How To Build a Business Case for Tech Investments

Make Your Tech Dollars Count

Ambitious digital transformations that promise the moon usually crash spectacularly. Most companies are dismayed to learn that their recent digital investments are delivering less than a third of the impact they were aiming for. The reasons? Lack of skills, weak leadership support, poorly defined objectives, and unrealistic timelines. This wide gap between what businesses need and the tech they implement is a wake-up call.

Preparing a solid business case for technology investments will help match your technology needs and budgets. By “business case” we mean not only budget approval but also demonstrating how the technology will meet stakeholders’ expectations, align with company goals, and deliver tangible business outcomes. A well-crafted business case for technology investments paints a clear picture of the overall value of the investment, weighing the costs, benefits, and risks.

Why Do So Many Technology Investments Fail to Deliver?

Many companies invest heavily in technology, only to find that the returns don’t meet their expectations. So, what’s going wrong? Here are the four main reasons:

• Lack of strategic alignment
• Inadequate planning and analysis
• Lack of skills and training
• Failure to properly evaluate all the available options

Technology that isn’t aligned with the broader business strategy often results in failed business objectives, wasted resources, and low ROI. IT leaders should therefore collaborate with business leaders to ensure that every tech investment supports the company’s mission and long-term vision.

Failing to assess your business needs and technology capabilities often results in inefficiencies and missed opportunities. Such an assessment will help you better understand your current systems, anticipate your future needs, and identify how new technology can bridge those gaps.

A lack of skills and training may ruin these processes even with the perfect technology and strategy. Companies therefore invest in change management and ongoing employee training programs to make the most of new tech investments.

Defining the Expected Outcomes of Your Tech Investments

Getting everyone on board with a new tech investment is challenging, but a strong presentation can make all the difference. Here at Exadel, we’ve developed a winning formula for our proposals. Here’s how we do it:

Creating a Comprehensive Business Case

When Do You Need a Technology Business Case?

Not all projects require a business case or project charter. Reserve business cases for initiatives or investments that demand significant business resources. A project charter may suffice for smaller initiatives to present your idea to stakeholders.

A business case for IT justifies a project’s resource demands or costs and usually requires approval from the project sponsor and other stakeholders. It should include key facts and figures explaining the benefits of the investment or initiative. Focus on clearly communicating the project’s value.

How to Write a Business Case for IT

The primary goal of a technology business case is to communicate effectively. Write each section in language your target audience understands and include enough information for decision-making. We use these guidelines to ensure high-impact:

While the project sponsor typically prepares the business case, input from team members and experts in finance, HR, IT, and other fields is crucial for a comprehensive and accurate document.

Key Elements of an IT Business Case

A well-constructed business case for technology investments contains the following key elements:

Bringing it all together

A well-prepared technology business case can transform an idea into a supported initiative, guiding it from conception to execution and ensuring its alignment with the organization’s strategic objectives.

Tips for Creating a Business Case for Technology Investments

When it comes to tech investments, strategy is everything.

First, assess your current situation and be brutally honest about where you are.For long-term projects, it is important to factor in inflation-adjusted costs. Don’t think about it as a calculation but as aligning your financial projections with reality.

Direct costs often exceed initial estimates, so be prepared for cost overruns.

Financing costs affect a project’s overall cost, profitability, and ROI. High financing costs may increase financial risk and affect cash flow management, so investors need to assess these costs to ensure the project’s financial viability.

The time value of money (TVM) recognizes that a dollar today is worth more than a dollar in the future because of its earning potential. This concept is crucial for making better financial decisions and investment strategies.

Labor costs are another piece of the puzzle. Sure, cheaper labor for AI and tech projects might look good on paper, but quality and adaptability should never be compromised. Long-term projects, particularly platform modernization, can see technology becoming obsolete almost overnight. If the chosen tech isn’t flexible enough to adapt, you risk skyrocketing contingency costs.

Think about what your team could achieve if they weren’t tied up with the current project. This helps you weigh opportunity costs and make better resource allocation decisions. Building a strong business case requires a thorough review of all categories, which takes time but is essential for a comprehensive evaluation.

To better understand what stage you’re in now, please refer to this diagram.

Before You Build Your Business Case for IT

Your aim is to create a compelling story that your stakeholders can get behind.

Use real-life examples, set clear goals, and back up your points with solid data and visuals.

Highlight what makes your proposal stand out and offer flexible pricing to show adaptability. Encourage feedback to make it a team effort and be upfront about any risks to build trust.

Write a business case for technology investments in a simple and direct manner. This will help your tech purchase team secure funding and budget support from stakeholders. Through storytelling, you’ll show why technology is crucial to your organization’s success.