How to write a business case for your next custom software development project

If you’re looking to outsource the development of your next custom software project, you’ll likely be required to share a business case with key stakeholders. As a tech business focused on building differentiated custom-built solutions for our customers, we know what great technology and delivery look like – and it all starts at the very beginning – with a winning IT business case.  

We’ve seen many business cases over the years, and for this article, we’ve pulled together the best parts of the finest software business cases, to share with you for your next project. A well-prepared business case not only ensures executive buy-in and secures necessary funding but also ensures you get the very best out of your software development partner.  

Short on time? Here’s a handy IT business case template free download for your next custom software development project.  

Before you even start drafting your IT business case 

Engage with as many key stakeholders across departments as you can. Understand their pain points and business requirements. Now’s also a good time to engage with a potential software development partner if you’re looking for an objective viewpoint on what may be possible.  

Getting started with your IT business case  

If you already have a clear idea of the solution you’re looking to build, here’s how you can develop a strong business case for your custom software initiative.  

 
Don’t skip the executive summary 

The executive summary is your shop window, it gets people’s attention, so you need to nail it. Start by clearly and succinctly describing the purpose of the custom software development project and define the problem, or problems, that your organisation is facing. If you have data to justify the problem, include it. Indicate the expected measurable value you think the project will deliver and outline the scope of the project, key deliverables, and a high-level timeline.  

You might also want to include the cost of doing nothing. Your projection on what will likely happen (or likely not happen) if you do nothing. You may also want to include reasoning as to why commercial off-the-shelf solutions (COTS) are insufficient and summarise any work you’ve undertaken to date to try and solve the challenge.  
Your key stakeholders will want to understand the impact that your software project may have on value, for example:  

• Cost savings, revenue growth, improved productivity.
• Streamlined workflows, automation, and better data management.
• Competitive advantage, market expansion, and enhanced customer satisfaction.
• Reduced risk. 

Use data and case studies from similar projects to provide credible estimates of ROI. If possible, perform a cost-benefit analysis to showcase the financial viability of the project. 

Spend the bulk of your time working on the problem, not the solution

To truly understand your problem, you need to look at how your current challenge is inhibiting your business’ strategic goals. For example, if your business has a strategic goal of increasing customer retention, but your current tech stack is making it challenging to retain customers, let alone increase them, then you need to carry out research that helps you understand why this is the case. Once you do, your business case should reflect this thinking:  

1. Describe the current challenges that the business faces that custom software can address (e.g., for our scenario above, that might mean, a lack of accurate customer data, inadequate digital channels in which to engage customers and personalise their experience, inefficient processes, scalability issues that are leading to dissatisfied customers leaving you, integration limitations leaving customers feeling frustrated with dual keying information, or competitive pressures).
2. Highlight any opportunities that the software solution will create, such as streamlining operations, enhancing customer experience, or enabling new revenue streams. 

The ‘what’ 

When the business case has explained the ‘why’ and provided research into the challenge, it should describe the proposed solution. This should be a high-level overview of the solution being developed, its scope, its functionality, features, and how it will integrate with existing systems.  
Include a ‘solution options analysis’ to demonstrate how many options and alternatives have been considered and/or tested. Describe both the advantages and disadvantages of each option and estimated costs. For example:

1. Option 1: Preferred approach  
2. Option 2: Alternative  
3. Option 3: Maintain the status quo / do nothing 
4. Out of scope  

Also, briefly discuss the technologies that will be used in the project (e.g., programming languages, platforms, cloud, and integration tools). 

The cost analysis  

A critical aspect of your business case is outlining the total cost of ownership. Consider: 

• Development costs: Custom software design, coding, testing, and deployment.
• Infrastructure costs: Hosting, storage, and network requirements.
• Maintenance costs: Ongoing updates, bug fixes, and support.
• Training costs: Educating employees on how to use the new system and ensuring its ongoing usage.

Provide a clear breakdown of how the expected benefits (e.g., operational savings, increased revenue, productivity gains) will outweigh the costs. Use specific metrics where possible (e.g., ROI, payback period). 

Identify the risks 

Every software development project carries an element of risks, including budget overruns, scope creep, integration challenges, and cybersecurity threats. Identifying these risks in advance and presenting mitigation strategies will demonstrate due diligence.  

Explain how these risks will be managed and mitigated i.e. regular project reviews, robust testing, contingency planning, and ensuring alignment with business stakeholders. 

Change management  

Indicate the level of change management resources required for your initiative.   

Show your implementation plan  

Outline the expected timeline for the custom software development project, including key milestones. Breaking down the project into phases, such as requirements gathering, design, development, testing, deployment, and post-launch support. Breaking it down this way helps your stakeholders visualise the progress and expected outcomes. 
Offer a realistic project timeline, with key milestones and deadlines. Detail the internal and external resources required for each phase of the project. 

Key performance indicators and return on investment 

Executives need to see how the custom software investment will pay off. Use financial models such as Net Present Value (NPV), Internal Rate of Return (IRR), or Payback Period to showcase profitability. Highlight how the software will differentiate your company from competitors and contribute to long-term success. Define how success will be measured, this could include KPIs related to software performance, user adoption rates, time savings, cost reductions, or customer satisfaction improvements.  

Describe the plan for benefits realisation, including an anticipated realisation schedule.  
Provide an overview of the funding requested and the timing of spending to support delivery and transition to business as usual.  

Provide high-level estimates of itemised costs associated with the actual project execution. This includes resources (internal and/or external expertise), infrastructure, maintainence etc. throughout the entire project lifecycle.  

Final recommendations  

Building a solid business case for custom software development requires a clear articulation of the problem, a detailed cost-benefit analysis, and a well-defined implementation plan. By demonstrating value, mitigating risks, and ensuring alignment with business goals, CIOs can gain the necessary support and funding to drive digital transformation successfully.