AI Business Case¶
Template Download Template
- Time to complete: 2-4 weeks (gathering data and stakeholder input)
- Who should complete: Project lead with finance, technical, and business input
- Key outputs: Investment request, ROI analysis, risk assessment
- Tools: ROI Calculator | TCO Calculator
Use the Interactive Tools
The ROI Calculator and TCO Calculator can help you model financial scenarios and generate numbers for sections 5-7 of this template.
Document Control¶
| Field | Value |
|---|---|
| Project Name | |
| Business Case Version | 1.0 |
| Author | |
| Date | |
| Status | Draft / Under Review / Approved |
| Approver |
Executive Summary¶
One-Page Overview¶
Project Name: [Name]
Investment Request: $[Amount]
Business Problem: [2-3 sentences describing the problem this AI initiative will solve]
Proposed Solution: [2-3 sentences describing the AI solution]
Key Benefits: | Benefit | Annual Value | |---------|--------------| | [Benefit 1] | $[Amount] | | [Benefit 2] | $[Amount] | | [Benefit 3] | \([Amount] | | **Total Annual Benefit** | **\)[Amount]** |
Investment Summary: | Item | Amount | |------|--------| | Initial Investment | $[Amount] | | Annual Operating Cost | $[Amount] | | 5-Year Total Cost | $[Amount] |
Key Metrics: | Metric | Value | |--------|-------| | ROI (5-year) | [X]% | | Payback Period | [X] months | | NPV | $[Amount] |
Recommendation: [Approve / Approve with conditions / Defer / Reject]
1. Strategic Context¶
1.1 Strategic Alignment¶
| Strategic Priority | How This Initiative Aligns |
|---|---|
| [Agency Priority 1] | |
| [Agency Priority 2] | |
| [Government Priority] |
1.2 Policy Drivers¶
| Policy/Legislation | Relevance |
|---|---|
| [Relevant policy] | |
| [Relevant legislation] |
1.3 Trigger for Change¶
Why now? - [ ] Existing system end-of-life - [ ] Service demand increasing - [ ] Cost pressures - [ ] Technology opportunity - [ ] Policy/legislative change - [ ] Other: [specify]
2. Problem Definition¶
2.1 Current State¶
Description of current situation: [Detailed description of how things work today]
Current Process Flow:
Current Performance: | Metric | Current Value | Target Value | |--------|---------------|--------------| | Processing time | | | | Error rate | | | | Cost per transaction | | | | Customer satisfaction | | | | Staff utilization | | |
2.2 Problem Statement¶
The core problem is: [Clear, specific statement of the problem]
This matters because: [Why this problem needs to be solved]
If we don't act: [Consequences of inaction]
2.3 Root Causes¶
| Root Cause | Evidence |
|---|---|
2.4 Impact of Current State¶
Quantified impacts: | Impact Area | Current Cost/Impact | Evidence | |-------------|---------------------|----------| | Financial | $[Amount]/year | | | Operational | | | | Customer | | | | Staff | | | | Compliance | | |
3. Options Analysis¶
3.1 Options Considered¶
Option 1: Do Nothing (Baseline)¶
Description: Maintain current state with no changes
| Aspect | Assessment |
|---|---|
| Cost | $[ongoing costs] |
| Benefits | None (baseline) |
| Risks | [deterioration risks] |
| Recommendation | Baseline for comparison |
Option 2: Process Improvement (Non-AI)¶
Description: [Describe non-AI improvement option]
| Aspect | Assessment |
|---|---|
| Initial Cost | $[Amount] |
| Annual Cost | $[Amount] |
| Annual Benefits | $[Amount] |
| Key Risks | |
| Pros | |
| Cons |
Option 3: AI Solution (Recommended)¶
Description: [Describe AI solution]
| Aspect | Assessment |
|---|---|
| Initial Cost | $[Amount] |
| Annual Cost | $[Amount] |
| Annual Benefits | $[Amount] |
| Key Risks | |
| Pros | |
| Cons |
Option 4: [Alternative AI Approach]¶
Description: [Describe alternative]
| Aspect | Assessment |
|---|---|
| Initial Cost | $[Amount] |
| Annual Cost | $[Amount] |
| Annual Benefits | $[Amount] |
| Key Risks | |
| Pros | |
| Cons |
3.2 Options Comparison¶
| Criterion | Weight | Option 1 | Option 2 | Option 3 | Option 4 |
|---|---|---|---|---|---|
| Strategic fit | 20% | ||||
| Benefits | 25% | ||||
| Cost | 20% | ||||
| Risk | 15% | ||||
| Feasibility | 10% | ||||
| Time to value | 10% | ||||
| Weighted Score | 100% |
3.3 Recommended Option¶
Recommended: Option [X] - [Name]
Rationale: [3-5 sentences explaining why this option is recommended]
4. Proposed AI Solution¶
4.1 Solution Overview¶
Solution Description: [Comprehensive description of the proposed AI solution]
AI Approach: | Aspect | Details | |--------|---------| | AI Type | Classification / NLP / Prediction / Other | | Model Approach | Custom build / COTS / Cloud API | | Deployment | On-premise / Cloud / Hybrid | | Integration | [Key systems] |
Future State Process:
4.2 Scope¶
In Scope: - [ ] [Capability 1] - [ ] [Capability 2] - [ ] [Capability 3]
Out of Scope: - [ ] [Excluded item 1] - [ ] [Excluded item 2]
Assumptions: | # | Assumption | Impact if Wrong | |---|------------|-----------------| | 1 | | | | 2 | | | | 3 | | |
4.3 Technical Requirements¶
| Requirement | Specification |
|---|---|
| Data sources | |
| Compute requirements | |
| Storage | |
| Integration points | |
| Security classification |
5. Benefits Analysis¶
5.1 Quantified Benefits¶
Financial Benefits¶
| Benefit Category | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Total |
|---|---|---|---|---|---|---|
| Efficiency Savings | ||||||
| FTE reduction/reallocation | ||||||
| Processing time reduction | ||||||
| Cost Avoidance | ||||||
| Avoided hires | ||||||
| Error reduction | ||||||
| Revenue/Recovery | ||||||
| Increased throughput | ||||||
| Improved collection | ||||||
| Total Financial Benefits |
Benefit Calculation Details¶
Benefit 1: [Name] | Component | Calculation | |-----------|-------------| | Baseline | | | Improvement % | | | Unit value | | | Annual benefit | |
Benefit 2: [Name] | Component | Calculation | |-----------|-------------| | Baseline | | | Improvement % | | | Unit value | | | Annual benefit | |
5.2 Non-Financial Benefits¶
| Benefit | Description | Measurement | Baseline | Target |
|---|---|---|---|---|
| Service quality | ||||
| Staff satisfaction | ||||
| Compliance | ||||
| Decision quality | ||||
| Customer experience |
5.3 Benefit Realization¶
| Benefit | Start Date | Full Realization | Owner | Dependencies |
|---|---|---|---|---|
6. Cost Analysis¶
6.1 Cost Summary¶
Initial Costs (Capital)¶
| Cost Category | Amount | Assumptions |
|---|---|---|
| Discovery & Planning | ||
| Requirements analysis | ||
| Data assessment | ||
| Data Preparation | ||
| Data cleansing | ||
| Data labeling | ||
| Feature engineering | ||
| Development | ||
| Model development | ||
| Integration | ||
| Testing | ||
| Infrastructure | ||
| Hardware/cloud setup | ||
| Software licensing | ||
| Change Management | ||
| Training | ||
| Communications | ||
| Project Management | ||
| PM resources | ||
| Governance | ||
| Contingency (15%) | ||
| TOTAL INITIAL |
Ongoing Costs (Annual Operating)¶
| Cost Category | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Infrastructure | |||||
| Cloud/hosting | |||||
| Storage | |||||
| Licensing | |||||
| Software licenses | |||||
| API costs | |||||
| Personnel | |||||
| Operations support | |||||
| Data science | |||||
| Maintenance | |||||
| Model retraining | |||||
| System maintenance | |||||
| Other | |||||
| Training (ongoing) | |||||
| Audit/compliance | |||||
| TOTAL ANNUAL |
6.2 Total Cost of Ownership¶
| Year | Initial | Operating | Total | Cumulative |
|---|---|---|---|---|
| Year 0 | ||||
| Year 1 | ||||
| Year 2 | ||||
| Year 3 | ||||
| Year 4 | ||||
| Year 5 | ||||
| TOTAL |
7. Financial Analysis¶
7.1 Cost-Benefit Summary¶
| Year | Costs | Benefits | Net Benefit | Cumulative |
|---|---|---|---|---|
| Year 0 | ||||
| Year 1 | ||||
| Year 2 | ||||
| Year 3 | ||||
| Year 4 | ||||
| Year 5 | ||||
| TOTAL |
7.2 Key Financial Metrics¶
| Metric | Value | Interpretation |
|---|---|---|
| Total Investment | $[Amount] | Total cost over 5 years |
| Total Benefits | $[Amount] | Total benefits over 5 years |
| Net Benefit | $[Amount] | Benefits minus costs |
| ROI | [X]% | (Net Benefit / Investment) × 100 |
| Payback Period | [X] months | Time to recover initial investment |
| NPV (at 7%) | $[Amount] | Present value of net benefits |
| IRR | [X]% | Internal rate of return |
| Benefit-Cost Ratio | [X]:1 | Benefits per dollar invested |
7.3 Sensitivity Analysis¶
| Scenario | Benefits | Costs | ROI | NPV |
|---|---|---|---|---|
| Base Case | ||||
| Benefits -20% | ||||
| Costs +20% | ||||
| Delay 6 months | ||||
| Worst Case |
7.4 Break-Even Analysis¶
Break-even occurs when: [Describe conditions]
Minimum benefits required for positive NPV: $[Amount]/year
8. Risk Assessment¶
8.1 Key Risks¶
| ID | Risk | Likelihood | Impact | Rating | Mitigation | Owner |
|---|---|---|---|---|---|---|
| R1 | Data quality insufficient | M | H | High | Data quality assessment; remediation plan | |
| R2 | Model accuracy below target | M | H | High | POC validation; performance thresholds | |
| R3 | Integration complexity | M | M | Medium | Architecture review; integration POC | |
| R4 | Stakeholder resistance | L | M | Medium | Change management; early engagement | |
| R5 | Vendor dependency | L | M | Medium | Exit clauses; skills transfer | |
| R6 | Regulatory/compliance | L | H | Medium | Early legal review; compliance checklist | |
| R7 | Skills availability | M | M | Medium | Training plan; contractor contingency | |
| R8 | Budget overrun | M | M | Medium | Contingency; stage gates |
8.2 AI-Specific Risks¶
| Risk Category | Risk | Mitigation |
|---|---|---|
| Bias & Fairness | Model produces unfair outcomes | Bias testing; fairness metrics |
| Explainability | Cannot explain decisions | Explainability tools; model selection |
| Data Drift | Model degrades over time | Monitoring; retraining pipeline |
| Security | AI-specific vulnerabilities | Security assessment; controls |
| Ethics | Unintended consequences | Ethics review; human oversight |
8.3 Risk-Adjusted Analysis¶
| Scenario | Probability | NPV | Weighted NPV |
|---|---|---|---|
| Best case | 20% | ||
| Base case | 60% | ||
| Worst case | 20% | ||
| Expected NPV | 100% |
9. Implementation Plan¶
9.1 Delivery Approach¶
Methodology: Agile / Waterfall / Hybrid
Phasing: | Phase | Description | Duration | Key Deliverables | |-------|-------------|----------|------------------| | Discovery | | | | | Planning | | | | | Design | | | | | Development | | | | | Testing | | | | | Deployment | | | | | Operations | | | |
9.2 Key Milestones¶
| Milestone | Target Date | Dependencies |
|---|---|---|
| Business case approved | ||
| Team mobilized | ||
| Data prepared | ||
| Model developed | ||
| Pilot complete | ||
| Go-live | ||
| Benefits realized |
9.3 Resource Requirements¶
| Resource Type | Phase 1 | Phase 2 | Phase 3 | Ongoing |
|---|---|---|---|---|
| Project Manager | ||||
| Business Analyst | ||||
| Data Scientist | ||||
| Data Engineer | ||||
| Developer | ||||
| Change Manager | ||||
| SME |
9.4 Dependencies¶
| Dependency | Owner | Status | Impact if Not Met |
|---|---|---|---|
10. Governance & Compliance¶
10.1 AI Governance¶
| Requirement | Approach |
|---|---|
| Ethics review | |
| Privacy impact assessment | |
| Security assessment | |
| Human oversight | |
| Model documentation |
10.2 Compliance Requirements¶
| Requirement | Status | Evidence |
|---|---|---|
| Privacy Act | ||
| AI Ethics Framework | ||
| PSPF | ||
| Agency-specific |
10.3 Project Governance¶
Governance Structure: - Executive Sponsor: [Name] - Project Board: [Members] - Steering Committee: [Frequency]
Decision Rights: | Decision Type | Authority | |---------------|-----------| | Budget changes (<\(X) | Project Manager | | Budget changes (>\)X) | Project Board | | Scope changes | Steering Committee | | Go-live approval | Executive Sponsor |
11. Stakeholder Impact¶
11.1 Stakeholder Analysis¶
| Stakeholder | Impact | Interest | Engagement Approach |
|---|---|---|---|
| High/Med/Low | High/Med/Low | ||
11.2 Change Impact¶
| User Group | Nature of Change | Impact Level | Support Required |
|---|---|---|---|
| High/Med/Low | |||
11.3 Workforce Implications¶
| Implication | Details | Mitigation |
|---|---|---|
| Role changes | ||
| Skill requirements | ||
| Headcount impact | ||
| Union consultation |
12. Recommendation¶
12.1 Summary Assessment¶
| Criterion | Assessment |
|---|---|
| Strategic alignment | Strong / Moderate / Weak |
| Financial return | Positive / Marginal / Negative |
| Risk level | Low / Medium / High |
| Feasibility | High / Medium / Low |
| Timing | Urgent / Important / Can defer |
12.2 Recommendation¶
Recommendation: [APPROVE / APPROVE WITH CONDITIONS / DEFER / DO NOT PROCEED]
Conditions (if applicable): 1. [Condition 1] 2. [Condition 2]
Rationale: [2-3 paragraphs explaining the recommendation]
12.3 Next Steps if Approved¶
| Action | Owner | Timeframe |
|---|---|---|
Appendices¶
Appendix A: Detailed Cost Breakdown¶
[Attach detailed cost calculations]
Appendix B: Benefits Calculation Methodology¶
[Attach detailed benefits calculations]
Appendix C: Technical Architecture¶
[Attach technical architecture diagrams]
Appendix D: Risk Register¶
[Attach full risk register]
Appendix E: Stakeholder Register¶
[Attach stakeholder register]
Appendix F: Supporting Research¶
[Attach relevant research, benchmarks, case studies]
Sign-Off¶
| Role | Name | Signature | Date |
|---|---|---|---|
| Project Sponsor | |||
| Business Owner | |||
| Finance | |||
| IT | |||
| Approving Authority |