Manager's Corner Esri: A business case is defined as "a proposal used to determine the effects a project will have on an organization's profitability and includes a challenge, proposed solution, and analysis of risk-adjusted costs and benefits of that solution." What is distinctive about the business case for GIS? KW: On the one hand--nothing. The same business case rules apply as they would elsewhere. That being said, rightly or wrongly, the benefits of GIS are often seen as soft and intangible, or GIS is seen as an enabler of a larger system. I don't view that as a problem and have been addressing these issues. What is distinctive, and what we hear time and again as the biggest barrier to adoption of GIS projects, is the lack of awareness amongst senior managers about what the technology can do. Often those making the business case forget this and don't sell the very simple benefits that we (GIS experts) take for granted. There are answers to questions that can only be derived geographically. That does not mean you are writing a technical report; rather, you are speaking the business language of executives and explaining quantitative examples of the benefits of GIS. Look at it this way, if you ran into an executive in the elevator, you should be able to clearly articulate what GIS is and its advantages to the organization in 30 seconds. CEOs will not buy into GIS because they think it's cool technology. They need to understand the benefit to the bottom line. Simple = good. Complex = bad. Esri: If an organization already has GIS, hasn't it already made the business case for GIS? Is making the business case necessary for every GIS project? KW: I guess they've already made a business case, but given the current economic climate, traditional anecdotal benefits will no longer get the funding. In terms of the necessity of a business case, it depends on the strategy and the management of the organization. Ideally, GIS should be managed within a strategic framework with allocated budgets for various operational or project activities. In this setup, smaller-scale product implementations could well be delegated down to operational managers who can call off against their own budgets without the need for a full-blown business case. Esri: Which is more difficult, making a case for a totally new GIS implementation or adding to existing GIS infrastructure? KW: I'm not sure there is a general rule-- both bring specific challenges. With a new implementation, there is often a lot of selling to be done to make people aware of what the technology can do. When adding to an existing infrastructure, the range of technical approaches or options tends to increase, and sometimes this can create unnecessary complexity. If there have been failures with past GIS projects, articulating quantitative benefits becomes a greater necessity. Esri: Can organizations run an internal costbenefit analysis, or do they need a consultant? How useful are the ROI [return on investment] calculators available on the Web? Esri: You found that the top concerns of senior executives include return on investment, aligning ICT [information and communication technologies] with business needs; integrating systems; and improving customer service, resource management, outsourcing, and security. Why is it important to think about what keeps executives awake at night? KW: Because if you can help solve their problems, you'll get their time, support, and approval for funds. A CEO will not be worrying about the organization's GIS, if he even knows about it, but he might be worrying about cutting overtime costs on his vehicle fleet. We can then see a solution, such as using ArcLogistics, and present our "overtime cost reduction solution." Or a CEO might want to increase the productivity of field-workers. We can then see a solution with mobile GIS. I devised the benefits spectrum [illustrated in Figure 1] because there are a lot of cost checklists about such things as project estimating templates and budget planners, but there was no equivalent benefit checklist. I basically thought, How can GIS improve the inputs and outputs to the process or the process itself? And what effects does this have on customers, cost savings, and so on? The main point of the checklist is to help the business case be focused on one or maybe two benefits--it's not the aim to deliver all the benefit types-- otherwise, the message becomes blunted. Esri: What mistakes are usually made when creating the business case? KW: I think the most common mistake is getting the process back to front. By that I mean that if you do a lot of analysis but only engage with senior stakeholders at the end of the process--when you think you have the "answer"--it tends not to fly. You need to spend a lot of time with senior stakeholders getting their buy-in, and sometimes the detailed analysis can follow. Esri: Please describe the three phases-- analysis, evaluation, presentation--of the business case process. KW: The first phase of the process is analysis, or defining a business problem, which is key to creating a successful business case. Rather than focusing on technical issues, the problem must be driven by the strategic objectives of the organization. Interviewing senior executives will help determine how GIS can reach business objectives. Continued on page 34 "Rather than focusing on technical issues, the problem must be driven by the strategic objectives of the organization." KW: It really depends. I'd like to think most organizations should be able to do it themselves, but there are going to be cases when external help is required. From my point of view, I think business case development should be a core skill for any organization, and there are significant benefits in having the business case developed by the same managers/users who will then go on to realize the benefits. I would also emphasize that the process is highly iterative. In regard to ROI calculators, I think we are beginning to see a bit of a push-back on them. C-level [e.g., CIO, CFO] executives reject what they see as a painting by numbers approach. I think if you have a well-constructed, thoughtful business case and for some reason the ROI numbers don't stack up, you have more chance of going back through it and working out what the problem is than if you have a stellar ROI but the logic is missing. www.esri.com ArcUser Spring 2009 33