Defending A Procurement Business Case
PurchTips - Edition # 186
By Charles Dominick, SPSM
Is Your Business Case Likely To Succeed Or Fail?
Whether it is investing in technology, training, or new staff, procurement leaders need to build a business case to compel executive management to fund a procurement improvement initiative. A business case will include a description of the project, the amount to be invested, and the expected financial benefit to the organization.
Just having a business case won't guarantee approval of your plans. You'll likely face many questions and have to defend your business case. Be prepared and know?
- Your alternatives with a fraction of the funding. Skeptical executives may view your business case as an idealistic one that hasn't been scrutinized for waste. Even if they like your ideas, they may only authorize 70% of the money you propose spending. How would you respond if you were asked what could be accomplished with 70% of the funding?
- The timeframe in which benefits will accrue. With an upfront investment, executives will want to know when they will start seeing financial benefits as a result. More importantly, when will those financial benefits exceed the investment? Many executives will not consider investments with a time-to-ROI of over 12 months.
- The importance of timing. You're likely not the only employee requesting funding. So, executives are forced to differentiate between what the organization has to do today and what it can defer until "better times." Can you articulate the consequences of waiting?
- Multiple options for success. Most executives got to their level by making good decisions and like to think of themselves as good decision-makers. So let them make a decision. And not just a "yes" or "no" decision. Present two or three recommended options and let them decide which one is best.
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