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The Decision Factor offers insightful comments and observations on analytics—from views on new technology approaches and market dynamics to the latest industry trends driving demand for faster, smarter information analysis. This blog contains personal views, thoughts, and opinions from SAP employees, mentors, and friends working in the area of analytics. It’s not endorsed by SAP nor does it constitute an official communication of SAP.

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Building an Analytics Business Case

Building an Analytics Business CaseAs analytics tools and platforms continue to proliferate, a central challenge for most practitioners is how to successfully compete for funding dollars for BI / Analytics. Compounding this challenge is that, rather than a core technology, Analytics is considered by many to be an enabling capability. So how do we go about building an analytics business case?

What’s a Business Case?

First of all, we need to understand that the term “business case” denotes different things to different people. Taking a leaf from Clayton Christensen’s book, The Innovator’s Solution, there are two definitions of the Job To Be Done (JTBD) by a business case:

  1. A strategic perspective is to think about a business case as a vehicle for aligning multiple stakeholders to take action upon a particular area; 
  2. A more tactical approach is to consider the JTBD as convincing budget owners to allocate and/or disburse resources to implement a solution. Resources can include internal development time and spend, external spend on a solution, and any customization, implementation, training and change management costs.

In an environment where there’s always competition for resources, developing the right type of business case will determine what gets done versus what doesn’t. However, that’s where the similarities end. We’ve seen business cases that range from two sentences in a spreadsheet all the way through to a multi-month strategy to convince decision makers, and everything in between.

Types of Business Cases

While there’s no single taxonomy for a business case, there are three levels of business case to consider. Figuring out which of these you need to build should be your first step.

  • Level 1(Basic): Cost + Technical solution enablers / benefits + Business benefits (qualitative)

This is the simplest form of business case, and one that’s suitable for items that are easy to understand and may or may not have a dollar cost. These business cases have relatively lower value and involve minimal change management. Pulling together this type of business case is fairly quick and easy really the only challenging part is to identify the business benefits. 

  • Level 2 (Intermediate): Level 1 + quantified business benefits + implementation roadmap

This type of business case involves going beyond the cost side to incorporate the dollarized impact of business benefits. In many cases the business benefits can be easily estimated, but the key is to run apples to apples analyses for three to five years.

  • Level 3 (Advanced): Level 2 + benefits realization plan + Storyline

The key aspect of this type of business case is that it’s got a storyline. Ideally, it starts with the strategic goals of the organization and shows how this investment will enable them. 

Strategic Intent of An Analytics Business Case

Five years ago, many of the analytics business cases were about justifying spending on external software to ramp up Analytics capability. Now that analytics is ubiquitous, there’s a need to more precisely define the strategic intent of the Analytics business case. This can include any one of the following:

  • Horizontal Analytics expansion to extend existing capabilities to additional parts of the organization
  • Vertical Analytics expansion to deepen existing capabilities/ take capabilities to the next level
  • Addition of Analytics capabilities such as visualization or predictive analytics
  • Standardization of analytics across the enterprise, to take advantage of scale
  • Establishment of a Analytics Competency Center
  • Leveraging analytics with customers, suppliers, etc.
  • Security and risk management, such as ensuring that decisions across the enterprise are made using the same set of data rather than multiple versions of the truth

In almost all these analytics business cases, the crux of the case rests on identifying what the impact of analytics will be on existing business processes. In other words, how much of a “lift” will the capability bring to the operating key performance indicators (KPIs) of the downstream processes that access to information enable?

In many instances, the need for an analytics business case is actually being driven by the business, because it wants to take advantage of capabilities such as end user visualization and predictive analytics without having to go through IT to have these delivered. In these situations, explaining the linkages between analytics and core operating processes, information governance, and Big Data is a valuable input that can be provided by IT.

Future of Business Analytics Business Cases

Two new vectors that are driving an enhanced approach to the building of analytics business cases are the mushrooming of new technologies and the shift of tech spending to the business, particularly to Marketing. I’ll cover the following in more detail in a future blog:

  • Business cases involving defined “Use Cases”
  • Business cases built using Design Thinking approaches