March 28, 2025 l Business World
Writing an investment business case for a major technology project should be straightforward, yet many business leaders struggle with it. They know the stakes — approving the wrong project could waste millions, while rejecting the right one could leave the company behind. However, they frequently run into difficulties when putting the case together.
The fact that digital transformation initiatives don’t always yield clear, immediate benefits is a major contributing factor. Technology expenditures frequently involve efficiency benefits, cost avoidance, or long-term competitive advantages that are more difficult to measure than new product launches, where revenues can be estimated. And when senior executives ask, “What’s the payback?”, the answers are often murky.
Another challenge is that writing a business case isn’t just about numbers. It’s also about persuasion. A perfectly calculated return on investment won’t get far if the case doesn’t tell a compelling story. Senior executives must see the whole picture and have faith in the vision before they can accept projects based solely on spreadsheets.
But let’s start with the science before we move on to the storytelling.
Clear financial reasoning is the foundation of a strong business case. You must first identify the sources of revenue. You can anticipate extra revenue based on historical performance and market trends if the project directly boosts sales, like an e-commerce improvement that raises conversion rates. Although the figures will be less evident, they can still be modelled if the revenue impact is indirect, such as when enhancing customer experience lowers attrition.
Next, look at the savings or efficiency drivers. Will the project cut processing time, reduce manual work, or minimize system downtime? If a new cloud-based system reduces IT maintenance costs by 20%, that’s a real, measurable benefit.
Cost avoidance is another factor. While many initiatives don’t save money right away, they do save money down the road. Consider investing in cybersecurity. Although a business may invest millions in advanced threat detection, how can the value of preventing a data breach be calculated? Here, you make an estimate of the possible financial consequences of a breach — legal fees, lost revenue, and regulatory fines — and use it as support.
Cost drivers are on the opposite side of the equation. This covers implementation, training, change management, and continuing support in addition to the cost of the technology itself. Businesses frequently undervalue these. The development of a new artificial intelligence-powered chatbot for customer support may cost $1 million, but the real cost may be far greater if the rollout calls for substantial employee training and integration with older systems.
Compute the net present value (NPV) after you have enumerated all of the revenue and cost components. This guarantees that the time value of money is taken into consideration when weighing the costs of the now against the rewards of the future. You must reduce those future returns to reflect the project’s current value if it costs $5 million now but yields $10 million in benefits over five years. The project makes financial sense if the net present value is positive.
However, the argument won’t sell itself, even with impressive data. The art enters the picture here.
Just because the math works doesn’t mean that executives approve investments. They believe in them, which is why they approve of them. That belief comes from storytelling.
Take Amazon’s cloud computing business AWS. In the early 2000s, Amazon’s leadership had to justify investing billions into infrastructure when the company was still focused on retail. The financial case was strong — third-party developers needed scalable cloud services — but the breakthrough came from how it was framed. Amazon positioned AWS as the foundation of the internet’s future, enabling companies of all sizes to develop more quickly, rather than only showcasing data. Strong financials and that vision made the argument unstoppable.
The Starbucks smartphone app serves as another illustration. The business case for the company’s initial investments in digital incentives and payments went beyond merely facilitating quicker transactions. Enhancing client relationships, fostering loyalty, and establishing a smooth digital-physical experience were the main goals. Although the numbers were significant, Starbucks’ vision as a tech-driven coffee brand rather than merely a network of coffee shops was what strengthened the argument.
It’s simple to concentrate on spreadsheets and projections when composing an investment case. However, the most successful examples combine a compelling vision with evidence. Show the potential consequences of the company’s inaction in addition to the return on investment. Will rivals get an advantage? Will consumers switch to more favorable digital experiences? Will the accumulation of inefficiencies hinder future growth?
A compelling investment thesis strikes a balance between reason and feeling. While the art makes it convincing enough to receive approval, the science makes sure the numbers hold up. Leaders in business who are adept at both not only get initiatives authorized, but also influence the direction of their organizations.
***The views expressed herein are his own and do not necessarily reflect the opinion of his office as well as FINEX. For comments, email rey.lugtu@hungryworkhorse.com. Photo is from Pinterest.