The Value of Business Analytics: Identifying the Path to Profitability

ROLE OF THE BUSINESS CASE

Why build a business case? This is not such a silly question—creating a good business case requires work, ingenuity, and a good understanding of the fundamentals of financial modeling. And, in certain circumstances, the business case is not even necessary; given sufficient political support, the reasons to justify investment will almost inevitably be found.

Unfortunately, such situations are rare and, depending on the scale of change involved, often nonexistent. It is one thing to convince an organization to make small changes with relatively minor investment. It is another to convince an organization to rebuild its approach to risk and fraud management with an accompanying seven-figure investment.

Developing a comprehensive business case is a complex topic, worthy of an entire book in its own right. This chapter focuses on only the core of what is important in justifying an investment in business analytics. Creating a business case is an essential part of communicating the value of business analytics in that it:

• Justifies to decision makers the reasons for releasing funding
• Minimizes bias through establishing a series of objective statements
• Clarifies and targets focus on specific outcomes

The first is the commonly understood reason for creating a financial model describing the benefits from any given business analytics project; simply, it is a formal argument that the returns from doing something will be greater than the investment made in doing it. It ...