Business Case
Document Structure
1. Executive Summary (1 page — decision + recommendation)
2. Problem Statement (current state + cost of inaction)
3. Proposed Solution (options considered + recommendation)
4. Financial Analysis (ROI, NPV, payback, sensitivity)
5. Risk Assessment (risks + mitigations)
6. Implementation Plan (phases, milestones, resources)
7. Stakeholder Analysis (who's affected, how)
8. Recommendation (clear ask)
Appendix: Supporting data, assumptions, comparisons
Executive Summary Template
SITUATION
[Company/team] currently [describe current state]. This results in
[quantified pain: cost, time, risk, revenue lost].
PROPOSAL
We recommend [specific solution] at a total investment of $[X]
over [timeframe].
FINANCIAL IMPACT
- Expected annual benefit: $[Y]
- Payback period: [Z] months
- 3-year NPV: $[W] at [r]% discount rate
DECISION REQUIRED
Approval of $[X] capital investment by [date] to begin [Phase 1]
by [start date].
ROI Calculation
Simple ROI
ROI % = (Net Benefit / Total Investment) × 100
Net Benefit = Total Benefits - Total Costs (over analysis period)
Example:
Total Benefits (3yr): $450,000
Total Costs (3yr): $150,000
Net Benefit: $300,000
ROI: 300,000 / 150,000 × 100 = 200%
NPV (Net Present Value)
NPV = Σ [Cash Flow_t / (1 + r)^t] - Initial Investment
Where:
r = discount rate (WACC or hurdle rate, typically 8–15%)
t = time period (year 1, 2, 3...)
Decision rule:
NPV > 0 → Project creates value; proceed
NPV < 0 → Project destroys value; reject or renegotiate
NPV = 0 → Breakeven; decision depends on strategic value
Example:
Year 0 investment: -$100,000
Year 1 net benefit: $40,000
Year 2 net benefit: $55,000
Year 3 net benefit: $65,000
Discount rate: 10%
NPV = -100,000 + 40,000/1.10 + 55,000/1.21 + 65,000/1.331
= -100,000 + 36,364 + 45,455 + 48,834
= $30,653 (positive → proceed)
Payback Period
Simple Payback = Initial Investment / Annual Net Benefit
Cumulative Payback (more accurate):
Year | Investment | Benefit | Cumulative Net
-----|------------|---------|---------------
0 | -$100,000 | $0 | -$100,000
1 | $0 | $40,000 | -$60,000
2 | $0 | $55,000 | -$5,000
3 | $0 | $65,000 | +$60,000
Payback = between Year 2 and Year 3
Precise: 2 + (5,000/65,000) = 2.08 years
Cost-Benefit Analysis Framework
Benefits (Quantify Each)
Hard Benefits (cash savings):
- Labor reduction: [# FTEs] × [avg salary] × [% time saved]
- Process cost reduction: [current cost per unit] × [volume] × [% saved]
- Error reduction: [error rate] × [cost per error] × [# transactions]
- Revenue increase: [new capacity] × [conversion rate] × [ACV]
Soft Benefits (estimate conservatively):
- Risk reduction (probability × impact)
- Customer satisfaction improvement (NPS → retention → revenue)
- Employee productivity (hours saved × hourly rate)
- Regulatory compliance (fine avoidance probability × max fine)
Costs (Be Complete)
One-time Costs:
- Software license / implementation fee
- Hardware / infrastructure
- Integration development
- Training and change management
- Data migration
- Consulting fees
Recurring Costs:
- Annual subscription / maintenance (SaaS or vendor)
- Ongoing support and administration
- Incremental headcount
- Compliance and audit costs
Risk Assessment Matrix
Risk | Probability | Impact | Score | Mitigation
--------------------|-------------|--------|-------|---------------------------
Adoption failure | Medium | High | 6 | Change management plan
Cost overrun | Low | Medium | 3 | Fixed-price contract
Data migration loss | Low | High | 4 | Parallel run + rollback
Key person leaves | Medium | Medium | 4 | Knowledge transfer docs
Vendor goes bankrupt| Low | High | 4 | Escrow + exit clause
Score = Probability × Impact (1–3 scale each)
Red = 6–9, Yellow = 3–5, Green = 1–2
Stakeholder Analysis
Stakeholder | Role | Interest | Influence | Stance | Action
----------------|-----------|----------|-----------|-----------|--------
CFO | Approver | ROI | High | Neutral | Present financials
CTO | Approver | Tech fit | High | Positive | Leverage as champion
Head of Ops | User | Time sav | Medium | Positive | Use as pilot lead
IT Director | Gatekeeper| Security | Medium | Skeptical | Security review early
Finance Team | Affected | Process | Low | Uncertain | Training plan
Legal | Reviewer | Contracts| Low | Neutral | Early review
Sensitivity Analysis
Key Variable Ranges
Variable | Pessimistic | Base | Optimistic
----------------------|-------------|------|----------
Adoption rate | 60% | 80% | 95%
Benefits realization | 70% | 100% | 110%
Implementation time | +6 months | Base | -2 months
Cost overrun | +30% | 0% | -10%
NPV at each scenario:
Pessimistic: $[X]
Base: $[Y]
Optimistic: $[Z]
Break-even adoption rate: [%] (below this, NPV goes negative)
Decision Criteria Checklist
Financial:
[ ] Payback period < [company threshold, e.g., 24 months]
[ ] NPV > 0 at [hurdle rate]%
[ ] ROI > [threshold, e.g., 150%]
[ ] Risk-adjusted NPV still positive in pessimistic scenario
Strategic:
[ ] Aligns with current year priorities
[ ] Enables future capabilities (vs one-time fix)
[ ] Competitive parity or advantage
Operational:
[ ] Resources available (people + budget)
[ ] Timeline feasible
[ ] Dependencies identified and managed
[ ] Rollback plan exists
Common Business Case Mistakes
- Overstating benefits: Use conservative estimates; state assumptions explicitly
- Ignoring soft costs: Change management, training, and productivity dip during transition are real costs
- 100% adoption assumption: Model 70–80% adoption as base case
- No sensitivity analysis: Single-point estimates look precise but aren't
- Missing the "do nothing" cost: Status quo has a cost too — quantify it
- Burying the ask: Put the specific decision request on page 1
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