How to Develop a Business Case (PowerPoint PPT Slide Deck)

DESCRIPTION

This product (How to Develop a Business Case) is a 105-slide PPT PowerPoint presentation slide deck (PPT), which you can download immediately upon purchase.

This deck include 7 main sections:

•  Executive Summary
•  Business Case Overview
•  Business Case Development Process
•  Lessons Learned – Risks and Success Factors
•  Business Case Template Overview
•  Glossary
•  Appendix and Example Slides

A business case is a tool that helps business leaders make investment decisions by helping them understand the financial impact of those decisions. A business case describes how the results will be delivered. A business case must be developed whenever a major investment decision is being made. The business case provides an understanding of which initiatives create the greatest value; supports decision-making; and helps track program performance.

The business case is often developed throughout the planning stage of a project to help justify a strategic direction and operating strategy. Business cases must clearly communicate the overall impact of a business decision; as well as the logic and methodology used to derive the results and should be used ongoing to "sell" and "defend" the program.

This deck is complemented by a companion document the "Business Case Template" Excel (separate product listing), which provides a step-by-step methodology for developing a high level business case. Explicit instructions on how to use this financial model are in the "Business Case Template Overview" section of this presentation

The document also delves into the importance of considering non-financial impacts, such as customer satisfaction and employee morale, to provide a comprehensive view of the benefits. It emphasizes the need for a decision matrix to reflect these benefits effectively. The presentation outlines the eight-step process for developing a business case, including determining approach, developing assumptions, and calculating financial impact. It also highlights the necessity of a detailed itemization of costs, including hardware, software, and labor, to sustain the future-state scenario. This structured approach ensures that all aspects of the business case are meticulously analyzed and presented.

Source: Best Practices in Business Case Development, Capital Budgeting, Business Case, Capital Budgeting Business Case PowerPoint Slides: How to Develop a Business Case PowerPoint (PPT) Presentation Slide Deck, Documents & Files

PPT SLIDE DEEP DIVES

Evaluating Financial Impact: Understanding Internal Rate of Return

This PPT slide focuses on the Internal Rate of Return (IRR) as a key metric for evaluating financial impact in project comparisons. It defines IRR as the discount rate at which the Net Present Value (NPV) of cash flows equals zero. This is crucial for decision-making, as it indicates the minimum return required for a project to be considered viable. The slide emphasizes that a higher IRR is generally more favorable, suggesting that projects with IRRs exceeding the company's internal hurdle rate should be prioritized.

The formula presented for NPV illustrates how cash flows are discounted over time, providing a mathematical foundation for understanding IRR. The graphical representation further aids comprehension, showing the relationship between NPV and varying IRR percentages. This visual aids in grasping how changes in IRR affect project viability, which is essential for stakeholders assessing multiple investment options.

The content suggests that IRR is not just a standalone metric, but should be used in conjunction with other financial indicators to make informed decisions. The slide encourages a comparative approach, highlighting that IRR can be instrumental in evaluating different projects against each other. This comparative analysis is vital for executives looking to allocate resources effectively and maximize returns.

Understanding IRR is fundamental for any executive involved in financial planning or investment decisions. It provides a clear framework for evaluating potential projects and ensuring that investments align with organizational goals. The insights offered here can help guide strategic decisions that drive financial performance.

Baseline Analysis for Raytheon Expected Bookings

This PPT slide presents a detailed analysis of the baseline for expected bookings over a five-year period from 2003 to 2007, specifically within the context of Raytheon’s business segments. The bar chart illustrates 4 key figures, with the highest baseline of $92 billion attributed to Raytheon Defense Businesses, followed by $82 billion for the ES and C3I Only segment, $63 billion for ES and C3I Domestic, and $42 billion for ES and C3I Large Domestic opportunities.

This visual representation underscores the importance of establishing a clear baseline for evaluating potential benefits from strategic initiatives. The accompanying key points clarify that the benefits were calculated specifically for a sub-segment of Raytheon’s operations, focusing on large domestic opportunities in the ES and C3I sectors. Notably, smaller opportunities valued at less than or equal to $100 million were acknowledged as potentially impacted by the change program, but were excluded from the benefits calculation.

The core team’s recommendations were directed towards domestic operations, which implies a strategic focus that may not extend to international or Foreign Military Sales (FMS) opportunities. This exclusion is critical for stakeholders to understand, as it delineates the scope of the analysis and the specific areas where the change program is expected to yield results.

Overall, this slide serves as a foundational element for decision-making, emphasizing the necessity of a well-defined baseline to accurately assess future performance and the impact of strategic changes. It provides a clear framework for executives to consider when evaluating the potential outcomes of their initiatives.

Understanding Sensitivity Analysis in Financial Projections

This PPT slide focuses on the significance of sensitivity analysis within the context of developing a business case. It emphasizes how this analysis helps in understanding the impact of varying assumptions on financial outcomes. The text outlines that sensitivity analysis is a process where one or more input assumptions are altered to observe changes in financial metrics such as Net Present Value (NPV), Internal Rate of Return (IRR), and Payback period.

A key point made is the necessity of concentrating on assumptions that exhibit high sensitivity. These are the inputs that, when slightly adjusted, can lead to substantial shifts in financial results. The slide suggests that these critical assumptions require careful examination as they can significantly influence the overall business case.

Illustrative examples are provided to visualize the concept, specifically highlighting the relationship between NPV and revenue growth sensitivity. The graph likely illustrates how varying revenue growth assumptions can lead to different NPV outcomes, underscoring the importance of understanding which assumptions carry the most weight in financial projections.

For executives considering this document, the insights presented here are crucial. They underline the importance of rigorous analysis in decision-making processes. By identifying and scrutinizing sensitive assumptions, organizations can better prepare for potential financial fluctuations and make more informed strategic choices. This approach not only enhances the robustness of the business case, but also aids in risk management.

Key Assumptions for Effective Business Case Development

This PPT slide focuses on the importance of developing assumptions within a business case framework. It emphasizes that assumptions must be clearly articulated, as they often require nuanced business judgment that may not be immediately apparent to stakeholders. The slide outlines 3 primary reasons for making assumptions: to predict, simplify, and clarify.

Under the "Predict" section, the slide indicates that assumptions are essential for forecasting business case inputs that are subject to change. It highlights that these inputs may evolve due to new circumstances, which necessitates a proactive approach to forecasting future sales volumes, prices, or performance improvements.

The "Simplify" section stresses the need to streamline business case inputs for easier management. However, it cautions against oversimplification that could compromise accuracy. This balance is crucial for maintaining the integrity of the business case while making it more digestible for decision-makers. Examples provided include using average values instead of detailed itemized data, which can help in presenting a clearer picture without overwhelming the audience.

Lastly, the slide addresses the need to clarify other inputs that contribute to the overall understanding of the business case. This ensures that all relevant factors are considered, enhancing the robustness of the analysis. The slide suggests that a conservative approach should be adopted when assumptions are contentious, to mitigate potential disputes and foster consensus.

Overall, this slide serves as a guide for executives to understand the critical role of assumptions in business case development, ensuring that they are both explicit and well-structured for effective decision-making.

Structured Eight-Step Business Case Development Process

This PPT slide outlines a structured approach to developing a business case, emphasizing eight key steps. It begins with "Determine Approach," which focuses on defining desired outcomes and the overall structure of the business case. This foundational step sets the stage for the subsequent phases.

Next, "Develop Assumptions" is crucial for establishing the scope of the analysis. It involves predicting outcomes, simplifying complex scenarios, and clarifying any uncertainties that may arise during the process. This step ensures that the assumptions made are realistic and aligned with the organization's objectives.

Following this, "Determine Benefits" highlights the potential advantages of the proposed initiative. It includes aspects such as revenue uplift, cost reduction, and increased capital efficiency. Identifying these benefits is essential for justifying the investment.

The "Determine Costs" step assesses the financial implications of the project. Understanding costs is vital for a comprehensive evaluation of the business case.

The fifth step, "Calculate Financial Impact," involves quantifying the financial metrics, including cash flows, net present value (NPV), internal rate of return (IRR), and payback period. This quantitative analysis provides a clear picture of the project's financial viability.

"Perform Sensitivity and Risk Analysis" examines how changes in assumptions might affect outcomes. This step is critical for understanding the risks associated with the project and preparing for potential challenges.

The seventh step, "Determine Non-Financial Impact," evaluates qualitative factors through decision matrices and descriptive analyses. Non-financial considerations can significantly influence decision-making.

Finally, "Summarize Findings" consolidates all insights, offering conclusions and actionable recommendations. This structured approach ensures that stakeholders receive a comprehensive view of the business case, facilitating informed decision-making.

Estimating Revenue Uplift: Approaches and Insights

This PPT slide outlines methods for estimating revenue uplift, emphasizing 2 distinct approaches: top-down and bottoms-up. The top-down approach is primarily used for rough estimates, focusing on the percentage increase in market share. It suggests leveraging benchmark or survey data to gauge potential revenue increases. This method is valuable for executives needing quick insights without delving into granular data.

The visual representation of market share shifts from old to new illustrates a clear transition, with the old market share at 70% and the new at 60%. This change indicates a strategic shift that could lead to significant revenue implications. The accompanying pie charts succinctly depict the impact of market share changes, making it easy to grasp the concept at a glance.

The bottoms-up approach, on the other hand, emphasizes a more detailed analysis. It involves estimating increases in unit volume and unit price, providing a comprehensive view of potential revenue growth. This method encourages a thorough examination of product mix changes, which can significantly influence overall financial performance. The bar graphs illustrate projected unit volume and revenue increases over 3 years, showcasing a clear growth trajectory.

This slide serves as a practical guide for executives looking to understand the mechanisms behind revenue uplift. It offers actionable insights that can inform decision-making processes, making it a valuable resource for those considering strategic initiatives aimed at enhancing financial outcomes. The combination of both approaches provides a well-rounded perspective, catering to various analytical needs.

Visual Financial Overview: Costs and Benefits Analysis

A graphical representation of costs and benefits is presented, emphasizing its effectiveness in conveying the business case's outcomes. This PPT slide is divided into 4 main sections: One-time Investment, Recurring Annual Costs, and Recurring Annual Benefits. Each section is visually distinct, allowing for quick comprehension of financial implications.

The One-time Investment section details 3 key components: Business implementation, Software, and Hardware. The total investment amounts to £104.5 million, with Business implementation being the largest contributor at £70.7 million. Software and Hardware follow, contributing £9.4 million and £2.8 million, respectively. This breakdown provides clarity on where initial resources are allocated, which is critical for stakeholders assessing upfront commitments.

Recurring Annual Costs are also highlighted, showing ongoing financial commitments. The costs include Software support, Hardware support, and IT implementation, totaling £64.7 million. This section is crucial for understanding the long-term financial obligations that accompany the initial investment.

On the right side, the Recurring Annual Benefits section outlines the anticipated gains from the investment. It lists several benefits, such as improved finance productivity and reduced IT maintenance, totaling £46 million. This juxtaposition of costs and benefits allows for a straightforward evaluation of the financial return on investment.

Overall, the slide serves as a concise tool for decision-makers, enabling them to grasp the financial commitments and expected returns quickly. It illustrates how a well-structured graphical summary can enhance understanding and facilitate informed discussions about the business case.

Advanced Risk Analysis through Statistical Simulations

This PPT slide emphasizes the importance of advanced risk analysis in financial decision-making. It highlights that such analysis goes beyond simple estimations by incorporating statistical simulations to assess the variability of financial outcomes. The text indicates that understanding the likelihood of changes in input values and assumptions is crucial for determining expected financial results.

It mentions the use of statistical simulations, specifically Monte Carlo methods, which are employed to model the expected value of financial results like cash flows or net present value (NPV). This approach allows for a more nuanced understanding of potential financial scenarios by considering the probability distributions of various input assumptions.

The visual elements on the slide include 2 probability distributions for different input assumptions, labeled as Input/Assumption #1 and Input/Assumption #2. Each distribution illustrates the expected values associated with those inputs. The right side of the slide presents a probability distribution of the financial result, which likely represents the aggregated outcome of the simulations.

The overall structure of the slide conveys a clear message: advanced risk analysis is essential for making informed financial decisions. By utilizing statistical simulations, organizations can better anticipate the range of possible outcomes, thus enhancing their strategic planning. This slide serves as a valuable resource for executives looking to deepen their understanding of risk analysis methodologies and their application in real-world scenarios.

Essential Components of a Business Case

This PPT slide outlines the importance of developing a business case, emphasizing its role in guiding investment decisions and tracking project performance. The initial statement highlights that a well-structured business case helps identify which initiatives yield the most value, thereby supporting informed decision-making.

The section titled "Why Have a Business Case?" lists 4 key reasons. First, it shows how significant investments can create value, which is crucial for justifying expenditures. Second, it aids in business decisions by evaluating different choices, ensuring that options are weighed carefully before proceeding. Third, the business case provides a framework for tracking performance and measuring success post-decision. This ongoing assessment is vital for understanding the impact of the initiative. Lastly, it fosters alignment among stakeholders, ensuring that everyone involved is on the same page regarding project goals and expectations.

The flowchart that follows breaks down the process into actionable steps. It suggests that understanding value is foundational, leading to supporting decisions. This is further elaborated through subsequent actions: assessing and quantifying value, evaluating options, testing decisions, and justifying them. Each step builds on the previous one, creating a systematic approach to decision-making.

For potential customers, this slide serves as a clear guide on the necessity of a business case. It illustrates that having a structured approach not only aids in making informed choices, but also ensures that projects align with broader organizational goals. This clarity can be a significant asset for executives looking to enhance their decision-making processes.

Financial Benefit Assessment: Top-Down vs. Bottom-Up

This PPT slide presents an overview of 2 distinct approaches for determining expected financial benefits: the top-down and bottom-up methods. The top-down approach relies on macro-level data and assumptions. It emphasizes the use of analogies or comparisons to establish benefits, especially when detailed client data is unavailable. This method is characterized by a range of benefits that reflect a high degree of uncertainty, making it suitable for scenarios where precise metrics cannot be established.

Conversely, the bottom-up approach focuses on improvements in specific business process metrics. This methodology is preferred as it allows for a more granular analysis, leading to more accurate estimations of financial benefits. The slide suggests that this approach is generally more reliable when detailed data is accessible, enabling a clearer understanding of the financial implications of operational activities.

The accompanying diagram visually represents the relationship between business goals, key performance indicators (KPIs), and the estimated size of the opportunity. It illustrates how both approaches funnel into a structured analysis, ultimately guiding business decisions and operational activities. The flow from broad objectives to specific metrics highlights the importance of aligning strategic goals with measurable outcomes.

For executives considering this document, the insights provided here can serve as a foundation for understanding how to effectively assess financial benefits. The choice between these approaches may depend on the availability of data and the specific context of the business case being evaluated. This slide effectively encapsulates critical methodologies that can inform decision-making processes.

Integrating Business Case Development in Planning

This PPT slide outlines the critical role of the business case within the project lifecycle, particularly during the Planning phase. It emphasizes that the business case is not a static document, but rather a dynamic tool that evolves throughout the project. The visual structure highlights 4 key stages: Managing, Planning, Delivering, and Operating, indicating that the business case is integral to each of these phases, but is primarily developed during Planning.

The text explains that the business case should be created early in the project process and refined continuously. This iterative approach ensures that it remains relevant and aligned with the project's objectives. It supports the rationale for change or strategic decisions, indicating its importance in justifying investments and guiding project direction.

Additionally, the slide mentions that developing a business case requires a solid understanding of value levers. This suggests that stakeholders must be equipped to identify and articulate the factors that will drive value from the project. The inclusion of terms like 'Business Diagnosis,' 'Strategic Direction,' 'Operating Strategy,' and 'Business Architecture' in the visual layout indicates that these elements are interconnected and essential for a comprehensive business case.

For potential customers, this slide serves as a reminder of the importance of a well-structured business case in project management. It highlights that a robust business case can significantly influence project success by providing clarity and direction. Understanding this methodology can lead to more informed decision-making and ultimately better project outcomes.

Comparative Analysis: Full vs. Incremental Value Approaches

This PPT slide outlines 2 distinct approaches for comparing financial scenarios against a baseline: the Full Value Approach and the Incremental Value Approach. Each method serves a specific purpose and is applicable under different circumstances, emphasizing the importance of selecting the right approach to avoid data misinterpretation.

The Full Value Approach is designed for scenarios where the impact on the entire organization, such as shareholder value, needs to be demonstrated. This method is particularly useful when the business case is intended to support broader business planning or budgeting efforts. Here, costs and benefits are calculated as total values, encompassing all cash inflows and outflows associated with each scenario compared to the baseline. The example provided illustrates this by showing total benefits and costs for 2 scenarios, highlighting a net benefit that reflects the overall financial impact.

On the other hand, the Incremental Value Approach focuses on the differences in cash flows between the proposed scenarios and the baseline. This method is best suited for situations where the proposed action is viewed as an investment, or when the incremental costs and benefits are relatively small compared to the overall figures. The example under this approach breaks down incremental benefits and costs, providing a clearer picture of the net benefit derived from each scenario.

Understanding these 2 methodologies is crucial for decision-makers. Choosing the wrong approach could lead to misleading conclusions and potentially poor strategic decisions. The slide effectively communicates the nuances of each method, enabling executives to make informed choices based on their specific needs and the context of their analysis.

Framework for Cash-Flow Financial Modeling

This PPT slide outlines the fundamental elements of a cash-flow based financial model, essential for constructing a robust business case. It emphasizes the importance of an incremental value approach, which is typically favored in financial assessments. This method allows for a clearer understanding of the financial implications of a project or investment by focusing on the changes in cash flows relative to a defined baseline.

Key principles highlighted include the necessity of measuring all costs and benefits against this baseline. This ensures that the financial model captures the complete picture of the project's impact. The slide stresses that both incremental costs and benefits must be exhaustive and accounted for precisely once, preventing any double counting that could skew results.

The structure for translating benefits and costs into cash flows is also addressed. It suggests converting the scenario’s benefits and costs into incremental cash inflows and outflows. This involves laying out these cash flows over time to determine the net cash flows, which is crucial for understanding the overall financial health of the initiative.

The slide further mentions the calculation of key financial metrics such as Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period. These metrics are vital for evaluating the viability and profitability of the investment. By following these guidelines, executives can ensure that their financial models are comprehensive and provide a solid foundation for decision-making.

Evaluating Business Cases: Baselines and Scenarios

This PPT slide outlines a structured approach to evaluating business cases through the use of baselines and scenarios. It emphasizes the importance of establishing a baseline, which represents the current state of the business without any investment. This baseline serves as a reference point, allowing stakeholders to compare potential future states that arise from different investment options.

The purpose of the baseline is twofold. First, it illustrates the existing business outcomes, providing a clear picture of where the organization currently stands. Second, it acts as a common reference frame, enabling a straightforward comparison across various future scenarios. This comparison is critical for understanding the potential impact of different investment alternatives.

The slide also details the purpose of scenarios. Scenarios represent possible future conditions resulting from specific investment choices. Each scenario is crafted to depict the outcomes of pursuing a particular option, allowing decision-makers to visualize the implications of their choices. The slide suggests that one scenario should be developed for each investment alternative, ensuring a comprehensive analysis of all options.

The accompanying bar chart likely illustrates financial outcomes for various scenarios, further supporting the analysis. The values shown indicate different potential returns, highlighting the financial implications of each investment decision. This structured approach aids in making informed decisions, as it provides a clear framework for evaluating the performance of investments against established baselines.