Cost and Benefit Projections for 2011 2013 By Company Product Development Group For Your CFO or Capital Review Committee {DD} {MONTH} {YEAR} Business Case Analysis DD Month Year Company Name Slide 2 Presentation Overview A. Introduction Proposed action Business objectives and motivation Opportunities threats & constraints B. Business Case Methods Scope and boundaries of the case Scenarios analyzed Major assumptions Cost model Rationale for benefits C. Cost and Benefit Projections, 2011 2013 D. Risk and Sensitivity Analysis E. Recommendations and Conclusions A. Introduction E. Recommendations & Conclusions D. Risks & Sensitivity C. Projections B. Methods Slide Footers Replace on Slide Master with your own date and name.
Business Case Analysis DD Month Year Company Name Slide 3 Case Subject: Proposed Action Subscribe to and implement the SoftShoeStyle system, as proposed by global trading systems, inc., {Month, Year}. Proposal includes: XX concurrent user licenses of the SoftShoeStyle system paid on a monthly subscription basis Download of MySQL database and license Training for designers/product developers Purchase of training/installation and/or integration services Additional hardware purchases during the second and third years of implementation. A. Introduction Business Case Analysis DD Month Year Company Name Slide 4 Case Subject: Business Objectives Reduce costs in targeted areas in product design and manufacturing Meet the more complex needs of footwear/retail industry customers Quick generation of custom design details Faster response to change requests Better support customer requirements Reduce product development lead time (time to market) Have all design data in one corporate database
A. Introduction Business Case Analysis DD Month Year Company Name Slide 5 Opportunities Market Share: Reaching design process improvement objectives will enable {Company} to increase market share by XX% within three years Cost savings: Greater productivity and shorter design times will save: Concept design phase costs(XX%) Detail style-spec phase costs (XX%) Spec change reduction and improved change management (40%) Manufacturing costs (35%) Raw materials costs (30%) A. Introduction Business Case Analysis DD Month Year Company Name Slide 6 Threats and Constraints Design downtime and disruption during transition to the new system must be negligible R&D budgets for 2011 2013 cannot rise more than XX% above current (2010) level A. Introduction Business Case Analysis DD Month Year Company Name Slide 7 Business Case Purpose To provide {Companys CFO or Capital Review Committee} with the necessary financial projections, financial metrics, and assessment of contingencies and risks, to support a decision either to accept or not accept the SoftShoeStyle proposal. Decision will be made {at the Capital Review Committee meeting, DD MM Yr or by DD MM Yr.} A. Introduction
DELETE THIS BOX BEFORE PRESENTING Business Objectives
Business objectives complete the business case subject statement, what the case is about. Good subject statements are built around objectivesbusiness objectives, financial objectives, functional objectives, or operational objectives.
Why move the focus from action to objective? Reaching objectives has financial and other business value that can be made tangible. The value of an action that is unrelated to an objective (Training design engineers, or purchasing a database license) is much harder to quantify in a compelling way. In brief, when a proposed action supports an objective (and all proposed actions do, in a rational environment), the appropriate subject for the business case is the full range of resources and actions required to reach the objective.
_________________________________________________________________________________________________________________________ Contents of this box Copyright 1998 2003, Solution Matrix Ltd. All Rights Reserved. For more detailed coverage, see the whitepaper Business Case Essentials or the Business Case Guide, ISBN 1-929500-01-7.
Business Case Analysis DD Month Year Company Name Slide 8 Case Purpose: Financial Metrics The {CFO/Capital Review Committee} requires financial projections and financial metrics: 3-year total cost of ownership (TCO) Projected 3-year net cash flow including cost and revenue impacts 3-year net present value (NPV) 3-year return on investment (Simple ROI) Projected market share impact Risk and sensitivity analysis will identify: Critical success factors and contingencies Risk factors that might change results A. Introduction Business Case Analysis DD Month Year Company Name Slide 9 Analysis Scope and Boundaries Time Analysis period: {3 Fiscal years, 6 Seasons (=3 years), 3 Calendar Years??} Organizations impacted Design/Product Development Overseas office(s) and/or Suppliers IT Customer service Geography Headquarters site only; Headquarters and {Country} or {Agent} office(s) B. Methods Business Case Analysis DD Month Year Company Name Slide 10 Scenarios Analyzed 1. Business as Usual Assumes no SoftShoeStyle implementation 2. Proposal Implementation Assumes implementation as proposed 3. Incremental Impacts Incremental impacts = Proposal scenario Business as Usual B. Methods Business Case Analysis DD Month Year Company Name Slide 11 Major Assumptions Implementation begins {MM YY} Learning curve complete in 2 weeks Implementation and transition to the new PLM system have no negative impact on product development process times Salary increases average no more than X% annually for 2011-2013 SoftShoe Styles monthly subscription rate remains the same Market size continues to grow X% per year for 2011-2013 B. Methods Business Case Analysis DD Month Year Company Name Slide 12 Cost Model B. Methods SSStyles Life - Cycle Phase Cost impacts under all scenarios SSStyles Acquisition and Start Up Year 0 and Year 1 SSStyles Operational Phase Year 2 and Year 3 Software Monthly Subscription - - SoftShoe Style - -
Monthly Subscription costs
Hardware Server system upgrades Client system (desktop) purchase Server system upgrades Client system (desktop) purchase Personnel Initial training Designer productivity Continuing training Designer productivity R e s o u r c e s
Services Optional
SW installation and integration services
SW integration services
Business Case Analysis DD Month Year Company Name Slide 13 Benefits Analyzed Objective: Reduce costs Lower cost of design/pd collaboration More efficient change management Increased personnel productivity Objective: Meet the more complex needs of footwear industry customers New design customization possible Faster response to customer change requests Better support of customer requirements Objective: Reduce product development time Fewer changes, earlier changes Simultaneous design and development phases Earlier sampling
B. Methods Business Case Analysis DD Month Year Company Name Slide 14 Data Sources {Company} 2010 2013 Business Plans SoftShoeStyle web site www.softshoestyle.com Vendor Proposal for services 2009 capital and operating budgets 30 day trail evaluation and feasibility study conducted at headquarters site MMYY Published industry averages and best-in- class figures
B. Methods Business Case Analysis DD Month Year Company Name Slide 15 Financial Projections C. Projections
DELETE THIS BOX BEFORE PRESENTING
FINANCIAL PROJECTIONS
The centerpiece of the business case will be a financial model. A model is a representation or analogy of something else. It is easier to examine the behavior of a model than it is to examine the thing it represents: model airplanes, mathematical models of subatomic events, and algebraic models of a national economy all serve this purpose. The simplest of financial models include the familiar pie chart, which shows how 100% of a sum is distributed in major components, or the basic business equation (Profit = Sales RevenueCosts), which shows how costs and revenues work together to produce profits. Business case results, however, are usually presented in cash flow statements and not as income. This is because cash flow shows directly the financial consequences of an action, whereas income also incorporates accounting conventions such as depreciation expense, allocated costs, and possibly other factors that are less direct reflections of the action. The business case will include cash flow statements and an income statement only if Projected income is one of the financial metrics that meets the purpose of the case. The case financial model may be nothing more than a single cash flow statement (see Cash Flow Statement below). In more complex settings, however, the complete financial model may include several cash flow statements in spreadsheet form, as well as tables or graphs that show the behavior of key variables, or relationships between them. In complex settings, the overall financial model is truly a system of interrelated models. The heart of the financial model and the heart of the business case will be a cash flow statement for each scenario in the case, usually implemented in spreadsheet form and having the structure shown below. A summary like this must be created, in order to develop other financial metrics for the case, such as net present value (NPV), total cost of ownership (TCO) of internal rate of return (IRR), payback period, and various return on investment (ROI) figures. The Projections slide above shows only the summary financial metrics, leaving the large and detailed cash flow spreadsheets to the written report.
Contents of this box Copyright 1998 2003, Solution Matrix Ltd. All Rights Reserved. For more detailed coverage, see the whitepaper Business Case Essentials or the Business Case Guide, ISBN 1-929500-01-7.
Business Case Analysis DD Month Year Company Name Slide 16 Projected Cash Flow C. Projections Business Case Analysis DD Month Year Company Name Slide 17 Cumulative Cash Flow C. Projections Business Case Analysis DD Month Year Company Name Slide 18 Cost Savings Example SoftShoeStyles Impact on Change Costs C. Projections % of Total Changes Now % Total Changes with SoftShoe Style Average $ Per Change Net Difference per Year Concept Design Phase 41% 51% $ 200 ($ 10,000) Detailed Design Phase 30% 26% $1,200 $ 54,000 Testing and Prototype Phase 19% 19% $ 9,600 0 After Start of Production 10% 4% $ 24,000 $ 120,000 Annual Savings: 164,000 $ Business Case Analysis DD Month Year Company Name Slide 19 Recommendations & Conclusions Based on the business case analysis presented here: We recommend that the {CFO/Company Capital Review Committee} vote to fund the SoftShoeStyle Proposal from global trading systems, inc. E. Recommendations & Conclusions Business Case Analysis DD Month Year Company Name Slide 20 Risks
D. Risks Business Case Analysis DD Month Year Company Name Slide 21 Recommendations & Conclusions In order to minimize risks and maximize returns from {Companys} investment in SoftShoeStyle, we further recommend that {Company}: Begins working with GTS consultants immediately to plan the ERP integration project Ensures that {Company} IT staff and resources are committed to the SoftShoeStyle installation and integration Appoints a transition manager responsible for ensuring that existing line projects are completed on time without disruption during the transition Requests and reviews quarterly reports on the financial measures outlined in the business case report and progress toward the important business objectives outlined earlier in this presentation