Don’t know where to start when creating a business case for services procurement? Then listen in as AGS’ Global Vice President of Customer Success Andrew Grant and Executive of Procurement Solutions Jonathan Winters share everything you need to know, from the factors to consider and structures that work best – including providing data to back it all up – to which stakeholders to include and common pitfalls to avoid, to enable a decision to be made. Learn more today!
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Hello everybody! My name is Frank Edge. Welcome to another episode of Subject to Talent. Today, we sit down with AGS's Global Vice President of Customer Success, Andrew Grant and AGS's Executive of Procurement Solutions, Jonathan Winters. In this episode, they discuss all aspects of building a service procurement business case. They discuss the factors to consider when preparing a business case, the structures that tend to work best and some of the common pitfalls. Let's listen in.
A: Hi everybody. This is Andrew Grant from Allegis. I've got Jonathan with me this morning. Good morning, Jonathan.
J: Morning, Andrew.
A: Thanks for joining us this morning. But by way of brief introduction to our listeners, just wondered if you wouldn't mind, just please sharing how you came to move into our industry.
J: Yeah, sure. I got here probably the similar way to a lot of people who end up in procurement or in staffing and that is I got here without intent. My studies at university were politics and nothing to do whatsoever with what I ended up doing and then I entered a graduate scheme at HSBC classic two years, four rotations graduate scheme. That must be 14, 15 years ago now. Towards the end of that, I got my first exposure to procurement and it was a chance to find a department where you had this measurable and tangible impact on the business where at the end of the year, when the company published their earnings, you knew that an aspect of that was because you saved them $2 million. You knew what your contribution was to the overall organization.So caught the bug, stayed in procurement for years and the NHS Barclays Lloyds Banking Group, Bank of America Merrill Lynch, Head of Procurement at Close Brothers. It was in that time at Bank of America, going back now must be six or seven years, that I ran a project to find a partner to help Bank of America Europe with their statements of work with their procurement solutions. In that process, we ended up appointing Allegis. That was my first exposure to AGS. Years later, couple of jobs later, I ended up coming back to AGS as that product started to move out of this area which was seen as innovative and brave to do this sort of thing. It was seen as being quite unusual to appoint a third party to help with To migrating into being the norm and that business is growing well, I joined AGS to help continue that growth journey. How about you Andrew?
A: Yeah. Interesting. In a common thread, there are around investment banking. I also worked in that sector for a few years as a finance guy, finance director my final role there, but really wanted to be in the front office of a business working directly with clients. That was really what I was passionate about. When I was approached to join a recruitment business about 25 years ago, it just seemed like a fantastic opportunity to change career and that's what I did. Just changing gear now, Jonathan, look, our discussion today is about the business case. We'd like to spend a little bit of time for our listeners really understanding, dissecting what is a business case, what's its purpose and what are some of the most important things to consider when we're putting together a business case. I guess, as a procurement professional yourself for many years, you've seen a lot of business cases over your time that you may have prepared yourself or people have submitted to you. I expect you've seeing the good, the bad and the ugly. Let's start with purpose. What is the purpose of a business case?
J: Well, at core, it's all about moving your thinking from that stage. For most people before they start creating the business case, they have a vague idea of what the problem is in their organization and they have a gut feeling as to what solution is. The business case helps you start to articulate and measure what that problem is, what it means to the organization, what impact it's having, what the solution might be and perhaps helps you broaden your thinking around that. There is solution options and then backing all that with data to allow for a decision to be made. That's it at its core.It moves you from that gut feeling as to where we ought to be to enough research for the decision can be made as to what we should do next. We help a lot of clients build business cases, specifically around procurement solutions and without exception, they all have that same sense of beginning that we know the challenge. The trickiest part of that process though is measuring the nature of that challenge, measuring the nature of the problem they've got in their business and what impact it's having today on the way they operate.
A: Interesting. Well, what's your experience with clients where they haven't really understood the purpose of a business case or it hasn't been properly prepared or prepared at all?
J: I guess, two extremes of how it can get dropped drastically wrong or people either just not doing enough in the business case, which is where they've taken that sense of, I know what the problem is and I know what the solution is and really just written down, this is what we need to do next, but not providing the data to back it up and not really looked beyond what they already assume the answer to be, not created options. Or the second equally difficult to manage one is that they go chapter and verse. I've seen a hundred page business cases and that's not really something that's going to facilitate effective decision making, which is the purpose of this at the end of the process. It's to decide what the right course of action is. There's a fine balance between the two somewhere which says, I've adequately thought through nature of the problem, I've measured the nature of its impact, I've given thought to it's things we might do, now let's make a decision out of the shortlist.
A: Yeah, look, I agree. I think from my experience, the purpose of a business case is to identify business problem, isn't it? Or a business opportunity. And second really in simple terms, to make a recommendation and ensure that you've got to that recommendation with sufficient evidence to make it credible, which is your point about having all the data. Okay. That's good. Moving on, in your experience, some of the factors to consider when putting together a business case.
J: I think first of all, stay open minded about the solution. Too often, we enter that process of creating business case as a way of getting approval to do what we've already decided we want to do, but we've done that without looking through the data. Once you're looking through the data in the business case, allow that to change your mind, allow that to show you different opportunities or ways to fix a problem that you're trying to fix. That's got to be top of the list. Second is definitely that data is key. Not only because it helps you make better decisions, but it's the foundation of the credibility of the business case. People, when it comes to the decision-making process at the end of this, will try and pick holes in what you've done, especially their impacts in any way.Good solid data is unequivocal. You're protected by doing so. Then finally, I guess, and possibly actually even most importantly is involve as many people as possible. Far too often, business cases get to the stage of being presented and it's the first that some people have heard of it. That's really important for two reasons. Number one, if it's the first they've heard of it, they will try and derail it, whether they're impacted by it or not. Number two, you don't know until you've shared the messaging in this and communicated widely within your business, who is impacted. Today, when you were addressing perhaps an inefficient process or trying to build a business case that solves an existing business problem, you don't know who will be impacted by the solution just because you've looked at who's impacted by today's issue.For example, you might be looking at probably around how reporting isn't working efficiently as it gets missed between spreadsheets, you come up with a technical solution, a piece of software that's going to solve this problem. IT were not previously a stakeholder. They are a stakeholder now. Just because you've looked at the as is, doesn't mean you've covered the stakeholder mapping for the solution. So, involve as many people as possible. People will often object to a decision that's forced upon them and very rarely object to a decision that they'd been involved in making.
A: Yeah, it's a great point. It's human nature, isn't it? I think people want to feel like they've been consulted as part of any change process. But two takeaways, I guess, that you've communicated there. One is don't get emotionally involved in the recommendation. You might think it's the recommendation and the only way, but not everyone's going to have that view and people are going to have different perspectives. Don't try to guess what's important to your point to those people. As part of putting the business case together, go and speak to them individually, interview them as part of the process to really understand what their perspectives are and make sure that you've covered all the bases in your business case. Don't leave anything out that's important to the people that are reading this report and they're going to be fundamentally making decisions on the basis of your business case. Your point's really well-made. Thank you.
J: Actually, that reminds me of one of the top for the business cases, which is challenge your own thinking with that business case. Sit with colleagues, sit with friends and get them to challenge and identify the gaps in the business case before you're sitting in front of the CFO or the CIO or CEO trying to pick your idea. Have as many people as you can try and pick holes in it. It's better that you identify those and come up with solid answers in some practice ground or some friendly environment than doing it in front of the board.
A: Yeah, that's a great recommendation. Moving on, who are the key players, Jonathan, to think about when you're putting a business case together?
J: Always it comes down to nature of the business case and the challenge it's trying to address. If I think really to the business case that we work on a lot, which is helping businesses come up with different ways of addressing statements of work, then you've obviously got the impacting parties, finance, HR change, procurement, whoever the exec's sponsor is. Those are parties that you'll know about before you start, before you sit down and put pen to paper. As you're going through the process, as you're doing, you said earlier on interviewing the stakeholders, as you're reviewing process maps, you're just going to keep stumbling across other parties who are involved. You're going to find certain departments, make a lot of requests. You're going to find certain individuals who get involved in approving documents, for example. As you identify all of these, they all become key stakeholders. They all become people that you need to consult with that didn't necessarily seem visible at the beginning.
A: Yeah, it's a good point. I mean, my own painful experience, I'd recommend to the listeners, get a whiteboard, design a stakeholder map, make sure you consider all the internal and external stakeholders and don't just get stuck on the obvious ones. Internally, the business stakeholders are the obvious ones, but don't forget corporate functions like finance and legal and HR. They all are stakeholders in different ways and make sure that you do consult with them or else it will come back and bite. Externally as well, customers or potential market is the obvious one to go for but also, don't forget about suppliers, channel partners, potentially regulators and other parties in the external market because they all have an influence actually on the eventual recommendation. Don't they?
J: Absolutely. That sense of their involvement is so valuable for when you get to the end and you're looking for people to support your recommendation.
A: Yeah, it's good. Jonathan, look, moving on to structural templates. I mean, often when you're thinking about putting a business case together, you go onto Google and you start looking at templates that are available. What would you recommend?
J: I guess the key is not to over think it. You don't have to work to some pre-approved standardized template because a business case is its core, it's quite a simple document. First of all, you need to lay out the as it situation. How are you operating today in this area, what's the associated costs, what are the associated risks, be those reputational or regulatory and what it'll look like as we are right now. Then you got to get the data to back that up. It's no good just saying, hey, this is costing us $10 million a year. You need all the data that says exactly where that money goes, how it flows in and out of the organization, is there money coming in as a result of this, all the data that you can get your hands on. There's probably no such thing as too much data in this situation and data doesn't just have to be restricted to pure numbers.In the procurement solutions world where we're looking at standards of work, the data isn't just the cost associated with each one at the timelines. It's contractual content. It's time emotion studies as to how long it takes to get something approved and so on. So as much data as you can get. Then, you need to lay out some options. As a general rule, you usually see three options in a business case. And if you were to boil those three options down into consistent narrative, they will be do nothing and accept the situation we're in, do something or do something major. Off the back of those, you then need to do the same as you did with the assets. You need to measure the cost, you need to measure the risk, you need to measure the viability of doing those three options and then end it with a recommendation. Have some faith and confidence in your view and stand behind one of those three options.
A: Yeah. Look, I agree. I think there are lots of different templates out there. I mean, my advice would be to consider it in two different ways. One is about the actual written document itself. There are some really good templates set up on Google, I mean, but I would encourage you to curate your own format for that. I think if you do that, you're going to feel more ownership of the report rather than just taking somebody else's format. The second recommendation would be, there are two parts to it. There's the written report, but then there's, you need to tell the story when you present this to the decision makers.It's not the optimal way to tell the story by presenting a word document as nicely formatted as it might be. You're going to need to put together some presentation or PowerPoint for that and really tell a story and not just replicate all the content that's written in the report as well. I would encourage you really strongly to work with someone who's got a strong desktop publishing or someone who's in your management team that puts together fancy PowerPoint decks, make sure that it looks the part as well and is going to keep people's interest as well. That would be what I'd weigh in with Jonathan.
J: I agree. I guess it's probably an extension of what you ended with there, but an exec's summary is key to this, especially if you're doing a data heavy business case, you've got a lot of data points in there. Nobody is reading the 25 top spreadsheet that's attached. So a one page summary that goes on the front that helps people really quickly digest what you're saying and they can have confidence in what's attached behind it, should make a lot of difference.
A: Yeah. I think also remember there are two different types of audience really. There's an audience that's very analytical and data heavy and are going to want to read the report line by line and make sure that you haven't missed or not considered all the risks or all the costs or all the different flows as you outlined. Then, there are going to be people that are more visual and probably not even going to read the report, but you need to be really compelling in terms of how you tell that story and bring that business case to life. Just keep it in mind, there are two different preferences in terms of how people receive information and just to think that through is in terms of how you want to get to the outcome you want. All right. Well, what are some of the pitfalls you've seen, Jonathan? You've seen the good, the bad and the ugly. What are some of the bad and the ugly that you've seen when people have put a business case in front of you?
J: I think I've often seen people put a huge amount of working to measuring the nature of the problem that they're trying to address, then lay out the options, but not measure the residual risk that's left after that. For example, we're not in compliance with a particular regulation right now, that's the problem the business case is trying to address. Here's the free options that get it back into compliance, but not going into what residual risk you have after you've implemented those. Do we still have some small regulatory issues? Do we have any reputational issues? Do we have any additional costs? They've invested all that effort and all the analytical time in the assets and not in the situation that we're left with after the implementation. That's one.I think another one that's incredibly common is it's rare to see a business case these days that doesn't have some elements of technology solution to it. It almost seems like people assume the technology resources available in the business. It's pretty common to see a business case that says all our problems are solved by creating the integration system A and B, and then IT points out that'll be two years before they can allocate a resource to help you with the integration. That's partly a cycle of management. One, it's partly one of questioning your own logic and your own assumptions beforehand and it's definitely one to watch out for.
A: Yeah, it's good. A couple come to mind for me as I mentioned earlier, I think you don't want to present a business case cold to the decision makers. You want them involved in the lead up discussions, don't you? As human nature as we said, they want to know that they've been heard and that their perspectives have been considered before any business cases presented back to them in front of their peers, in front of their bosses or their colleagues. I also have experienced where you need to demonstrate that you've been thorough and not missed other alternatives. Again, you're stuck on your recommendation, but bear in mind that you got to that place.You need to take people on the journey with you and to do that, you need to make sure that you present other alternatives and you've canvassed enough views I think, from the different stakeholder groups and the marketplace to ensure you haven't missed an obvious strategical alternative. Then, the big one I think that gets a lot of people with the business cases is you've got to share evidence or data to back up your recommendation. People are not going to take your word for it. Doesn't matter how good the story is if you don't have the evidence. It's critical you spend enough time doing that research and doing the design tests and doing often prototyping to make the recommendation very credible otherwise, you could well be sent back to the drawing board.
J: Absolutely. Then just to add to that, I think you should also take a moment to think about your own independence. And what I mean by that is if the solution you're going to propose obviously benefit you or your department, it's going to result in you needing an extra five heads into your team or it's going to result in a bigger budget for your function, recognize even if that's the right time, that it's going to be perceived as a little bit . The broader the stakeholder group, the less that will look that way or even get external help to build a business case. If you're not independent in your position or even perceived to be independent in your position, get external help because that credibility is ultimately the strongest part of the business case.
A: Yeah. Agreed. Look finally, how do you know you've done everything correct? I mean, you've been putting this business case together. What's your advice, Jonathan, to ensure that people feel as though they've put everything together correctly?
J: Yeah. Look, it's not a science. Brutally, you'll probably never know whether or not you did everything correctly. But if you follow the formula, you do all the research, you engage as many people as you possibly can engage, you really think in depth about systems, processes, all the impacted parties and you communicate with everybody, you'll have done the best you can. Not all good business cases get approved and not all approved business cases are good business cases, but it's down to you to make sure that you've put everything into that business case that could be asked. If you get to the end of presenting a business case and those you've been presenting it to you were clearly engaged and don't have very many questions, then you know you've really hit it on the head. If you get hours of questions, then you know you could have done a better job.
A: Yes, true. And just reflecting on your earlier comment, I mean, and again, my experience, I think if you have tools where practice runs to present the business case to different people, different groups that you respect their opinion they have used on, that can be really valuable before you actually make the presentation and submit the business case to the decision makers. From my own experience, I'd recommend a business person, but also separately a finance person because these two groups are often two of the more important stakeholder groups. Aren't they? They most often have very different perspectives on process, on risk, on return, quite different perspectives. It's a great asset test I think before you submit and give you more confidence that you've done everything as correctly as you can.
J: Absolutely. When you do those dry runs with these stakeholders, don't be afraid to fundamentally change aspects of the business case following that or at least the way it's presented. If you can prevent a question being asked because you've answered it before somebody is needed to ask, you'll find yourself in a much stronger position. As soon as people start finding holes, they'll continue looking for more. So take the feedback from the stakeholders, address anything that they felt was a concern back into the core of the business case and ensure that when you present it for real, you're covering off everything they may well have asked you in practice.
A: Okay, great. Thanks Jonathan. Anything to sum up in terms of key takeaways?
J: Yeah. The key is really unlocking as much data as possible. Now the big challenge associated with that is often you're writing a business case because something's not working properly. It's not usually the case for you to get an opportunity to do even better. It's tends to be that something's not going very well. When something's not going very well, that can often be associated with a lack of data. Sometimes it might seem insurmountable, but you've got to find a way to do it. You've got to maybe partner with external organizations, partner with other people in your business to find access to the right data because without that, it's just a hunch. It's not a business case.
A: Yeah. I think that's a very important point. I think also, be aware of all your own strengths and weaknesses too. If you're a business person and you're not particularly analytical for example, make sure that you find someone that you can partner up with who is very analytical and very data-focused, data-driven who can help compliment your strengthens and your skills. Or it might be the other way around. You might be a very data-driven analytical person but not as strong on some of your business acumen. Think about who you put together on that project team. Don't try to do things on your own and you'll finish up with a better product I'm sure. Okay. Well, that's great. Well, thanks for your time, Jonathan today. To our listeners, thanks for tuning in. We hope you got some take home value from the session on the business case and keep a look out for more discussion topics coming soon. Bye for now.
F: Thank you for joining us today and thanks to Andrew Grant and Jonathan Winters for an insightful discussion. If you'd like to learn more about AGS's service procurement, please check us out at AllegisGlobalSolutions.com. If you have any questions for Andrew or Jonathan, feel free to tweet us @AllegisGlobal with the #SubjectToTalent. Also, you can email us at SubjectToTalent@llegisglobalsolutions.com. If you enjoyed our podcast today, please subscribe, rate us and leave a review. Until next time, cheers.