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ISO-20000-ITIL-blog

ISO 20000 & ITIL® Blog

ITIL Business Case – How to justify the implementation of the IT service

Starting a new service (or making a significant change to an existing one) almost always has a non-IT beginning. Before you focus on development, build, test… etc., there are a few important steps in your service lifecycle that are more business and financial oriented. And, many question arise. Believe me, most of them (if not all) are not technical.

Do you remember any of your conversations with (top) management? You need approval and can’t wait to dig into the development of some great new service and they want to know “Why would we do that? What’s the business case for this service?” Business, what?

Need for justification

What I often see is that people who are involved in IT service development or maintenance are pretty bad at “talking business.” See it from the other side: someone, usually management of the company, is responsible for profit and loss. That means that they need to know how the money is spent, meaning (so, here we are – those questions from the beginning of the article) why do we need this service and what are we going to get back? In its simplest form – is there a business case behind this service implementation or not? In other words, I can hardly believe that people in IT can do whatever they want without a need to provide proof that it’s worth doing. A business case is your tool.

According to ITIL, a business case is a document where you will explain why the investment in a new (or changed) service is worth the effort. That will include financial as well as non-financial explanations.


What’s the content?

So, if you would be someone who approves the investment in a new service –what would you like to know before you approve the development of that service?

The financial aspect is always an issue. For myself, at least, I would like to see financial justification for the implementation. That would include a cost estimate for implementation, as well as the potential return of invested money. I agree, it’s hard to predict how much can be earned with the service, but developing a business case is not an easy task, anyway.

Further on, I would like to find out about the risks and possible problems. That will give me a sense of the “real world,” which is not perfect, and give me confidence that the person who prepared the business case has a feel for life around us.  To provide even more sense of real-life complications – include issues that could arise during the implementation as well as afterwards.

Options are always there, so the business case should list a few of them. The higher level the management is who makes the decision, the less space there is for argument. They need options to choose from and the reasoning behind them. So, give it to them.

And, maybe the most important element of the business case is – recommendation, i.e., what you think your organization should do. So, you have presented arguments (financial aspect, risks, options, etc.) and now it’s time to say what you think. And, one more thing – keep it easy to read.

Benefits explained

A business case provides several benefits. Take, for example, finances. If you are aware of the financial aspects of the new service implementation, then you hold your financial situation “in your hands,” i.e., there are fewer surprises down the road. And, management will not approve implementation if there is no positive financial calculation, anyway. On the other hand, the business case will be your controlling mechanism once the service enters the live environment; i.e., the return on investment will be calculated once the service is operational.

Managing risks belongs to the same category. Start early (managing risks) and gain more benefits (fewer surprises). I don’t promise this will happen with the first business case, but with time, management will appreciate that.

The business case is an excellent bridge between business and IT services. In order to get approval from the management, IT has to explain the benefits of the service in business words. And, that’s not easy. But, by doing that, you will get a better look at the IT services from a business point of view.

And, afterwards …

Once you get approval for the implementation, than reality sets in. Business circumstances are changing (which creates changes to IT services). In order to keep control, you should get back to your business case from time to time (or when there is a big change). In such a way, you will keep the justification for the existence of the service in sight.

Consider also the non-financial aspects, i.e., the value created by the service. It could be the case that the financial calculation is perfect, but the service does not bring any (or little) value. Take, for example, some outsourcing projects. Economically they might be perfect, but the value created was very low. And, they fail.

However your approach the creation of a business case, you have to be aware that it’s your trigger to start developing a service. Once it’s finished, it’s your perfect tool to show that you are still on a good track – and that can increase your “business case” inside your own company.

Use this free preview  Business Case template to get a better overview of the form and content.

Advisera Branimir Valentic
Author
Branimir Valentic
Branimir is an expert in IT service management (consultancy, training and tools), IT governance (training and consulting), project management and consultancy in IT and telecommunication. He holds the following certificates: ITIL Expert, ISO 20000, ISMS Lead Auditor and PRINCE2.