One of the reasons I like publishing my blog is the window it gives me into the topics people are searching for related to master data management and customer data integration. And "business case" is consistently in the top 10 search terms. 

That makes sense - most projects start with a business case, and most people, when embarking on this type of project, will use search engines to learn as much as they can before getting started.  

For a lot of people in the CDI and MDM space, creating a business case for one of these projects is like building a case for breathing. The value is so obvious that we sometimes forget that other people in the organization need a business case to understand the benefits, to predict the costs and to sell the program internally. 

What does it take to develop a successful business case? 

1. Start by identifying your primary stakeholders. Who's going to be affected by improvements in customer data? Start tracking the functional areas, departments, geographies, etc. that are complaining about the current state of your customer information.  

Usually, a few obvious candidates will come to mind - the VPs or business owners for marketing, sales, finance and customer service, for example. But go beyond the obvious and sleuth out the people in operations, R&D, manufacturing and other parts of the company. Once you start digging into it and asking around, you'll be surprised how many people in the company are affected by or touch customer data.

2. After identifying all these people, start cataloging their pain points and collecting their horror stories about issues such as inefficient processes, unnecessary costs, missed revenue opportunities and regulatory problems. Ask them to put a dollar amount next to the issues so you can quantify the as-is position. 

3. Spend some time developing your strategy. Think about these stakeholders and their issues. How will you go about solving the problems, and what organizational, business process and technology changes will be needed? Don't forget that CDI and MDM are primarily business problems requiring a fair amount of cultural change, redesigned business processes and some technology. But if you start with the business issues and make sure you address data governance early and often, you'll be off to a good start.

4. Next, give some thought to the metrics you want to use going forward, and measure the company's current performance against them. Some suggestions would be the customer retention index, days sales outstanding, customer satisfaction, sales cycle or customer care performance. Go back to your stakeholders, get their ideas on the metrics and develop a simple scorecard you'll be able to use to track these metrics over the life of your program. That way, you'll have an accurate, agreed-upon "before and after" to show the improvements that CDI brings.  

5. Once you've got your stakeholders and your strategy, and you've selected your metrics and measured current performance against them, spend some time thinking about the capabilities your CDI solution will bring. Where will higher quality, more tightly integrated customer information help the business? The three classic business drivers for MDM and CDI are: increasing revenue, reducing costs (or avoiding cost increases), and regulatory compliance and risk management. Most of the improvements that CDI can bring to your organization will fall into one of these three buckets.

6. Next, sit down with stakeholders and discuss how much improvement your CDI program will bring. Find out what they are willing to commit to, and over what period of time. Don't make it too challenging or your chances of achieving success will be low. But, if the improvements aren't compelling enough, your ROI will be too low to interest management.  

7. Most companies have a target for ROI or payback period that you'll have to meet. But don't worry - there's usually plenty of room for improvement. At one of my clients, a senior IT program manager explained that they believed solving their customer data challenges would deliver as much as $100 million in increased revenue and reduced costs over a two- to three-year period.

8. You're within striking distance of being done. You've got to convert the improvements in the metrics into financial results. Take days sales outstanding, for example. Just a few days' reduction in converting receivables invoices into cash can mean tens of millions of dollars to the bottom line. If your firm has above-average days sales outstanding and you're confident your program can deliver improvements here, the financial results can be dramatic. 

9. Now that you've got a handle on the benefit side of the equation, take a detailed look at the cost side. What's your total cost of ownership going to be? Don't forget to account for your total implementation costs (including organizational change management) and your costs beyond the first year (such as ongoing costs like software maintenance, data stewardship headcount and third-party data enrichment).

10. At this point, you've got everything you need to calculate ROI. Your organization may have a standard template for ROI calculation, or you may have to create your own. But it's a pretty simple formula: (benefits - costs) / costs. An ROI analysis template for Excel is available on Microsoft's Web site.  

You'll probably have to create a written business case document to explain your ROI analysis and sum up the arguments in favor of your CDI program. Be prepared for frequent meetings and changes to your assumptions, your benefits and your costs. Hopefully, the project will be approved and you'll proceed to actually solving your customer data challenges. 

You're Not Done Yet 

Don't put your business case on the shelf when your project is approved. Review your work at strategic points throughout and after the project is completed. Use the business case as a tool to see how your project is doing relative to expectations and to manage it throughout its lifecycle. And don't forget to communicate about the initiative and its successes to your stakeholders and the rest of the organization.

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