State of Oregon – DHS Office of Information Systems


Department of Human Services

Business Case for Capital Information Technology Investments:

Title (briefly identify proposed action – if necessary, add a short subtitle of no more than 1 or 2 lines)

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DHS 0096 (3/06)

State of Oregon – DHS Office of Information Systems

This template contains suggested boilerplate language and assumes that the Business Case Team will make appropriate additions, deletions, and changes for their specific needs.

Insert information between left and right brackets - >

Delete brackets.

Information in italics are additional template instructions.

Delete all italicized instructions.

There is a checklist at the bottom of each section so you can verify you have included the necessary information and delete after use.

Update the Table of Contents after completing the template. To do so, click on the table of contents and hit the F9 key.

Table of Contents

1.Executive Summary

2.Introduction & Background

3.Problem Definition & Desired Business Goals & Objectives

4.Alternatives

4.1.Assumptions

4.2.Benefits

4.3.Costs

4.4.Risk Assessment & Risk Mitigation Strategy

4.4.1Alternative 1

5.Financial Analysis

6.Implementation Approach/Timeline

7.Appendices

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DHS 0096 (3/06)

State of Oregon – DHS Office of Information Systems

1.Executive Summary

Key questions that the executive summary should answer by taking the information from the body of the business case:

  • What is the proposal & what problem does it solve?
  • How will the business value be measured?
  • What does the business solution or technology do?
  • How much will it cost & what is the funding source (general/federal/other)?
  • What are the risks?

This section should be able to stand alone as the single source of the overall purpose, goals, proposed actions, costs, benefits, and risks,which will allow an executive level sponsor to deliver a compelling a case for the business opportunity. The Executive Summary will describe the objective of the proposal, the current state of the problem and the resulting opportunity. It outlines the scope of the proposal in general terms. The Executive Summary also provides a brief description of the value of the proposal and benefit metrics in business terms and not information technology terms. It should also provide the reader with an idea of the overall investment cost and the associated funding sources, if the funding source is known.

The summary should be a maximum of 2 pages in length.

Checklist for Executive Summary:

  1. Will the reader have a clear understanding of the reasons for the proposal and its objectives? For example, what is being proposed, what are the benefits metrics, and how much will it cost?
  2. It should not contain any information that is not contained in the body of the business case.
  3. Does it include the funding source?
  4. Is the Executive Summary 2 pages or less?
  5. Can the Executive Summary be treated as a stand-alone document?

2.Introduction & Background

This section describes the current state of, and any history relating to the business problem or opportunity. Examples of some general business problems are:

  • Not meeting service level expectations
  • Escalating costs
  • Change in legislation

Make sure to include any measures that would help quantify the business problems and provide an accurate picture for the reader of the current environment or state of affairs.

Checklist for Introduction & Background Section:

  1. Are the relevant facts outlined so that the reader has a clear understanding of the history, current situation, and the resulting problems or opportunities?
  2. Where necessary, does the current situation include available data or statistical information?

3.Problem Definition & Desired Business Goals & Objectives

This section should provide a description of the way things are now (as is), the way they should be (to be), and what is needed to fill the gap between the two (gap analysis). The problem definition should never be defined as an information technology improvement or enhancement. Technology is only a means to achieving benefits. The benefits themselves are the result of changes to the business, designed to solve the problem.

In outlining the ‘as is’, ‘to be’ and ‘gap’, explain the business process change and change management aspects of the problem. The focus of this section should be on the people and process changes needed to address the problem or take advantage of the opportunity and not just the technology. If the proposal will benefit other Clusters or business units, provide the measures and metrics that will demonstrate business value for these areas as well. If necessary, include interviews, data or information from other Clusters or business units in the Appendices.

This section should also make a link between the proposal and how the problem links to DHS mission or Cluster objectives, strategic plan, statewide initiatives, federal mandates, etc. This linkage can provide credibility, a sense of priority, and a sense of immediacy to the business case.

Checklist for Problem Definition & Desired Business Goal Section:

  1. Is the business problem or opportunity clearly defined?
  2. Does the definition of the opportunity or problem clearly state the value to the Cluster, section, unit, programin business terms and not information technology terms?
  3. Is the problem or opportunity linked to DHS Missionor Cluster objectives?

4.Alternatives

This section should outline different alternativesolutions for addressing the problem or business opportunity. At a minimum, there must be a “do nothing” or “business as usual” alternative and at least one other alternative. Business case best practices indicate that a minimum of three (3) alternative solutions is preferred. While there may legitimately be only two alternatives, this should not be inferred as an opportunity to seek sole source justification or to circumvent procurement rules. For each of the alternatives, include enough information to present estimates of timelines, costs, benefits, and risks to make comparisons.

There should be a supporting table for each alternative that illustrates the value (benefit), costs, and risks across time. Use the tables provided in the template, create tables, or use another format such as the legislative fiscal format.

4.1.Assumptions

Document assumptions used to develop value, risk, and costs, and the ability of the alternative to solve the business problem, or optimize the opportunity. Include how the assumptions were determined, and if necessary, how they were validated.

4.2.Benefits

Identify the benefits, how they will be measured, who realizes the benefits, and an estimate of when the benefits will occur. Use appendices for detailed information or calculations.

4.3.Costs

Identify costs as One-time or Ongoing Costs. Predict these costs over the time period of the proposal, the payback period for the investment, or the specific timeframe that has been chosen to explain the alternative. Use appendices for detailed information or calculations.

4.4.Risk Assessment & Risk Mitigation Strategy

This section provides the reader with an assessment of the risks, along with any discussion on risk mitigation strategies.

Definition: A risk is a factor or event that may jeopardize the alternative from achieving the anticipated benefits or increase the cost of the alternative – should it become a project.

Examples of risks:

  • Legislative changes
  • Lack of Senior Management Support
  • Lack of training
  • Poor communication
  • Inability to secure critical resources

Identify the risks, the probability of the risks occurring, and the impact that the risks might have on the proposal if they occurred for each alternative. For example:

Risk Probability:

High – indicates that there is a high likelihood that the risk will occur.

Medium – indicates that the risk is likely to occur.

Low – indicates that the risk is not likely to occur.

Risk Impact:

High indicates that there will be significant impact to the proposal.

Medium indicates that there will be moderate impact to the proposal.

Low indicates that there will be a minor impact to the proposal.

Examples for Mitigation:

Example:

The risk that senior management will not support the project is low, but the impact to the proposal if senior management does not support the project is high and will significantly affect the proposal’s success.

For more detailed proposals, it may be necessary to identify methods or strategies for minimizing or mitigating risks that have a high probability of occurring and would have a significant impact on the proposal.

Example:

The risk mitigation strategy for obtaining senior management support for the project is to create a communications plan for the proposal. The communication plan will define a process for keeping senior management informed on the proposal’s progress. It will also identify a point of contact for any questions that the senior management might have.

Checklist for risks:

  1. Have all of the general risks been identified?
  2. Have all risks associated with each alternative been identified?
  3. Have the probability and impact of the risks been presented?
  4. Have risk mitigation strategies been outlined?

NOTE: The alternative section and table will need to be unique for each alternative that will be presented in the business case.

4.4.1.Alternative 1

Briefly describe what the alternative does and how it addresses the business problem.

Business Case Assumptions:

  1. Business Needs:

e.g. alternative 1 will change the current process by,….

e.g. clients in the field will no longer be required to…..

  1. Workload:

e.g. alternative 1 will allow the processing center to meet current federal mandates by…..

  1. Transactions:

e.g. will the number of transactions that can be processed increase?

e.g. will there be a new type of transaction?

  1. Data Processing:

e.g. these assumptions should include the necessary changes that need to be made to existing computer systems and the associated hours of work needed to make the changes – or, the addition of a new computer system, software, etc. and the associated hours of work, etc.

  1. Volumes/Position Duties:

e.g. what staff and positions are affected by this alternative? It may be that the alternative has a single funding source from one cluster, but affects positions in several clusters, units, etc. Make sure to capture the impact on all the staff affected by the alternative, and what cluster or unit they belong to, how they will be impacted, and what the affect of the impact might be. Additionally, include any information or data that was used to make these assumptions – if necessary, this information can be included in the Appendices.

Now that the assumptions have been captured for the alternative, quantify the costs and benefits for the alternative in the table below, or create your own table.

Alternative name in the table header

Cost Estimates / Year 1 / Year 2 / Year 3 / Year 4
Personnel Services:
One-Time:
e.g. Contractors, Limited Duration, Regular Staff, etc. (Remember to document the assumptions, calculations, and data in the appendices.
Add rows as required for line items
Ongoing Costs:
Include ongoing staff requirements for such things as:
IT maintenance & support, increases in FTE or positions for clusters or business units.
Services & Supplies:
One-Time Costs:
e.g. training, printed material, etc.
Ongoing Costs:
e.g. software license renewals, training, printed material, postage, etc.
Capital Outlay:
One-Time Costs:
e.g. IT hardware, software, etc.
Ongoing Costs:
Total Cost Estimates
Benefit Estimates / Year 1 / Year 2 / Year 3 / Year 4
Personnel Services:
One-Time Benefits:
Ongoing Benefits:
Total Benefit Estimates
Risk Estimates / Year 1 / Year 2 / Year 3 / Year 4
Add the risks to this section for each alternative which is addressed in the next section
Total Risk Estimates

Duplicate the assumptions and table for each alternative.

Comments:

Add any additional comments regarding the assumptions and table. The comments section may also be used to list the costs and benefits that are intangible – meaning that dollar values could not be determined for the items, but they are never-the-less, costs or benefits to the alternative. For example, one benefit of an alternative may boost employee morale. That is not necessarily a benefit that can be quantified in terms of dollars.

Checklist for Alternatives Section

  1. Are the alternatives defined at a sufficient level of detail to define value (benefits), risks, and financial (costs), benefits, and risks later in the Business Case?
  2. Do the assumptions made about the value (benefits), risks and financial (costs) for each alternative match the value (benefits), risks and financial (cost) in the tables?
  3. Has sufficient amplifying data, calculations, etc. been included in the Appendices for further detail and validation?

Checklist for Cost Estimates & Assumptions:

  1. Will the reader have a clear understanding of the costs for the proposal and how they differ from the other alternatives or the “business as usual” scenario?
  2. Are the intangible costs and benefits listed in this section – are they compared for each alternative or the “business as usual” scenario?
  3. Will the reader have a clear understanding of how these costs translate into business value – such as improved customer service, or an ability to meet service level expectations, contain escalating costs, or adapting to changes in legislation?
  4. Are costs included for quality assurance (QA) testing – if required?The recommended cost for QA testing is based on project cost, typically 5-10 percent of the estimated project cost. OIS will work with the business cluster to determine whether QA testing is required in accordance with published Department of Administrative Services, Information Resources Division (DAS/IRMD) directives.
  5. Werestaff from other business units or clusters contacted about the involvement of their staff in the proposal?

5.Financial Analysis

What is the financial impact on the organization? Is there a cost/benefit that can be expressed in terms of a financial metric such as a break even point, payback period, return on investment (ROI), or a total cost of ownership (TCO)?

The financial analyst member of the business case team should be able to provide input and information about the best metrics to use to express the financial impact of the alternatives and the recommended alternative.

Make sure to perform a financial analysis on the alternative solutions or business as usual scenario with the same metrics used to analyze the recommended alternative solution and illustrate how the proposed solution stacks up against the alternatives.

If there are significant up front costs and capital outlay, those costs can be analyzed here and further illustrated in the next section;Implementation Approach/Timeline.

Cost Estimates / Year 1 / Year 2 / Year 3 / Year 4
Personnel Services
Services & Supplies
Capital Outlay
Total Cost Estimates
Benefit Estimates / Year 1 / Year 2 / Year 3 / Year 4
Personnel Services
Services & Supplies
Capital Outlay
Total Benefit Estimates
Risk Estimates / Year 1 / Year 2 / Year 3 / Year 4
Personnel Services
Services & Supplies
Capital Outlay
Total Risk Estimates
Business Case Estimates / Year 1 / Year 2 / Year 3 / Year 4
Personnel Services
Services & Supplies
Capital Outlay
Total Business Case Estimates

Checklist for Financial Analysis Section:

  1. Will the reviewer have an understanding of the projected costs and benefits of the recommended alternative throughout the lifecycle of the investment?
  2. Has the recommended been evaluated using an appropriate financial metric such as ROI, TCO, or a basic payback period?
  3. Are the alternatives and recommended alternative solution clearly shown using the same metrics?

6.Implementation Approach/Timeline

Provides estimated timing of tasks/phases so financial analyses based on the timing of expenditures and benefits can be completed (Gartner).

A high level implementation approach and proposed timeline should be provided here to show how costs and benefits might fall within specific funding periods such as fiscal years, or biennia for the proposed alternative.

Checklist for Implementation Approach/Timeline:

  1. Has the implementation approach and timeline been synchronized with expected costs and benefits?
  2. Does the implementation approach take advantage of any funding horizons such as fiscal years or grant deadlines?
  3. Does the timeline for the implementation introduce risks that were not addressed in the risk analysis section?
  4. Is the implementation approach and timeline reasonable based on the developed costs and benefits realization?
  5. If approved, the business case team will be required to complete.>

7.Appendices

Presents detailed supporting data, such as financial models (Gartner).

Provide supporting data (if required):

  • Survey data?
  • Environmental Scans- what are other jurisdictions doing for the same problem?
  • Interviews?
  • Spreadsheets, management reports, etc.

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DHS 0096 (3/06)

State of Oregon – DHS Office of Information Systems


Appendices: FPA Analyst Worksheets For Each Alternative


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DHS 0096 (3/06)