Technicalities - the online newsletter for STC RMC

April/May 2007

Volume 47, Number 5

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Jack Molisani Presents "How to Build a Business Case"

by Al Kemp

Held on the fourth Thursday in May, the Rocky Mountain Community's annual business meeting opened with outgoing President Deb Lockwood introducing the officers for the 2007-2008 season: President Ron Arner, Vice President John Endicott, Secretary Kathy Recchiuti, Treasurer Jessica Betterly, and Nominating Committee members Alida Franco and Frank Tagader.

Ron Arner, Martha Sippel, and Frank Tagader at May's chapter meeting.

Ron Arner announced that the Rocky Mountain Community received an Award of Excellence from the Society for Technical Communication. Martha Sippel presented STC's Associate Fellow Award to Frank Tagader and thanked Barb Miller, Linda Gallagher, and Mary Jo Stark for helping with the award nomination process.

Following the announcements, Frank Tagader introduced the speaker, Jack Molisani. Molisani has been a project officer in the Space Division of the United States Air Force and a software documentation manager. He is the founder and president of ProSpring Technical Staffing (http://www.ProSpringStaffing.com). Molisani also produces LavaCon: The Conference for Advanced Technical Communication Professionals (http://www.lavacon.org). This year's LavaCon will be held in New Orleans to help with the city's hurricane recovery effort.

Jack Molisani presenting how to build a business case at May's chapter meeting.

Molisani gave an interactive talk on "How to Build a Business Case." To reward audience participation, he distributed the contents of a large bag of Hershey's Kisses — often in highly aerodynamic fashion.

Molisani reminded the audience that the goal of most companies is to make money for the owner or the shareholders. Making a product involves both direct costs, such as materials and labor, and indirect costs, such as facilities and insurance. The more effectively a company manages those costs, the more profit it makes.

Management looks at the world in black and white: you are either a profit center or a cost center. A profit center generates more revenue than it takes to operate, while a cost center generates less revenue than it takes to operate or no revenue at all.

Many departments are clearly a cost center or profit center, but others are harder to classify. If a technical support department charges for its services (per call, through a maintenance fee, etc.) and if the revenue covers more than the cost of providing the support, the department is a profit center. If the revenue is less than the cost, the department is a cost center. If the documentation department is perceived to be an integral part of the development team, it is a profit center. If documentation is perceived to be a commodity that is acquired for the lowest acceptable quality at the lowest possible price (like boxes and bubble wrap), the documentation department is a cost center.

Jack Molisani encouraged audience participation with real-life examples (and Hershey's Kisses)

Corporate executives are concerned with increasing profit by increasing revenues and decreasing costs. To increase profit, executives evaluate two types of spending: Return on Investment and Cost Avoidance. Return on Investment (ROI) is the amount of revenue generated as the direct result of an expenditure. ROI estimates the time required to recoup the money spent and the amount of money generated. Cost avoidance (CA) is an action taken to decrease current costs or prevent future costs. It is similar to ROI, but the return is on money saved rather than revenue generated.

A business case is a verbal or written proposal that states a problem, describes the solution, discusses the cost to implement the solution, and quantifies the ROI or CA that will be realized if the solution is implemented.

The elements of a business case comprise:

Executive Summary
Current Situation
Proposal
Financial Proof
Conclusion
Supporting Materials

The Executive Summary summarizes the problem and entices the audience to read the business case.

The Current Situation describes the problem in terms that are important to the audience. This section must state why the situation is a problem for the company, not just for the authors of the business case.

The Proposal describes what is being proposed, how it solves the problem, and how much it costs. This section presents the ROI or CA, and it addresses both risks and opportunities.

The Financial Proof demonstrates the ROI or CA. It shows how the ROI or CA was calculated and discusses the source for the financial data. Use historical company data or industry standard data if possible. Keep the financial information simple; provide full details in the supporting materials. Molisani offered humorous advice on financial proof: "Don't tell me about the labor pains. Show me the baby."

The Conclusion summarizes the problem and the solution. It states that spending a specified amount of money will generate a specified amount of money in cost savings/revenue, and it ends with a call to action.

The Supporting Materials include references and sources, raw financial data (if necessary), and detailed financials.

There are all sorts of business cases. A business case may request approval of a simple process change or it may involve a major corporate spending decision. Some business cases present a variety of solutions: the "Toyota" solution, the "Cadillac" solution, and the "Ferrari" solution.

Molisani emphasized that we technical communicators are responsible for how others perceive our value. Business cases not only help us get our projects approved, they also help us demonstrate our value to the rest of the company.

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