What is the Purpose of the Business Case? | The Business Rationale

The purpose of the business case is four-fold:

1. the next step in the design process, where assumptions and high-level designs are turned into a delivery model, which describes how HR service will be delivered in the future;
2. the next step in the change process, where the business case and designs are communicated across the organisation to describe how transformation and change within HR will benefit the organisation as a whole and the delivery of overall goals and objectives;
3. the mechanism to obtain approval and funding to proceed with the transformation of the HR service;
4. the reference point for guiding all decisions and activities during implementation.

The business case is a document which needs to be more than numbers and a hard financial analysis. It needs to be a document which can articulate to colleagues from across the business the future vision for HR. Whilst you and your colleagues have developed and fully understand the vision, others need to understand it as well.

This means that business case needs to be able to explain the following:

• what the HR department will look like in the future, its size and structure;
• how the HR service will operate, that is, how staff will access support from HR; what information on HR policies and guidance will be available; how much will be provided through self service, a service centre and face-to-face advice; what strategic support will be provided to senior management;
• how the HR service will be measured and assessed to ensure that is delivering benefit and value.

A good method of communicating the vision for HR is to develop an operating mode. This model will demonstrate how HR will be organised in the future and how it will deliver HR services. An example of a generic operating model is presented in Figure 1. This model is important because it is not only a communication tool but also identifies for the business case what changes need to be made within people, technology and processes. These changes can then be used to assess the financial impact of the transformation and its potential benefits. When presenting this model it will also be important to identify whether any services will be outsourced to another company, or whether services will remain within your company but moved to another team (such as a shared service centre) and/or country.

Figure 1: Example of HR operating model.

This information in the business case can then be communicated to your colleagues across the organisation. This process of communication helps to identify the advocates of change, those who are ambivalent and those who oppose the proposed transformation. Identifying the members of these different camps, and taking appropriate action at an early stage will significantly increase the likelihood of success.

In addition to its role in the change process, the business case will also become a document around which future programme management decisions should be based. The business case should be used as a reference point all the way through the programme, not just as a tool to get permission to start. For example, when the going gets tough it can be used to galvanise stakeholder support by reminding them of the commitments they have made.

Often it is prudent to develop an 'initial' business case prior to a more detailed 'full' business case. The objective of the initial business case is to obtain permission and funding to do more detailed work. As a result, every aspect does not have to be designed in extreme detail. The second, and more detailed, full business case is the document used to secure funding to do the main implementation, and to act as the reference point for all decisions and activities during the implementation, as long as any assumptions on which it is based, for example costs estimates, remain stable. Of course, not all assumptions hold true, and the business case becomes a document which is updated and refined throughout the life of the programme. 

An approach for developing an initial business case is to complete an 'Opportunity Chart', for each of the areas where HR transformation will deliver benefits.

An example of an 'Opportunity Chart' is provided in Figure 2.

Opportunity	Reduce costs and time taken to manually book training courses by providing staff with an on line course booking system.
Description of the problem	14 full time staff are employed to receive forms requesting training and these staff have to chase missing information on the forms, check that courses are available, manually input information from the forms into the training system to book the courses, manage waiting lists and notify staff when they have been booked onto a course.
Indicators used to measure the problem	Number of working days to process training forms Ratio of training administration staff to total staff
Current level	5–7 working days to process training forms 14 training administration FTE supporting 4500 staff — ratio of 1:321. Target benchmark is 1:600
Target level	1 working day to input approved training request into self service and to get confirmation of booking or notification that staff member is on waiting list 7 FTE to manage technology courses on self service and monitor waiting lists. Ratio 1:642
Financial saving	7 FTE
Non financial benefit	Eliminate administration and time lag when booking training courses
Costs	Configuration of training administration system Development of on line courses and guidance documents for all staff on how to use self service to book training courses Development of courses to train HR staff to use and manage new self service functionality

Figure 2: Opportunity chart.

Key issues to remember when completing the opportunity charts are as follows:

1. Provide short headings and descriptions of opportunities, further detail will be added in the full business case.
2. Identify some benchmarks and/or performance indicators to baseline current performance and set improvement targets. For example, in Figure 2, key measures are the ratio of training administration staff to total staff and the number of days taken to process training requests.
3. Use the difference between current performance and targets to estimate percentage of saving and identify key areas for savings. In Figure 2 for example, it is noted that the potential exists to save seven full time equivalent (FTE).
4. Not all benefits will be financial. Again in Figure 2, the time taken to process training requests will be significantly reduced.
5. Identify key costs such as configuration, training and communications. These can be estimated by contacting relevant software providers or by estimating the time that the IT team would need to configure and test a new self service function and the time that would be needed to produce training and guidance materials.

When a chart has been completed for each opportunity, they can be aggregated to produce the initial business case.

Case Study

A local Authority was undergoing significant and radical change in the way that it provided services for its customers. The nature of this change meant that the Authority had to think much more radically than it used to, as it positioned itself to become an innovative, integrated and customer-focused authority. The HR community was identified as having a key role to play in supporting, driving and sustaining this change agenda.

The challenge for the HR community was to undertake a fundamental review of the HR service and ensure that it was capable of supporting the Authority with its transformation. This involved reviewing every aspect of HR and identifying those opportunities that would support the organisational transformation agenda, improve the performance of the service and reduce costs. In order to identify these opportunities they performed feasibility study which was divided into four stages:

• Stage 1 — Baseline performance and costs. This involved:
  • Identifying the total number of HR, payroll, health and safety and learning and development staff.
  • Identifying the cost of providing the HR service. This included salary costs, on costs, accommodation costs, IT costs and procurement spending.
  • Producing an inventory of HR processes and activities, assessing their performance against a range of benchmarks.
  • Identifying the number of staff supporting these processes and their indicative costs.
  • Undertaking a survey across the Council to test views on performance and quality of HR service.
• Stage 2 — Identify opportunities. This involved completing opportunity charts for areas where benchmarking, feedback from surveys and consultation with HR staff had identified the potential for service improvements and cost reduction.
• Stage 3 — Prioritise opportunities. A workshop was convened with senior HR staff and representatives from all Authority departments to identify those opportunities which would support the Authority's objectives for the organisational transformation programme, improve the quality and performance of HR services and reduce costs. Three key opportunities were identified:
  • the creation of a new HR model;
  • better buying (within recruitment and training);
  • implementation of Web-enabled HR systems and the automation and streamlining of processes.
• Stage 4 — Produce initial business case. The costs and benefits of each of the selected opportunities were aggregated into an initial business case which summarised the value of the HR transformation programme both in terms of financial savings and its contribution to the Authority's overall transformation programme. This initial business case, which estimated annual savings of between £1 and 1.5 million, was approved by the Authority leadership team who were able to quickly and easily understand key opportunities and benefits. The initial business case was then used to develop a detailed business case and to initiate the HR transformation programme.