How do I build a business case for my HANA investment proposal?
Blog #1: What are the main parts of the business case?
One of the most frequently asked questions we get at the SAP HANA Global Center of Excellence is how to build the business case for the investment in SAP HANA. Each of us has been involved in over 20 HANA business cases over the last 2 years, and in this series of blogs, we’d like to share our experiences (good and bad), what works and how to go about it.
There are typically 4 main parts to the business case, which we will look at in some detail over this series of blogs:
1. Total Cost of Ownership (TCO) savings
2. Productivity savings
3. Business benefits
4. Project costs
First, let’s talk about why we need a business case. We live in a tight economy – there is a need to scrutinise projects and ensure that they will deliver real value to the business. There is not a single solution to any project – each will have its own cost, delivery time and set of business benefits. The business case provides us a framework to compare these in a structured way. This is especially important when the solution that you are proposing is not just about reducing costs, but also about increasing capabilities and improving business processes.
The Business Tree below shows the way we structure the summary of the benefits across the different areas of Business Processes, Productivity and TCO.
This money tree was taken from an early business case at a customer, and although the numbers have been modified, the pattern that we see is indicative of real life…
10-20% of the value of a HANA investment will come from TCO reductions. These will come from reduced storage costs, consolidated server environments through landscape simplification and decommissioned software, as more analysis is pushed down into HANA. Although this may be easiest to calculate and is tempting because the numbers can be easily accessed within IT without having to engage with the business, it is the smallest value driver for most HANA projects, and on its own, will take longer to pay back.
30-40% of the value will come from increases in productivity of BI and application development. Customers are realising that the elimination of layers in the architecture, the ability to model virtually instead of physically and the faster loading, testing and reporting mean that BI development cycles are accelerated by up to 50%. Similarly, we are seeing similar patterns in application development, where simplified architecture and the ability to handle many data types, workloads and analytical engines translate into faster development cycles. I have started a series of blogs on BI productivity – (Delivering BI projects in 50% of the time with SAP HANA), if you are interested in this area.
50-60% of the value will come from improved Business Processes. These will differ greatly by Line-of-Business and Industry. Manufacturing companies will be focused on Asset Management, Reducing Work in Process inventory, Improving Production Plant Throughput. Telco organisations might be focused on Reducing Customer Churn, Improved Network Intelligence or Reduced Revenue Leakage.
Suresh Ramanathan will be writing a series of blogs about Sweet spots for HANA value, starting with an example of how HANA transforms the invoice and goods receipt reconciliation.
Given that the majority of the value comes from improved Business Process, how do we understand which processes are of most value to a particular customer, and where HANA can provide the most benefit? We have developed a process called Design 2 Value (D2V) Workshops, which Dinesh Vandayar will be writing about over the next couple of weeks. It leverages Design Thinking principles, and focuses on a joint joint Business & IT workshop to jointly identify potential use cases, prioritise these by value to the business and feasibility, and then look at the business processes in detail to explore the value add and impact of HANA.
If you are seeing very different % breakdowns in your business case, we’d love to hear about your examples. Alternatively, if you’d like some more information on different areas of business case building for HANA investments, please don’t hesitate to get in touch – firstname.lastname@example.org
VN:F [1.9.22_1171]Building The Business Case For Your HANA Investment,