In my previous article, I talked about the true costs of building an in-house IT Monitoring tool. Many organizations, of course, will consider several solutions before making an investment decision. The usual options are:
- A DIY (in-house) build of the required tool.
- Purchasing a commercial off the shelf (COTS) tool.
- Paying for a custom tool build by a third-party organization.
- Paying for managed services from a third-party organization.
- Or doing nothing... which is, unfortunately, still a frequent strategy in many organizations!
With this dilemna comes the dreaded ask from the budget holder or business owner: "can you write a business case outlining the various choices we should consider?"
Now, as an engineer myself, I can say that in my professional experience there are few things that can send a project to the backburner as fast as a budget holding manager or business owner asking an IT Ops or engineering person to write a business case.
I've witnessed this conversation countless times: when asked for a business case: the IT Ops/Engineering pro's first question is usually "OK, can you send me a template and I'll write it."
So do we have a Catch-22? Does no business case mean no solution?
Unfortunately, that's often the case. The business case never gets written, or it is poorly written with no "Decision Grade Information" to encourage the budget holder or business owner to approve it.
But it doesn't have to be this way. Business cases are really not difficult to create. With a little forethought, they can be very short and generated in rapid fire time. Let's explore how.
The Core Requirements of a Good Business Case
In this article, I'll share some practical hints and tips to show you how to build a business case. We'll be using a business case for IT monitoring tool as an example to continue the theme of our series of articles, but the tips in this article apply to a wide range of business cases.
So let's examine the core requirements of a business case—here's what it needs to do:
- Outline the problem domain—what is the existing issue that needs a solution? What is the impact on your business, expressed in business terms, like cost, money, quality, customer impact, etc.?
- Document the available solutions options.
- Indicate the expected business benefit and/or return on investment (ROI) for each option.
- Recommend the solution that's best for your organization and explain why.
My personal preference is to keep things short and sweet, so I'm going to share with you my favorite technique: BCOOP. That stands for writing a Business Case On One Page!
Why? Because every one of us is time poor— especially executives and managers who have to make financial decisions on a wide range of issues every day of every week.
Building a Business Case on One Page (BCOOP)
To do this, we need to address the four primary questions outlined above:
- What is the problem?
- What are the Solution Options?
- What is the ROI for each solution?
- What is the recommended solution?
Let's start with the problem statement. What is the problem we are trying to solve? In the case of our example, the issue is the lack of an IT monitoring tool. But it's not enough to just say that. What are the pain points caused by this problem? Here's my example:
The lack of an IT monitoring tool is:
- Costing us money: I estimate that we dedicate two full-time equivalent (FTE) engineers to manually checking and fixing customer reported network issues. That's $100k cost per annum and it's reducing the profitability of the division by 20 percent, or $80k per annum in real terms.
- Impacting our customer experience: We are failing to detect customer network issues in a timely manner. We have lost two customer services contracts in the last month as a result. This also impacts our financials as these contracts combined were worth $40k per annum.
For the next seciton of the BCOOP template, we outline the courses of action available to us:
- Buy a COTS tool.
- Build our own tool.
- Get a third-party company to build a tool for our needs.
- Do nothing and maintain the status quo.
ROI for Each Solution
In the third section of our template, we evaluate the ROI of the available solutions.
- Buy a COTS tool. We have reviewed three COTS tools on the market. Over a three year time-period, the total cost of procurement, support, and initial training/set-up is $32,500. This will free up 1.5 FTE engineers' time, which saves $75k and allows them to generate additional revenue of $132k. Net ROI to us is $174,500.
- Build our own tool. This is not an option for us. We do not have the necessary development skills or expertise
- Get a third-party company to build a custom tool. We explored this option, but our business requirements can be met by a COTS tool. Indicative quotes to buy a custom developed tool is $120K. Annual support and maintenance would be on a Time and Material basis—with a daily charge rate of $350. Over three years we estimate it will cost $195k.
It will take at least four months to receive a first version of a bespoke tool.
- Do nothing. This will continue to reduce our profitability by at least 20%, or $80k per annum. Moreover, as we scale our customer base, we will need to hire more IT Ops/Engineers to maintain customer satisfaction. For every 10 new customers we onboard, we need to add one IT Ops/Engineer person at $50k cost per annum.
This is the final step to the template, wherein we make our reccomendations, and demonstrate wit decision grade information why we have made this choice. In this example, we're recommending Option 1: Buy a COTS tool, as it is the most cost-effective choice. Here's how I'd qualify that decision:
Recommendation: Option 1 - Buy a COTS tool.
- It gives us the best ROI. Net ROI to us is $174,500.
- We can implement a COTS tool faster than any of the alternative options—so we get a faster return. Installation, configuration, and training can be completed within three weeks.
- With our annual support and maintenance payment (included in the three year costing) we get access to all the new features and capability of the COTS tool as the vendor evolves it.
- 1.5 FTE IT Ops/Engineers will be freed up to work on paid for Services Engagements—growing our top-line revenues
- By implementing a COTS tool, we can automate a lot of manual processes, driving greater business efficiency. This is usually done via configuration, not customization.
The COTS option will both save us money and earn us money, here's how:
Savings: Today, we'll spend $300k over three years with our engineers doing the work of a tool, but with a COTS tool, we can reduce our costs to $107.5k over those three years, for a total savings of $192,500.
ROI: A COTS tool will free up 1.5 FTW engineers for new chargeable work—up to $132,000 per annum! With a COTS solution in place, we can onboard many more customers without worrying about hiring more engineers.
Why The BCOOP Template Works
So what's good about the BCOOP template?
Well, for starters, it contains "decision grade information." Business owners and budget holders are concerned with business outcomes—information like return on investment and time to implementation is crucial to them. With the BCOOP method, this information is presented in quantitative terms as well as qualitative.
The BCOOP template also contains all the essential information that decision makers need on one page, so it's quick and easy to read.
For certain organizations, especially Government/Public Sector or large corporations, you may have to conduct a formal RFP process before you can select a solution. That again is another business process that often causes IT Ops/Engineers a lot of pain. In the third and final installment of this series, I will again outline some useful hints and tips to make your RFP process as simple and efficient as possible.