The Importance of Creating Business Cases
for Healthcare Technology Companies
Everyone knows they should write a business case, but if an executive has already given the green light on a project or the business team is bogged down with multiple priorities, business case development often falls by the wayside. Rather than viewing business cases as ways to simply check the box, they can truly be powerful tools that will prevent you from wasting millions of dollars on products that have no real market.
A well-crafted business case provides a structured framework for evaluating the potential benefits, costs, and risks associated with a proposed project and serves as an effective tool for deciding whether or not to proceed with the project.
Why a Business Case Is Critical Before Investing in New Solutions
INFORMED DECISION MAKING A business case provides a structured approach to evaluating the potential benefits and risks of a proposed project. It enables stakeholders to make informed decisions based on a thorough analysis of all relevant factors. Companies need to be comfortable NOT moving forward with business cases that are less than optimal uses of their resources.
RESOURCE ALLOCATION Healthcare technology projects often require significant investments of time, money, and resources. A business case helps ensure that resources are allocated effectively, focusing on projects that offer the greatest potential return on investment.
STRATEGIC ALIGNMENT A business case ensures that proposed projects align with the company’s strategic goals and objectives. This alignment is essential for maximizing the impact of investments and ensuring long-term success.
At Eliciting Insights, we have seen many companies that skip business cases. Often their roadmaps are cluttered with client requests, executive projects, and day to day support tasks. Then, when a key initiative is prioritized by leadership, the only way to build a new product is to add more development resources.
What a Business Case Includes
A business case is a detailed document that outlines the justification for a proposed project or investment. It typically includes the following key components:
1. EXECUTIVE SUMMARY The executive summary provides a concise overview of the proposed project, highlighting the key points of the business case. It should include the project’s objectives, expected benefits, estimated costs, and the overall recommendation.
2. PROBLEM STATEMENT This section clearly defines the problem or opportunity that the proposed project aims to address. It should include a description of the current situation, the challenges faced, and the potential impact if the problem is not resolved.
The problem statement, while ostensibly simple, is actually the lynchpin of your entire business case. The problem that you are solving will drive your value prop.
At Eliciting Insights, we have found that a problem in itself is not enough. The problem needs to be a top 3-5 problem for your buyer. We all have problems we need to solve, but if it’s not in the top 5 to solve, then your buyer won’t get to it this year and most likely not next year.
3. PROPOSED SOLUTION The proposed solution section outlines the recommended approach to address the problem or seize the opportunity. It should include a detailed description of the proposed technology or solution, its features, and how it will address the identified problem.
4. BENEFITS AND IMPACT This section details the expected benefits of the proposed solution, both tangible and intangible. Tangible benefits may include cost savings, increased revenue, and improved efficiency, while intangible benefits could involve enhanced patient satisfaction, improved compliance, and better decision-making.
When thinking about the benefit of the proposed solution, healthcare buyers need a real ROI. Make sure your proposed solution can get to a 3X ROI or higher for your buyer. Typically, new healthcare technology requires implementation and process changes, so an ROI of less than 3X is not interesting to most buyers.
5. COSTS AND BUDGET The costs and budget section provides a detailed breakdown of the estimated costs associated with the proposed project. This includes development, testing, training, and launch costs. A clear budget helps stakeholders understand the financial implications of the investment.
At Eliciting Insights, we have found that determining costs of new healthcare technology solutions is more nuanced than you would expect. In order to scope new solutions, the development team needs to take time away from development to scope. The business team has to clearly articulate what the solution does at a detailed enough level for development to properly estimate. At Eliciting Insights, we have found that if this process is not properly honed, a $1M product may actually cost $5M to build. What would have had an ROI is actually a huge waste and may ultimately get scrapped.
6. RISK ANALYSIS Risk analysis identifies potential risks and uncertainties associated with the proposed project. This section should include a risk assessment, mitigation strategies, and a contingency plan to address any unforeseen challenges that may arise.
7. IMPLEMENTATION PLAN The implementation plan outlines the steps and timeline for executing the proposed project. It should include key milestones, deliverables, resource requirements, and a project management plan to ensure successful implementation.
8. CONCLUSION AND RECOMMENDATIONS The conclusion summarizes the key points of the business case and provides a clear recommendation on whether to proceed with the proposed project. It should be based on the analysis of benefits, costs, risks, and strategic alignment with the company’s goals.
While many business cases have value, the business cases that bring the most value and are most aligned with the organization’s strategic priorities are the ones that should move forward. Just because the team preparing the business case recommends the project move forward, does not mean it should. There may be more optimal business cases for the organization to focus on.
How Third-Party Market Research Can Help
While many companies prefer to keep business case development in house, a third-party market research firm can be used for all or just key components of the business case development especially when the proposed project is a market facing new solution. Ways a third party can help:
VALIDATION THAT THE PROBLEM IS A SIGNIFICANT, PREVALENT MARKET PAIN POINT: Is this market challenge a top priority for the buyer to solve? At Eliciting Insights, we have seen many companies assume that a client’s challenge is the market’s challenge when really it is only the challenge of one particular client.
BUYER IDENTIFICATION: Who is the buyer? Without a clearly articulated market and buyer(s), the proposed solution might be too generic and not appeal to a specific segment.
ASSESSMENT OF THE MARKET SIZE: Is this a big enough market to go after? If a solution requires millions of dollars in investment to build, test and sell, then there needs to be a large enough market interested.
ACCELERATING THE DEVELOPMENT OF THE BUSINESS CASE: Rarely do healthcare technology companies have business resources with enough extra capacity to spend the time needed to develop a robust business case.
A third party who understands the market and the development process can help with business cases.
In the healthcare technology industry, creating a business case is essential for making informed investment decisions. A well-crafted business case provides a structured framework for evaluating the potential benefits, costs, and risks of a proposed project, ensuring that resources are allocated effectively, and strategic goals are met. Third-party market research enhances the business case process by providing valuable market insights, objective analysis, comprehensive data, and benchmarking information.
While companies can develop business cases in house, leveraging third-party research ensures a robust and credible foundation for investment decisions, ultimately driving long-term success in the competitive healthcare technology landscape.
