[Editor’s Note: Ardent Partners, in conjunction with Hubwoo, recently published a helpful guide on How to Build a Compelling Business Case for Supplier Networks. Today’s article features snippets of the guide, which interested readers can download by clicking here. We think you’ll find it very useful.]
Supplier networks sit at the intersection of a paradigm shift in the way trading partners communicate, collaborate, and transact. Global enterprises have recognized this transformation and have begun, in many cases, to alter their business processes. And, while the potential for supplier networks to both ease and accelerate this shift is enormous, articulating and presenting a business case to persuade a move to a supplier network can be difficult and time-consuming. To help P2P executives strengthen and streamline their business case development, Ardent Partners has developed this Business Case “framework” that includes content and research specific to supplier networks.
Introduction
The goal of this specific document is to help procure-to-pay (P2P) professionals and other business leaders present a compelling justification for an investment in a supplier network by explaining how supplier networks can be leveraged to positively impact current business operations and results. In the midst of a global surge in innovation that has spread across all geographies and across most supply markets, the winners in business will be the agile organizations that can tap into expertise and find value wherever it exists in the market. Against the backdrop of rapidly evolving supply chains, how organizations communicate, collaborate, and transact with their suppliers and the enabling platforms that they utilize will take on increasing importance to business operations. Simply put, enterprises are becoming increasingly linked to and dependent upon their suppliers and supplier networks can serve as a valuable enabler of these relationships This document is designed to help jump-start new (or stalled) supplier network initiatives, provide the final push for those approaching the finish line, and validate the work of the groups that fall anywhere in between.
What is a Business Case and Why is it Important?
A business case is the document designed to present a logical argument for initiating and investing in a specific project or technology. The goal of any business case is to provide the critical information that key decision-makers need to make an informed decision as to whether or not a project is a worthwhile use of enterprise time, money, and resources. It is important to note that a business case can also be used to communicate the project to other constituents and establish a method for measuring success.
What Should a Business Case for Business Networks Include?
I. Executive Summary
The Executive Summary should provide an overview of the key points of the business case and outline the purpose of the supplier network project. The Executive Summary should also contain a summary of the issues being addressed by the project, what benefits it will provide, and how it aligns with the goals and objectives of the organization.
II. Background
The reason for writing the Background Section is to provide the reader with an introduction to the P2P organization and clearly explain the general business problems that it faces due to the lack of a supplier network.
III. The Problem/Opportunity
This section should briefly describe the main business problems that the proposed project will address.
IV. Current State
Use this section to describe the organization’s current P2P process as clearly and succinctly as possible. Identifying the organization’s pain points (as described above) within the current process can help point the decision-makers towards your desired solution and make a strong case for it.
V. Project Overview
This section should outline the proposed solution and its scope – what it will do, how it works, and a list of major capabilities that the team would like to utilize. This section should also include an impact analysis that discusses the business, process, stakeholder, IT, and financial impact of this project. One of the most important aspects of any business case is the financial analysis that supports it. While competing projects can have very different requirements and benefits, “Return on Investment” is a performance measure used to evaluate the efficiency of an investment and is helpful for use in comparing the relative benefits of a number of different and, sometimes competing, investment opportunities.
While the inclusion of an ROI calculation in a business case is standard, the scope, details, and complexity of ROI models required by different enterprises can vary widely. It is important that the ROI model used in the business case meet enterprise requirements. If those requirements are unclear, the project team should confer with its finance department (or a third-party expert) before finalizing the business case.
VI. Conclusion
The conclusion of the business case should be compelling and address the problems and the opportunities that were laid out in the beginning of the document. Briefly re-state to the reader that the benefits of the proposed solution to the entire enterprise far outweigh the costs.
Final Thoughts
Supplier networks can unlock extraordinary benefits for both P2P teams and the larger enterprise, but it is important to remember that investment decisions are not made in a vacuum: an investment in a supplier network most likely will compete for funding against other compelling opportunities. If the team is going to invest the time and resources in developing a business case, it makes sense to go “all in” in its creation to ensure a well-crafted and powerful argument. And, as much as the content in the business case itself determines the final outcome (i.e., approval or not), the organization, design, and presentation of a business case can offer very strong signals as to the capabilities and understanding of the team making the proposal to the decision-makers tasked with approving or denying it.
Like what you read? Interested readers can download the full report by clicking here.
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