How to Build a Robust Business Case for Cloud Transformation

Searchlight have supported many organisations in overcoming concerns around ageing in-house IT business applications directly impacting on the services they provide to customers and the efficiency in the way they operate. Cloud Transformation often enables organisations to move to an operating environment that is easy to use, simplified, extensible, scalable and has long-term resilience. However, before combating the transformation journey, we advise that teams first focus on building a strong Business Case, which is owned and championed by business stakeholders.

Over years of experience, we have found that building a robust Business Case is critical to success. The Business Case is the foundation of any Cloud Transformation, as this outlines the plan to ensure investment is received, the executive team are on board (creating a guiding coalition) with the suggested transformation journey and that ultimately, the overarching business strategy is clearly thought out.

To help businesses on this journey we have noted some of the key points to consider when building your Business Case for Cloud Transformation. Every organisation builds their business cases differently, however, when starting to create your cloud-based application Business Case, you need to involve the Executive team, breakdown the process and most importantly, consider the cost-impact of ongoing change.

Breaking down the Business Case

Rather than building one overall Business Case covering the entire transformational journey over three to five years, break this down into a number of transition stages and individual Business Cases. This will provide an optimal blend of confirmed implementation and operating costs to identify benefits and allow the business to embed change and realise sustainable value. From the start of your Cloud Transformation, the involvement from the Executive Team is crucial to creating the overall Business Case, as well as those for the transitional stages. It is vital that the Executive Team articulate the strategic benefits of their Cloud Transformation when considering cloud-based applications, and not only focus on the technical or operational benefits. The Business Case is owned by the Executive Team, and not just IT. They are accountable for adopting the new capabilities and embedding the new ways of working to improve customer satisfaction, increase revenue, give more visibility on the operating performance and enable the organisation to be more effective. The Executive Team need to assess the tangible and intangible benefits on their business processes, their teams and their organisation design. This is as important as modelling the costs within the Business Case.

Understanding the Financial Impact

Focus on the cost-impact of ongoing change and not just your initial implementation costs. As your business finance model will change the organisation, especially the finance team, need to consider the impact and benefits of reducing your capital expenditure by moving to a “software-as-a-service” model, and increasing your operating expenditure. A change in processes is required by moving from amortised CapEx and Balance Sheet, to monthly or annual subscription OpEx and Profit and Loss.

The costs need to be calculated based on the end-to-end business processes for the initial delivery and then for supporting the cloud-based applications over the lifetime of the service. Cloud-based applications will require upgrades, modifications, new features, ongoing support and integration. In accepting the standard functionality within the cloud-based application there will be a need for new business processes and skills to be adopted. The Business Case must include ongoing costs associated with communications, knowledge transfer, training, test management and learning. This will ensure that the organisation is ready, willing and able to use and support the new ways of working to realise the benefits within the Business Case.

Investment to support your overall business strategy

The Business Cases that will underpin your Cloud Transformation will ensure that any investment in cloud-based applications supports your overall business strategy. Your cost and benefit model must:

  • Consider organisation-wide engagement and collaboration, between all business functions and IT teams
  • Have benefits aligned to specific tangible and intangible business capabilities
  • Assess the end-to-end business processes
  • Assess over the full lifetime of a cloud-service
  • Have a deep understanding of the cloud-service offering, including potential changes and new applications, understand what is available and what is actually required.

In summary, your transformation journey to the cloud starts with a Business Case. Searchlight has helped many organisations getting their Business Cases right.

Contact us for support on developing your robust Business Case.

Searchlight TeamHow to Build a Robust Business Case for Cloud Transformation