Have you ever decided on investing in a product or service, but require approval from executive sponsors before proceeding with your purchase? Or do you like a product or service, but are hesitant to make the investment in it because it’s costly?
If either of these scenarios describes the situation you’re in, a business case is an excellent thinking tool that can help you with your decision. A business case articulates the rationale for investing in a product or service in terms of numbers. It is often presented in a formal document, but may also be presented through more informal methods like a spreadsheet or even a single slide in a slide presentation. It further provides a way to make your case to nontechnical decision-makers without needing to provide the specific intricacies about the method or approach to your desired product or service’s implementation.
To build a business case, perform the following steps:
- Define the options to evaluate
- Determine the costs of each option
- Determine the benefits for each option
- Recommend an option based on cost and benefits
Let’s look at each of these steps more closely.
Defining Your Options
When evaluating a new product or service, you instantly are faced with two options: purchase the new product or service, or stay with what you have. In many cases, decision-makers start with a bias toward the status quo because there is no cost in transitioning to new technology and the business process that goes along with it. Further, if a new product or service is being considered, its competing options should be considered as well, for example, if you’re considering Drupal as a web content management platform, consider WordPress too.
Let’s illustrate with an example. Say you have a proprietary, licensed legacy content management system (CMS) that is poorly performing and difficult to maintain. You and your company are no longer happy with it and want to make a change. Your budget is limited, so an open-source solution is more attractive because it carries no licensing fees. Drupal is certainly an attractive option, but as just stated, add WordPress as an option. This brings our options to the following:
- Status quo CMS
In a real-world scenario, it’s good practice to consider more options than this, including evaluating proprietary options like Sitecore and Adobe Experience Manager. For the sake of simplicity, however, let’s limit our example to the ones we’ve listed.
Determine the Costs of Each Option
Two different types of costs need to be considered when evaluating options, the cost of the initial implementation, and the ongoing and operating costs once the implementation is complete. The following two tables approximate these costs. Note: these costs are approximations only to be used as an illustration. Actual costs can only be calculated once detailed requirements are considered.
The following table summarizes theoretical implementation costs for each of the three options. These entail the licensing and build estimates for each option. This illustration assumes a simple implementation with little to no customization. Please note that these numbers are for illustrative purposes only. Real-world figures, driven by project requirements, will certainly differ.
Status Quo CMS
$0 (already paid)
It comes as no surprise that the implementation cost of the status quo CMS is $0, because, after all, it has already been bought and configured. The licensing costs of all three options are $0 because Drupal and WordPress are open source offerings, and the license fee of the status quo CMS has already been paid. Had Adobe Experience Manager or Sitecore been considered, their license costs would be non-zero. In our example, we budget more for the Drupal build than that of WordPress because in our experience, with Drupal’s greater power and flexibility comes greater complexity, and that typically translates to greater investment in development hours.
After implementation, each option incurs recurring costs. This is a critical consideration in evaluating options that often gets overlooked, and we recommend you always factor in these costs in your decision. For our example, the following table summarizes those costs. To reiterate, these numbers are for illustrative purposes only.
Status Quo CMS
Maintenance and Support
Factoring ongoing costs makes it immediately apparent that the status quo CMS is costlier in the long term, both in maintenance hours spent and in annual licensing. As with their initial implementation costs, Drupal’s ongoing costs are greater than those of WordPress because, again, of Drupal’s greater complexity.
Determine the Benefits of Each Option
For investment in any of these options, a benefit is expected, particularly in expenses saved or new revenue earned. Focusing on annual revenue (again, just an illustration), the following table summarizes the benefits of each option.
Status Quo CMS
Finally, we see where the investment in Drupal’s complexity pays off; its greater functionality typically means a greater ability to meet ever-evolving needs. We translate this in our example to a greater annual revenue than that of WordPress, and both CMSs, being more functional than the status quo CMS, are capable of generating more revenue.
Recommend an Option
When we combine costs with benefits as described above, we are left with the following comparison:
The above graph makes the following assumptions:
- In Year 1, the Drupal and WordPress options earn no revenue because they’re being built
- Likewise the status quo CMS is earning revenue in Year 1 because it has already been built
So, in this example scenario, we can draw the following conclusions:
- If your organization is prioritizing short term results, staying with the status quo CMS is the best option.
- If your organization is willing to make a moderate up-front investment for moderate long-term benefit, WordPress is the best choice.
- If your organization is willing to make a greater up-front investment for greater long-term benefit, then Drupal is the way to go.
Admittedly, our example scenario is overly simplistic. In reality, detailed requirements can radically alter both the costs and benefits of any option one considers. We at Mediacurrent have performed this type of analysis for some of our clients to help them with their technology investment decisions and can do the same for you. Please contact us to learn more!