged on the basis of business impact, so you may be in competition with other potential investments the customer may be considering - a factory refit, a new store or a new advertising campaign. That’s when a Business Case really counts.
The CFO wants a Business Case to compare your proposal with other options and your Sponsor wants one to help him sell it in to the CFO. If they want it what are you waiting for?
When is a Business Case most useful?
It’s hard to say when it’s not useful. If you have deep industry and company insight and have dealt with similar companies before, you may be able to build an initial Business Case to get your first meeting. Most procurement people use an RFP to effectively ‘dumb down’ the buying process - making it easier to compare one solution with another - and you can use a Business Case to disrupt the process by introducing ROI arguments. If you are in a strong position already, a good Business Case can accelerate the buying process thereby giving the competition no chance to respond.
Difficult but worth the effort
If you have never created a Business Case before it may seem daunting, but once you know the ropes it gets easier. If you have Business Analysts and Pre Sales people to help you build your Business Case great. If not, read on and we can tell you how to do it yourself.
Building a Business Case - the step by step guide
Here are 3 key things to remember when building your Business Case
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It must include all costs associated with buying and implementing solution – including customer internal costs
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The benefit calculation must be based on data received from the customer
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The format should be aligned with your customer’s capital expenditure template and contain their KPIs
Asking good questions
You will build your Business Case on the responses you get from Need and Benefit questions. The way you ask questions will not only ensure you get the information you need – but done well it will enhance you credibility and help earn the right to ask further questions.
These are the 4 kinds of question you should be asking based on the KPIs relevant to your customer
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Information Questions – are used to gather factual information that is not available from other sources e.g. “Which companies do you usually compete against?” is an Information Question I often ask about reducing the number of losses.
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Problem Questions – uncover and develop needs in areas where you can offer solutions e.g. “What challenges do you face when competing against these companies?”
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Impact Questions – expand the customer´s perception of the problem by exploring its effect on other areas of the business e.g. “Could you please walk me through a recent example to help me understand the impact of these issues on your business?”
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Benefit Questions – get the customer to quantify the potential benefit of addressing the problem e.g. “If you could reduce this type of incidence by say 25% how much additional revenue would that generate?”
You may opt for 3 versions of the numbers in the Benefit Calculation – worst, target and best case.
Credibility Statements
These are used to demonstrate your understanding of the customer’s business and earn the right to ask a question. For instance I might say to a specialised software vendor “My understanding is that SAP and Oracle are very strong in your market” before asking the above Information Question “Which companies do you typically compete against?” Showing your understanding of their business and having evidence to back up your claim increases your credibility and earns you the right to ask the question.
An Hypothesis to initiate an opportunity
If you have enough experience of customers in a very similar situation to a new prospect, you can use data from those case studies along with publicly available data to develop a rough Business Case. Then use it as a lever to get a first meeting. I have a client who sells enough Enterprise Wide software applications to be able to do this on a regular basis.
I also work with an IT company that builds Cloud based Application Management Systems for the Banking sector. They know by now that every relevant organisation will apply the same 4-6 Key Performance Indicators (KPIs) when they evaluate this sort of software. With a history of successfully delivering against these KPIs my client can rapidly build an evidence- based Business Case that demonstrates how value will be delivered to the business.
Credibility is vital
A couple of words of warning. You should be careful to talk about Business Value and ROI with the right people. For others it might be out of their comfort zone. Your Business Case must be credible or Senior Managers will simply not believe it. There is also a risk that if you exaggerate the ROI it may become part of your contract. So it’s better to make a case you can be certain of delivering.
A few questions about developing a Business Case
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How often do you use business cases to protect your price and accelerate the sale?
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Do you have a list of all KPIs impacted by your products or services, supported with examples of Information, Problem, Impact and Benefit Questions?
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Are you comfortable discussing ROI? If you’ve only ever talked about features, benefits and prices you may have to practice internally before you engage Senior Managers in discussions about Business Value.
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