Building Better Business Cases for IT Investments

Ward, John; Daniel, Elizabeth and Peppard, Joe (2008). Building Better Business Cases for IT Investments. MIS Quarterly Executive, 7(1) pp. 1–15.

URL: http://misqe.org/ojs2/index.php/misqe/index

Abstract

While most organizations today demand a robust business case justifying investments in information technology (IT), our research finds that few are satisfied with their ability to identify and quantify the expected benefits from these investments. Surprisingly, we found that many organizations don't demand rigorous evidence to support the justification for investment-thus allowing benefits to be overstated and projects oversold. Based on our work with organizations over many years, we have developed a new approach for building a business case. It differs from conventional approaches because it recognizes different types of benefit, identifies measures for all benefits, and gathers evidence for the size of the expected benefits. The approach also requires that a benefit owner is identified for each benefit, to ensure commitment and aid benefit delivery. Benefits are explicitly linked to both the IT and the business changes that are required to deliver them. Responsible individuals are also identified for ensuring the necessary business changes occur. Our research also identifies a wider role for the business case. Typically, the main objective in building the business case for an IT project is to obtain approval for the financial spend. But a comprehensive and robust business case also: (1) Enables priorities to be set for investing in different projects; (2) Identifies how the combination of IT and business changes will deliver each of the benefits; (3) Ensures commitment from business managers; and (4) Creates a basis for reviewing the investment when it is complete. We surveyed over 100 European organizations to understand current practices in developing business cases and to identify how those practices relate to the success of IT investments. The results show that organizations that adopt our suggested approach to building business cases are more successful in delivering value from their IT investments.

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