Business Case Justification Framework – Cost Benefit Analysis
A Telematics Strategy and Benefits review will usually identify one or more areas of the business that would benefit from telematics. These may typically include:
• Administration of the company/ECO car fleet business and private mileage management;
• Management of field service engineering or sales operations;
• Own account or contract logistics and distribution.
To evaluate each or any of these sets of requirements Eagle-i recommends that its structured Business Case Justification (BCJ) framework is followed.
Eagle-i’s Professional Services Team will work in partnership with clients to assist them through a BCJ process that typically includes the following stages:
Stage 1 - Needs Analysis
Interviews and workshops with “stakeholder groups” to identify and prioritise target areas for improvements. To perform a gap analysis and to identify areas of operational weakness that might be improved by telematics.
Stage 2 - Benefits Definition and Realisation Planning
The corollary of the needs analysis process is a benefits definition.
The most common reason why some IT projects fail to be implemented properly is a lack of benefits planning and management. Benefits are not simply realised by chance – they require definition, ownership and management. Benefits need to be managed throughout a project and ideally in the following steps:
1. Benefits Identification – specified in clear business terms
2. Benefits Quantification and Valuation – measured with specific economic targets for performance
3. Benefits Distribution – where they are to be gained and managed by whom
4. Benefits Realisation Planning – how and when they are to be materialised
5. Benefits Realisation – measuring and achieving them
6. Benefits Review – comparing planned with actual and targeting benefits that have yet to be achieved
In the BCJ process we are concerned with steps 1-3 and specifically a focus on early stage benefits, “quick wins” that can be realised soon after implementation. These usually result from immediate “behavioural change”.
For example: reductions in overtime claims in field engineering service operations are typically realised quickly once staff realise that the system automates/verifies other forms of timesheet reporting.
Benefits and quantifiable targets for improvements are captured and documented to form the basis of a Return on Investment model that underpins the Business Case.
Eagle-i bases its projections for typical cost savings on industry data gathered and from its experience of implementing solutions for over 300 client operations.
The Business Case is then substantiated (or not) by real data generated in during the Proving Stage.
Later stage benefits that result from organisational change and/or business process redesign we leave to later in the post-implementation period.
Stage 3 - Measurement – Base Case
Stage 3 establishes the base case, in numerical and economic terms for the current operation. Typically these will be measures of monthly costs, both staff and vehicle related.
The objective is to establish a reliable picture of the pre-telematics cost base for comparison post-pilot.
Stage 4 - Proving - Pilot Phase
Once target benefits and base costs have been agreed; a pilot programme can commence.
A pilot involves installing a representative sample of the target fleet (usually 10-15%) with a telematics application. A limited number of users are trained on the Monitor2 platform to evaluate system features, performance and general qualitative benefits during the pilot phase.
It is important to involve all stakeholders in the pilot – including drivers and mobile workers.
Cost Benefit Analysis – Go/No Go
After a month data can be analysed and compared with pre-pilot measures.
Benefits are measured against target and the Business Case/ROI model can be tested against quantitative and qualitative benefits.
Assuming target thresholds are reached the client can make a Go/No Go decision whether to proceed on sound economic data.
