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Department of the Navy

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Enterprise IT

Abbreviated Business Case Analysis

Version 2.0



for

<< Specify the IT Investment Here >>
<< Submittal Date >>

<< Version >>
DON Component

<< Organization >>

<< POC >>




<< IT Project Full Name >>



DON IT Enterprise Abbreviated Business Case Analysis

Approval and Change Summary


Ver. No.

Version Date


Change Purpose

Change Authority


Disposition


Reference

X.XX.XX

DD-MMM-YY

[Initial approval by ITEAA or other decision authority; change/ update to previously approved version; other]

[ITEAA or other decision authority/ governance board; integrated product team; project lead; other]
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>

[Approved; approved with conditions; disapproved; cancel; other]

[Official email or memorandum]
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<<Template Instructions>>

<< Prior to submission, delete these instructions as well as all template guidance provided on the following pages>>
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CONTENTS




Executive Summmary……………………………………………………….......iii

1.0 Overview.......…..………………………………………………………………...1

1.1 Purpose…………………….…………………………..………………......1

1.2 Problem Statement……………………………….………………...…1

1.3 Background and Context.........................................................1

1.4 Project Initiative Description and Requirement(s).......1


1.5 Benefits........................................... .............................................1

1.6 Scope .............................................................................................1

1.7 Assumptions and Constraints...............................................1

1.8 Points of Contact and Roles & Responsibilities...............1

2.0 Alternatives Considered……………………………..…………………....2

2.1 Evaluating Possible Alternatives to the Status Quo…....2

2.2 Architecture .........................................………………………….....2


2.3 Cost and Estimated Savings....................................................2

2.4 Risk Summary.............................................................................3

2.5 Operational Impacts…………………………………...………….....3


3.0 Conclusion............................................................................................4


Appendix A: Glossary ………………………………………..………...............5

Appendix B: Investment Measures…………………..…………………....6

Appendix C: Requirements...................................................................7






Executive Summary


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SHOULD NOT EXCEED
1 page. >>

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<< If this BCA is for cloud computing, alternatives must include, at a minimum: (1) the current, status quo hosting environment; (2) the milCloud option offered by the Defense Information Systems Agency (DISA); and (3) (at least one) Commercial Cloud Service Offering (CSO) provided by [Commercial Cloud provider]. >>

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  • Summarize the current issue/requirement re: the Status Quo environment.

  • Brief comparison of the Alternatives.

  • How (the recommended alternative) best addresses Status Quo issue(s), e.g., generates cost savings (refer to cost table below), fully satisfies requirements, involves the least risk, etc.

  • Provide a general timeframe for implementation of selected alternative, if approved: provide the projected start date and expected migration completion date by month and year.

  • Provide a clear statement regarding any major operational impacts (positive and/or negative), risks, facts or assumptions that should be made known to the reviewer(s). (Refer to summary chart below)

  • Include whether funding has been identified for this effort.

  • (If known) Contract vehicle(s) that could be used to implement the proposed solution.

Cost Comparison of Status Quo and Alternatives Considered <>




FYXX

FYXX

FYXX

FYXX

FYXX

FYXX

TOTAL

Alternative 1 (Status Quo)

TOTAL Costs:






















Alternative 2

TOTAL Costs:






















Net Savings of Alt. 2:






















Alternative 3

TOTAL Costs:






















Net Savings of Alt. 3:


























Operational Benefit Summary <>


Alternative

Score(1)

Key Points

Alternative 1 Total Score







Alternative 2 Total Score







Alternative 3 Total Score







(1) NOTE 1: Operational Area scores ranged from -5 to +5. The higher the score, the greatest positive impacts


1.0 Overview

1.1 Purpose


<
This Business Case Analysis (BCA) for [name of business case] includes an objectively documented analysis, comparison of alternatives and recommendation to address [describe a critical mission need(s), requirement(s), gap(s), or problem]. It is being submitted to the [decision authority name] for review, feedback and final decision>>

1.2 Problem Statement


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1.3 Background and Context

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1.4 Project Initiative Description and Requirement(s)

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1.5 Benefits

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1.6 Scope



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1.7 Assumptions and Constraints



<key assumptions and constraints essential to understanding the basis of the analysis contained in the business case. Include timeframe of fiscal years used in the analysis. If root causes were not identified in 1.3 because they are unknown, assumptions concerning root causes should be noted here.>>

1.8 Points of Contact and Roles & Responsibilities


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2.0 Alternatives Considered


2.1 Evaluate Possible Alternatives to the Status Quo

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The following [cite number] alternatives were considered for this BCA:



  • Alternative 1 – [Status Quo – name]

  • Alternative 2 – [name]

  • Alternative 3 – [name]


2.2 Architecture

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2.3. Cost and Estimated Savings

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Table 2.3 - Financial Considerations ($ in thousands)

Alternative 1 – Status Quo

FYXX

FYXX

FYXX

FYXX

FYXX

FYXX

Total

Investment costs






















Operations & Sustainment Costs






















TOTAL Alternative 1 Costs:






















Alternative 1 Investment Decision Measures:










Confidence Level = << Choose >>

Alternative 2

FYXX

FYXX

FYXX

FYXX

FYXX

FYXX

Total

Investment costs (Including transition costs)






















Operations & Sustainment Costs






















TOTAL Alternative 2 Costs:






















Net Savings of Alt. 2:






















Alternative 2 Investment Decision Measures:










Confidence Level = << Choose >>

Alternative 3

FYXX

FYXX

FYXX

FYXX

FYXX

FYXX

Total

Investment costs (Including transition costs)






















Operations & Sustainment Costs (include SW licensing if applicable)>






















TOTAL Alternative 3 Costs:






















Net Savings of Alt. 3:






















Alternative 3 Investment Decision Measures:










Confidence Level = << Choose >>


2.4 Risk Summary

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Alternative [...] has an overall risk of [high, medium, low]. [Risk type] has a risk probability of “Probable” because [explain and identify possible mitigation strategy]. If such mitigation actions are taken, it is believed that the risk [could or could not] be reduced from “Probable” to an acceptable level because [explain].



Table 2.4 - Risk Considerations

ALTERNATIVE:

Alternative 1 - Status Quo

Alternative 2

Alternative 3

RISK TYPE

Risk Probability

Mitigation Identified (Y/N)

Risk Probability

Mitigation Identified (Y/N)

Risk Probability

Mitigation Identified (Y/N)

  1. Mission – Reqmts Met


















  1. Cost – Remains In Scope



















  1. Schedule – Attainable



















  1. Sufficient Personnel (skills, etc.)



















  1. Probability of Change in Reqmts



















  1. Complexity Level Exceeds Projection



















  1. Cybersecurity Issues


















Probability: Certain = 70 – 100%; Probable = 40 – 69%; Possible = 5 – 39%; Improbable = Near 0%

2.5 Operational Impacts


<< Definitions 1-8 below apply to Table 2.5, which is to be completed for each Alternative to show whether the Alternative has a negative (harmful) impact or a positive (beneficial) impact in each operational area listed..>>


  1. Mission/business function: Area of business or war-fighting support the system or application falls under.

  2. Interoperability: Should indicate number and types of interfaces needed to be operational; can also include applicable networks.

  3. Customer/User Benefit: examples may include usability, 508 Compliance, accessibility, solution(s) for current manual processes, etc.

  4. Efficiency: should include footprint, power and required technical personnel

  5. Cybersecurity: if this BCA is for cloud computing, this area should answer Yes or No to: CAP, HBSS/ACAS, Encryption ability, network security, MAC Level and CAC enabled application. All should be inaccordance with the appropriate Data Security Impact Level. For other BCAs, address accordingly.

  6. Reliability/Quality: recover within x mins, hrs, day, weeks, etc.; amount of data we can afford if any to lose?

  7. Sustainability: Technology refresh rates, out-year costs.

  8. Other: Can include Complexity if system is extreme in either direction (very low to very high)

After each table, clearly state the nature of any significant operational impacts the Alternative presents. Expand on significant issues, areas of concern and/or strengths and how they are likely to affect the success of the project. For example:>>

Alternative [#] had [significant, moderate, minimal, no] negative operational impacts in the areas of [list], and [significant, moderate, minimal, no] positive benefits in the areas of [list]. Speficid benefits include....... Areas of concern include....

Table 2.5 - Operational Benefits / Impacts – Alternative 1 (Status Quo)

Operational Area

Score(1)

Rationale

  1. Mission/business function







  1. Interoperability







  1. Customer/User benefit







  1. Efficiency







  1. Cybersecurity







  1. Reliability/Quality







  1. Sustainability







8. Other







Alternative 1 Total Score:








(1) NOTE 1: Score from -5 to +5. Negative impact scores of -4 or -5 are red; high positive impact scores of +4 or +5 are green.


Table 2.5 – Operational Benefits / Impacts – Alternative 2

Operational Area

Score(1)

Rationale

  1. Mission/business function







  1. Interoperability







  1. Customer/User benefit







  1. Efficiency







  1. Cybersecurity







  1. Reliability/Quality







  1. Sustainability







8. Other







Alternative 1 Total Score:







(1) NOTE 1: Score from -5 to +5. Negative impact scores of -4 or -5 are red; high positive impact scores of +4 or +5 are green.

Table 2.5 – Operational Benefits / Impacts – Alternative 3

Operational Area

Score(1)

Rationale

  1. Mission/business function







  1. Interoperability







  1. Customer/User benefit







  1. Efficiency







  1. Cybersecurity







  1. Reliability/Quality







  1. Sustainability







8. Other







Alternative 1 Total Score:







(1) NOTE 1: Score from -5 to +5. Negative impact scores of -4 or -5 are red; high positive impact scores of +4 or +5 are green.


3.0 CoNCLUSION


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After performing an analysis of the financial and non-financial benefits and risks of the alternatives, [Alternative number and name] is recommended as the most viable, best value option. It generates the greatest savings [note amount and timeframe], fully satisfies all requirements, provides the greatest operational benefits/impacts, and involves risks that, once managed, are considered acceptable.

Appendix A: Glossary


Term

Description

Assumption

An assumption is an informed position about what is believed to be true for a situation where explicit factual knowledge is unobtainable.

Baseline

A description of the beginning condition in measureable terms and a start date from which progress can be measured.

Business Case

A fact-based argument advocating an Alternative to improve business performance results. Most are prepared to support project or acquisition investment go/no-go decisions. The project business case is not a one-time document. It provides critical information for decision making throughout the project life span.

Cloud Computing

Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is composed of five essential characteristics (On-demand self-service, Broad network access, Resource pooling, Rapid elasticity, Measured Service); three service models (Cloud Software as a Service (SaaS), Cloud Platform as a Service (PaaS), Cloud Infrastructure as a Service (IaaS)); and, four deployment models (Private cloud, Community cloud, Public cloud, Hybrid cloud). Key enabling technologies include: (1) fast wide-area networks, (2) powerful, inexpensive server computers, and (3) high-performance virtualization for commodity hardware.

Constraint

Constraints are factors known or discovered that are expected to limit the analysis, possible solutions and/or expected outcomes.

Cost Savings

A reduction in costs below the projected (i.e., budgeted) level as a result of a specific initiative. Because cost savings are a reduction in the level of budgeted costs, savings are available to be recouped from the budget.

Cost Avoidance

A reduction in future unbudgeted costs that cannot be recouped from the budget.

DOTMLPF

The DOTMLPF acronym is defined by the CJCSI 3170.01G - Joint Capabilities Development System (JCIDS) as: doctrine, organization, training, materiel, leadership and education, personnel and facilities. JCIDS requires all DOTMLPF aspects (materiel and non-materiel) be considered when developing a solution/recommendation.

Investment Decision Measures

Measures that result in evaluating the financial viability of a proposal or investment. This template uses Internal Rate of Return (IRR) and Net Present Value (NPV) measures. Appendix B explains an easy approach for determining these measures.

Investment funds

Funding used for non-recurring costs to upgrade, refresh, or modernize existing systems/processes, or new developments (Economic Viability (EV) Tool Users Guide).

Internal Rate of Return (IRR)

The internal rate of return is the interest rate received for an investment consisting of discounted payments/investments (negative values) and savings achieved (positive values) that occur at regular periods.

Net Present Value (NPV)

NPV is the difference between discounted benefits and discounted costs (i.e., discounted savings/cost avoidances less discounted costs). An initiative must have an NPV > 0.0 to be considered financially viable.

Operations & Support (O&S)

All costs to sustain the system/project after it has been released to production (i.e., after deployment or upon achievement of Full Operational Capability (FOC) (Economic Viability (EV) Tool Users Guide).

Risk Management

Risk Management incudes risk management planning, identification, analysis, response planning, monitoring and control. The purpose of Risk Management is to increase the probability and impact of positive events and decrease the probability and impact of negative events.



Appendix B: Investment Decision measures

Example: Investing in the hypothetical scenario below and realizing the following savings each year for five years, employing a 2.2% Discount Rate, and using Microsoft Excel’s NPV and IRR functions, as explained below, the below NPV and IRR values were arrived at:


  • Year 1 ($2,000,000) (initial investment)

  • Year 1: PV = $150,000 (cost savings per year – additional investment, as applicable)

  • Year 2: PV = $450,000

  • Year 3: PV = $600,000

  • Year 4: PV = $650,000

  • Year 5: PV = $670,000

Net Present Value (NPV): NPV is the difference between discounted benefits and discounted costs (i.e., discounted savings/cost avoidances less discounted costs). An initiative must have an NPV > 0.0 to be considered financially viable. See http://www.whitehouse.gov/omb/circulars_a094/a94_appx-c for the Nominal or Real Discount Rate. The example below uses 2.2%. If your analysis uses Then-Year dollars (also known as nominal, or current dollars), use nominal discount rates. If your analysis uses constant dollars of the first year of the analysis (also known as constant, base year, or real dollars), use real discount rates.


Using Microsoft Excel NPV function, enter as follows: =NPV(A2,A3,A4,A5,A6,A7,A8). This provides a NPV of $329,182.

Internal Rate of Return (IRR): The internal rate of return is the interest rate received for an investment consisting of discounted payments/investments (negative values) and savings achieved (positive values) that occur at regular periods. The higher the IRR the more financially viable.

Using Microsoft Excel IRR function, enter as follows: =IRR(A3:A8). This provides an IRR of 7%.



 

A

B

1

Data

Description

2

2.2%

Annual discount rate

3

(2,000,000)

Initial cost of investment one year from today

4

150,000

Cost savings year 1 minus additional investment, as applicable

5

450,000

Cost savings year 2

6

600,000

Cost savings year 3

7

650,000

Cost savings year 4

8

670,000

Cost savings year 5

9

Formula

Description (Result)

10

=NPV(A2,A3,A4,A5,A6,A7,A8)
=IRR(A3:A8)


NPV of this investment after five years = $329,182
IRR of this investment after five years = 7%


Appendix C: REQUIREMENTS



<<[As applicable]>>






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Department of the Navy

Abbreviated Business Case Analysis







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