Four Steps to Create a Business-Case Process for Universities

It's not surprising that the phrase, “Make the business case,” is being heard as frequently as, “Will this be on the final exam?” in institutions of higher education.

As state and local funds decrease, the importance of tuition dollars in funding strategic initiatives increases exponentially, as does the need to ensure that each investment opportunity–whether in technology or another area–actually serves well-defined and agreed-upon goals. Numerous universities face funding deficits, tuition hikes and the vagaries of a free market, where the whims and consequences of consumer choice count.

The “landscape of the American university is quite complex –dotted with megaversities' of 50,000 students and suffused with sectarian institutions with less than 2,500 students. It is robust with community college systems. So, for publicly located and assisted universities one has to think like a private entity because the sources of funds are predominantly private,” explains Lawrence J. Redlinger, professor and executive director of strategic planning and analysis at the University of Texas at Dallas. “State support is maybe 25 to 30 cents on the dollar. For the not-so-well-endowed privates (which is most of them), one has to husband resources because the students (customers) have demand elasticities (they can go somewhere else).”

As a consequence, like their counterparts in the public sector, institutions of higher education are adopting a formal business case approach for evaluating IT spending requests. If your institution hasn't yet formalized a process for evaluating technology spending, there are four critical concepts that deserve inclusion: demonstrating the project's strategic fit; weighing opportunity costs; measuring project outcomes; and supporting sound change-management principles.

Building a business-case process that includes these steps will force IT staffers to consider projects from an institutional, as opposed to departmental, perspective. When that happens, poorly conceived projects will get weeded out sooner and those that warrant investment will get steered along a path that improves the original project concept.

Four Steps to Creating a Business-Case Process

Demonstrate Strategic Fit

At the onset of any new project-consideration process, ensuring that the project dovetails with key institutional goals is critical.

Organizations that lack a business case often wind up coping with a chaotic approach to information technology characterized by several similar projects implemented by different departments and green-lighted pet projects that don't match the institution's strategic goals.

“When business cases match the mission statement of an [institution], it's possible to evolve into a far more successful organization,” says Carl DeMaio, president of The Performance Institute, a Washington, D.C.-based nonpartisan think tank.

Yet for the process to work, it's critically important to empower the process to weed out projects that don't fit the strategic framework by instituting impartial guidelines. What a business case should do is create a solid foundation for decision-making. What it can't do is guarantee that higher-ups will choose a particular project or that it will ultimately achieve success. Yet without a mutual understanding and written analysis that spells out what's required and how these requirements will help the organization achieve its objectives, a business case isn't worth the paper it's written on ... or the hard disk space it's stored on.

Weigh Opportunity Costs

Just because a project aligns with an organization's goals doesn't mean that it automatically moves from the drawing board to implementation. A strategic project will identify realistic opportunities to improve processes, close performance gaps or significantly reduce costs. The process of soliciting feedback from stakeholders, evaluating risks and understanding costs will help pinpoint the project's feasibility and risk.

Some key questions that project sponsors must address: What is the financial impact? What are the licensing, hardware and implementation training costs? How do we assess risk and return? What is the project life-cycle cost? Once the new system is in place, how will we roll it out to end users and drive adoption?

“The money that a project can save is important, but we always look at ways to improve learning in the classroom, and for us that is a critical part of developing an effective business case,” says John Campbell, associate vice president of academic computing at Purdue University based in West Lafayette, Ind.

Evaluating the costs involves more than listing the pros and cons. The process should include formal worksheets that address return on investment (ROI) calculations, soft and hard costs and involvement from departments outside of the project sponsor's purview. Besides checking for strategic fit, include a checklist that calls for review of government mandates, impact on students and other critical success factors.

“On the administrative side of the university, the drive for integrated systems, and the rise in reporting requirements (federal, state, etc.) are very important considerations. That is, the accountability demands on universities have risen enormously as the thirst for data by governing bodies, regulatory agencies, etc. has risen,” Redlinger says.

Measure Project Outcomes

Perhaps the hardest and most-critical aspect of building a business case is soliciting data to quantify what success looks like and what types of qualitative measures best demonstrate achievement of initial project goals. These metrics should be provided for evaluating the project's success during the ramp-up phase and life cycle.

The business case is “about making sure that what IT does relates to real business benefits,” says Dr. Tushar Hazra, senior consultant at Cutter Consortium in Arlington, Mass. “Building a strong business case also allows IT to show direct results of investments. If we don't provide a means to measure value, then there is no way to find out if what was promised was delivered.”

The larger an organization becomes, the more difficult and complex it is to manage projects and get an understanding of true costs. The larger the project, the more likely it is that investment success will depend on a wide range of stakeholder involvement. Once the business reality is clearly understood, creating metrics that reflect it in a meaningful way is critical.

Support Sound Change Management

If the project's business plan considers the above factors, it may still fail without sound project management and program management.

“As professionals, we all like to succeed,” explains Hazra. “But in reality, what will happen is that business or financial objectives are not clear. Shared resources don't materialize. Or, no one takes accountability for taking a project to fruition.”

Depending on the institution, resources will be available to manage the project. Sometimes the project manager will have technical expertise, but in some instances this individual does not need technical expertise. The best way to gauge what's needed is to interview relevant stakeholders and understand the conditions for success within your organization. Setting firm project requirements, deliverable dates, an accountability structure, reporting guidelines and peer-review processes is essential to maintaining consensus throughout the project's life cycle.