The Necessity of Business Case’s.

18 Jan

In their 2004 paper Tiernan and Peppard outline that the drivers and beneficiaries of IT investment are often skewed, results poorly evaluated and blame wrongly apportioned, ultimately leading to project failure. They argue that once the business case has been approved the justifications and drivers of value are quickly forgotten about. The diagram below illustrates how the IT department can be wrongly apportioned blame for something they have no control over, often leading to accusations of the IT productivity paradox (Brynjolfsson, 1993), strategic misalignment among other things.

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The Business case illustrates its importance by providing standards or as Tiernan and Peppard put it “There is a practice of creating elaborate plans to implement the technology while the reason for embarking on the process in the first place receives little or no planning”. Business cases can rectify this by clearly defining what a cost is and what an investment is or weather the investment should take place at all.

Crucially business cases leave a trail of accountability so, for instance if the sales manager underestimates the technical implementation of a project then he or she can be held accountable.

Business Cases can also immediately redefine budgets and forecasts. The inclusion of anticipated business benefits (through the business case) can also manage expectation and quieten accusations of a productivity paradox occurring. Thus a business case can be defined as a guide for management as to how to create value at various stages along the path to project completion. The need for business cases reminds me of the case made by Carr (2003) that IT itself is not an advantage; rather it is how it is utilised that creates the competitive advantage. Business Cases can help firms create this advantage.

Brynjolfsson, E. (1993) The productivity paradox of information technology: review and assessment. Communications of the ACM 36(12), 67–77.

Carr, N.G. (2003) IT doesn’t matter. Harvard Business Review (May), 41–49.

Tiernan and Peppard (2004) Information Technology: Of Value or a Vulture? European Management Journal Vol. 22, No. 6, pp. 609–623.

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2 Responses to “The Necessity of Business Case’s.”

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  1. Why build a business case for the IS investment? « So Opinionated … - February 1, 2013

    […] view be taken that IT is a separate function within an organisation (this point is established in strategicblogger’s post). IT is cross-functional and thus an investment in this area requires acceptance and wide […]

  2. The role of the Conscientious Dissenter on an IT-Business case team « So Opinionated … - February 6, 2013

    […] to ensure IT goals are aligned with those of the company as a whole (which you can read about read here).  But what of the character s that make up this […]

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