These benefits help an organization achieve its goals and compete effectively.
For example, a more accurate and current sales forecasting system would enable decision-makers to react faster to changes in the market. Decision-makers would have the information they need to adjust prices faster and launch promotional campaigns faster. That would give their company an advantage over its competitors.
Although gathering financial data on strategic advantage is usually difficult, quantifying benefits that provide strategic advantage may make the difference between business case success and failure.
|Typical business case costs include equipment (purchase and maintenance) and labor (training and operation). Don't forget to include overhead costs.
Business case benefits provide three types of business value:
- Increased revenue
- Reduced costs
- Strategic advantage
A business case for producing a new product would include the anticipated increase in revenue from sale of the product.
A business case for improving a process would include the anticipated savings in equipment, labor, or both. Labor savings may require research.
For example, you are investigating the benefits of purchasing an expensive office-automation product. The product distributes and updates shared files and prevents errors caused by overwriting the most current copy of a file with a previous version.
Both automatic updating and preventing errors reduce labor costs. But you can't include the reduced labor costs in your financial analysis unless you quantify them.
If you research the current process, you might find that an administrative assistant spends three hours a week distributing and updating shared files. Twice a month a current copy of a file is overwritten by a previous copy. The administrative assistant spends an hour correcting each problem.
By eliminating this manual work, the office-automation product would save five hours of administrative time each week. Take the cost per hour for an administrative assistant and multiply it by five to get the product's weekly savings in labor costs. Use that figure in your financial analysis.
Go to the next tip: Return on investment.
The material on this page has been taken from the Business Case Primer.
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