Definition
Financial documents that aggregate development costs, post-market realized income and key assumptions are based on product concepts.
In detail
Business Case is a financial document summarizing development costs, achievable revenue post-launch, and key assumptions, based on the product concept. Within the product development system, it addresses the decision of whether an investment is worthwhile, providing management with a basis for project approval by quantifying benefits and risks. Unlike a project charter, a Business Case focuses more on financial feasibility, while the charter focuses on project scope. Outputs typically include cost estimates, revenue forecasts, return on investment, sensitivity analysis, and a list of key assumptions.
Example in practice
A technology company's R&D department proposed a new smart hardware concept, but the investment was large. Management required a business case: the finance team estimated R&D costs, manufacturing costs, marketing expenses, and forecasted sales and revenue over three years. They also analyzed market risks and technical uncertainties. The case showed the payback period was too long, but modular design could reduce costs. The company adjusted the product plan accordingly, re-evaluated, and approved the project. The business case helped the company avoid blind investment and ensured resources were used for high-return projects.