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Business Case Analysis
Business Case Analysis
Proposed SoftShoeStyle PLM System
Cost and Benefit Projections for 2011 – 2013
ByCompany Product Development Group
ForYour CFO or Capital Review
Committee
{DD} {MONTH} {YEAR}
DD Month Year Company Name Slide 2
Business Case Analysis 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 AnalysisE. Recommendations and Conclusions
A. Introduction
E. Recommendations & Conclusions
D. Risks & Sensitivity
C. Projections
B. Methods
Slide FootersReplace on Slide Master with your own date and name.
DD Month Year Company Name Slide 3
Business Case Analysis 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
DD Month Year Company Name Slide 4
Business Case Analysis 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
DD Month Year Company Name Slide 5
Business Case Analysis 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
DD Month Year Company Name Slide 6
Business Case Analysis 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
DD Month Year Company Name Slide 7
Business Case Analysis Business Case Purpose
• To provide {Company’s 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 objectives—business 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.
DD Month Year Company Name Slide 8
Business Case Analysis 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
DD Month Year Company Name Slide 9
Business Case Analysis 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
DD Month Year Company Name Slide 10
Business Case Analysis Scenarios Analyzed
1. Business as UsualAssumes no SoftShoeStyle implementation
2. Proposal ImplementationAssumes implementation as proposed
3. Incremental ImpactsIncremental impacts =
Proposal scenario – Business as Usual
B. Methods
DD Month Year Company Name Slide 11
Business Case Analysis 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 Style’s monthly subscription rate remains the same
• Market size continues to grow X% per year for 2011-2013
B. Methods
DD Month Year Company Name Slide 12
Business Case Analysis Cost ModelB. Methods
SSStyle’s Life-Cycle Phase Cost impacts under all scenarios SSStyle’s Acquisition
and Start Up Year 0 and Year 1
SSStyle’s 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
Res
ourc
es
ServicesOptional
SW installation and integration
services
SW integration services
DD Month Year Company Name Slide 13
Business Case Analysis 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
DD Month Year Company Name Slide 14
Business Case Analysis 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
DD Month Year Company Name Slide 15
Business Case Analysis Financial ProjectionsC. Projections
DD Month Year Company Name Slide 16
Business Case Analysis Projected Cash FlowC. Projections
DD Month Year Company Name Slide 17
Business Case Analysis Cumulative Cash FlowC. Projections
DD Month Year Company Name Slide 18
Business Case Analysis Cost Savings Example
SoftShoeStyle’s Impact on Change Costs
C. Projections
% of Total Changes
Now
% Total Changes
with SoftShoe
StyleAverage $
Per ChangeNet Difference per
Year
Concept Design Phase 41% 51% $ 200 ($ 10,000)
Detailed Design Phase 30% 26% $1,200 $ 54,000
Testing and Prototype
Phase19% 19% $ 9,600 0
After Start of Production 10% 4% $ 24,000 $ 120,000
Annual Savings: € 164,000 $
DD Month Year Company Name Slide 19
Business Case Analysis Recommendations & ConclusionsBased 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
DD Month Year Company Name Slide 20
Business Case Analysis RisksD. Risks
DD Month Year Company Name Slide 21
Business Case Analysis Recommendations & ConclusionsIn order to minimize risks and maximize returns from {Company’s} 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
E. Recommendations & Conclusions