How to Build a Business Case For SharePoint
A business case for SharePoint should clearly articulate the hard ROI, soft ROI, and the risks that the system will mitigate.
Mon, October 19, 2009
CIO — Developing a business case for any IT investment is a complicated exercise. But building a business case for SharePoint poses specific challenges because much of its ROI is intangible: SharePoint deployments can lead to process improvements, but it's not always easy to quantify the dollar value of those process improvements.
Any business case—whether for SharePoint or any other system—typically requires various financial measurements, such as return on investment (ROI), total cost of ownership (TCO), discounted cash flows (DCF), net present value (NPV) and internal rate of return (IRR), to be estimated. You'll need to figure out which of these measurements your financial analysts require in a business case for a software implementation.
Fundamentally, a business case for any software implementation should include three core points: the hard savings, the soft savings and risk mitigation. A business case specifically for SharePoint should also address the product's rich functionality and its broad user support—both of which are distinct selling points for SharePoint.
When these five points are well-defined and properly communicated in your business case, it will unquestionably accelerate acceptance and funding of SharePoint investments.
[ For more on SharePoint, see SharePoint 2007 Demystified: How to Cash in on Collaboration Tools. ]
A business case without a well-framed model of SharePoint's costs will not pass the proverbial sniff test with most financial analysts, and rightfully so. However, with the costing model established (see How To Determine The True Costs Of SharePoint), the business case can progress.
The first element of any business case for any software application is the cost savings that will result. Organizations that deploy SharePoint for imaging-based solutions, for example, can demonstrate how physical storage and retrieval costs are minimized or eliminated. Another example of imaging-related hard savings is the elimination or reduction of shipping costs: Because SharePoint stores documents in one centralized, online environment, documents no longer have to shipped to various locations. Finally, SharePoint often leads companies to consolidate or eliminate other enterprise content management systems a company may be using, which in turn can result in measurable savings on software licenses, software maintenance and technical expertise.
Russell Stalters, BP's head of information and record architecture, is planning to accelerate his company's SharePoint deployments because of the substantial savings the product is introducing. "SharePoint projects are coming in at approximately 50 percent of the overall cost of traditional enterprise content management (ECM) systems," he says, adding that SharePoint's benefits go beyond the cost savings associated with reducing software licenses.
The second element of your business case deals with soft savings—the less tangible benefits that result from deploying software and systems. In many cases, the soft savings that stem from SharePoint are efficiency improvements, such as the amount of time a person or group will save as a result of using SharePoint to automate manual business processes or to retrieve stored documents.