Issue link: https://industrialmanagement.epubxp.com/i/656209
march/april 2016 11 She believed no business case was needed. After all, consolidation was obvious. An executive hired a consultancy to help her plan the consolidation of multiple distribution centers into one. After several months of work, armed with the plan the executive and the consultants had constructed, she presented how the distribution centers should be consoli- dated to her boss and her peer group – all individuals who would be affected by the change. After a brief pause, each stakeholder began to comment on the presentation and explain why the change would not work. Her boss advised her to abandon the plan because she could not achieve consensus. The executive had been so convinced that the changes would benefit the organization economically that she believed no business case was needed. After all, consolidation was obvious, as each distribution center had excess capacity. The plan fell apart because there was no business case. The process of producing the business case would have provided the opportunity to identify the points of view of the various stakeholders. Professionals, including engineers, analysts, managers and senior execu- tives, often must assess options to help organizations decide what they should do with limited resources. Should the enterprise improve a manufacturing line to increase output, install a new ERP system to make information more accessible or launch a new product? The business case is often the vehicle organizations use to decide on a project. As demonstrated by a KPMG survey: "Eighty-six percent of participants reported the existence of a formal policy or process for creating business cases … demonstrating the growing acceptance of the need to commit to the justifi- cation of investments." The business case and how to use it According to the Project Management Institute, a business case is "a documented economic feasibility study used to establish validity of the benefits of a selected component lacking sufficient definition and that is used as a basis for authorization of further project management activities." Prince2, a United Kingdom project management methodology, provides additional granularity: "The justification for an organizational activity (project), which typically contains costs, benefits, risks and timescales, and against which continuing viability is tested." Business cases tend to be linked to projects. The Project Management Institute illustrates this by showing that business cases are inputs into various project management processes in its project management body of knowledge. Ultimately, a business case is about making the argument to shift from the current state to an improved future state. Business cases generally fall into the following categories: Increase revenue, decrease expenses, improve working capital and improve productivity. Managers need a mechanism to distribute limited resources among competitive options. The business case provides the necessary information. Business cases can reason that the organization must respond to market demand or an articulated or implicit customer need (adding capacity to a manufacturing line or launching a new product); address an organizational need (consolidating activities carried out in multiple divisions into a single shared service center); deploy technology or a new business process (implement an ERP system, buy new laptops or upgrade software); meet a new legal or regulatory mandate (OSHA, EPA or FDA regula- tions); address a public sector or social need (expand food depository capacity at a nonprofit); improve, expand or select a facility (lease vs. buy); or sell a product or service. A good business case provides execu- tives with sufficient information to make an informed decision. A business case that has sound analysis and uses good data can be successful even if the project is not approved. Business case outline Organizations often have a standard