How to build a bottom-up, value driven business case for automating your source to pay processes that gets approved. Part 4. 

My last article covered the import steps of identifying the right technology and designing a realistic transformation roadmap. This article will look at the process of building your business case from a non financial point of view. My next piece will look at the financials.  It is imporant to remember that a business case that is solely focussed on high level financials is probably not going to get signed off and approved. On the other hand, a business case that covers all aspects of your proposed changes and provides a bottom-up value assessment is far more likely to be. A robust assessment is also likely to help you to drive the tranasformation project through during implementation.

Building your business case

By this point in the process, you will know what you want to do, with who, and over what timeframe. The next step in the process is to collate everything you know into a business case document, and then seek approval for investment in the project from your executive team and / or board members. Interestingly this step is often viewed as being the most stressful part of the whole process. Where do you start? What documentation do you need to prepare? How will it be received? What extra questions will your execs ask? Do you have a compelling enough story? Will the changes you have proposed be approved?

Despite the focus and importance of a business case document, it is typically the step that gets oversimplified and ends up being numbers focused – rather than being the honest assessment execs are generally looking for. Your business case is not a spreadsheet. Financials are an important component of the business case, but they are not the only component.

Your business case needs to address three overarching points to be approved and help you to drive your transformation project:   

• Trust – your business case needs to be robust enough to ensure your execs trust that you know what you are talking about 
• Honesty – it should be an honest assessment of the proposed project. Setting out the components that could accelerate or slow the project down, and defining the financial and project delivery assumptions you’ve made 
• Governance – it needs to plot a clear path with robust monitoring and evaluation points that will ensure that the project delivers on its promises. Having a robust plan that outlines the key ‘transformation’ metrics that need to be achieved and what corrective action can be applied. 

Your business case needs to include the following elements: 

A Change Management Assessment 

Any business case needs to include a detailed assessment of the impact your project is likely to have on your team. You need to outline the ‘people factors’ that are going to both support the implementation of your project, as well as hinder it. To do that consider the following: 

• Your current culture and value system 
• Your business’s capacity for change, including how much change is already underway or planned 
• The leadership styles and power distribution that exists across the organisation 
• Perceptions of previous transformation and change projects 
• Your middle management's attitude toward the proposed changes, as they will be key in driving end user adoption 
• The executive sponsorship required to drive the change across the organisation 

Align your Plan to wider Strategic Goals 

Any business case needs to draw a very clear and obvious line from the proposed project to one or more of your organisation’s strategic goals. Then linking that back to the transformation that your proposed changes will deliver. This is vital to gaining executive support for the project and getting their approval on any spend. This needs to be more detailed than just ‘X aligns with Goal Y around digital transformation as it is a digital project. So, how do you demonstrate the level of detail required? 

• Review your corporate and departmental strategic plans. If they don’t exist meet with your senior executive team and ask them about their key strategic priorities. 
• Then identify the specific outcomes of your project that will support those priorities.
• Align your success metrics and the timeline of your project with the wider corporate and/or departmental strategic plan. 

Test out your findings with a couple of key stakeholders to ensure they make sense – this also helps seed the idea of your project with that stakeholder.  

Get to grips with Risk 

Risk is a hugely important part of any business case decision-making process, so you need to demonstrate that you’ve done your homework and understand the associated risks of your project across three key areas: 

• Project risks – what are the risks involved in the delivery of the project 
• Inaction risks – what are the corporate risks that the business continues to face whilst not doing the project 
• ROI risks – what are the risks of not achieving the expected return on investment. 

For each of the risks, you need to identify the likelihood, impact, risk rating and mitigation strategy and an owner. Project risks should be derived from your project planning process, these are usually the risks that are highlighted in the business case. The areas that are usually missed are the inaction risks and the ROI risks. 

Risk of Inaction 

The risk of inaction refers to the very real corporate risks that a business faces when they are changing their procurement and accounts payable process. Every business faces these risks, the question is to how high those risks are, based on the systems and processes you already have in place. There are generally 10 corporate risks across a business’s procurement and accounts payable processes that you need to be aware of: 

• Fraudulent invoices – the risk that you will pay an invoice that you shouldn’t 
• Supplier Non-Compliance – this incorporates a whole range of supplier-side non-compliance risks around the types of documentation/processes that you require them to hold. The risk here is that you start working with a supplier that doesn’t have the required documentation in place or an existing supplier’s documentation lapses. This could include compliance to: 
  • Environmental, social and governance requirements (ESG) 
  • Modern slavery 
  • Insurance 
  • Industry Accreditations 
  • Industry assessments  
• Duplicates invoices – the risk that you pay the same invoice twice for a supplier. 
• Tax compliance – the risk that you are not able to comply with relevant tax submissions/laws due to issues with your data or processes. 
• Maverick spending – the risk that there is unauthorised corporate spend for goods/services. 
• Spend approval – the risk that you are unable to demonstrate approval of corporate spend for goods/services in adherence to your financial policies and procedures. 
• Incorrect invoice data capture – the risk that you capture invoice data incorrectly resulting in issues around supplier payments  
• Conflict of interest – the risk that corporate spend decisions are made without a clear assessment of conflict of interests (e.g., a contract is awarded to an employee’s friend or other business interest. 
• Contract lifecycle risk - this risk incorporates a whole range of contract related risks including areas such as: 
  • Unfavourable and/or potentially damaging contract terms being agreed to without a proper contract risk assessment 
  • Contract documentation going missing 
  • Approval of contracts by unauthorised employees 
  • Contracts unknowingly coming to an end 
• Damaging supplier relationships – this risk relates to issues that can arise in your procure to pay process that could damage the relationship you have with your suppliers. This could include factors such as: 
  • Late, delayed, or missed invoice payments 
  • High cost to service due to manual follow-up processes 
  • Orders being missed or incorrect due to manual ordering processes 
• Business disruption – this risk relates to the possibility that your core procure to pay business operations are disrupted due to key staff leaving who hold key, manual process knowledge. 

Risk on ROI

If you have been able to follow the process up to this point, you should have a clear idea of how and when value will be delivered through your proposed project, all of which will be determined by a series of assumptions. The risks on ROI are the risks of those assumptions not being met.

For example, if you’ve calculated that lowering your invoice processing costs will be driven by supplier adoption of more automated invoicing channels, what happens if the adoption is slower than expected? What mitigation strategies can you put in place to ensure that the assumptions are close to reality?

I recommend reviewing all the areas of expected benefits:

• Invoicing process benefits
• PO Processing Benefits
• Procurement related benefits
• People related benefits
• Efficiency related benefits

And then conducting a risk assessment based on those areas to identify likelihood, impact, and a mitigation strategy.

In our experience, articulating non-financial aspects of a business case go a long way to build trust, demonstrate your expertise and prime your Executive for the financial side of the business case. In my next piece, I will look at adding these key financials to your business case.