Business Case and ROI: A symbiotic relationship

 

A business case is like a sales pitch. How? Well, it is broadly similar. Both are aimed at persuading an audience. The key difference is that a sales pitch tries to convince someone to buy a product or service, while a business case tries to convince stakeholders that a particular decision, investment, or course of action is worth approving. Its goal is to persuade stakeholders to support a proposal by showing why it makes business sense, not simply why it sounds appealing. Adding ROI, calculated through tools like the QKS Group ROI Benchmark Framework, to a business case makes it more persuasive, as the stakeholders can clearly see what the business is likely to gain in return for the money it spends. This visibility helps the stakeholders during evaluation of the case, especially when they have to compare multiple competing priorities. 

How to calculate ROI for business case(s)? 

The core ROI formula remains the same: 

ROI = (Net Benefit / Total Cost) × 100 

Where: 

• Net Benefit = Total Expected Benefit − Total Cost  

• Total Cost includes all investment/s required to implement the project. 

The first step is to identify all the costs involved in the project. These may include software or equipment costs, implementation expenses, training, support, consulting fees, employee time, and any ongoing maintenance or operational costs. After that, the expected benefits need to be factored in. These benefits may come from higher revenue, lower operating costs, faster work, fewer mistakes, better productivity, or improved customer retention. For a business case, these benefits should be converted into financial terms as much as possible, so the comparison is meaningful. 

For example, if a company plans to spend US$1,000,000 on a new solution and expects that solution to generate US$1,600,000 in total value through savings and additional revenue, the net benefit would be US$600,000. Dividing US$600,000 by US$1,000,000 and multiplying by one hundred gives an ROI of 60 percent. This means the project is expected to return 60 percent more than the initial investment over the chosen period. What kind of ROI is considered good? There is no single “good” ROI from a sales angle, because it depends on margin, deal size, and sales cycle. But here are some rough estimates: 

 

• 0–10% ROI: usually weak 

• 10–20% ROI: acceptable 

• 20%+ ROI: good 

• 50%+ ROI: very strong 

 

In a business case, ROI should always be presented with context. It is important to mention the period over which the return is being measured, such as one year or three years, because ROI looks very different depending on the timeframe. It is also helpful to include the assumptions behind the numbers, since many projected benefits are estimates rather than guaranteed outcomes. A stronger business case may also mention the payback period, which shows how quickly the organization can recover its initial investment, along with any risks that might affect the outcome. 

#BusinessCase #ROI #StrategicPlanning #BusinessTransformation #ValueRealization