The Procurement Glossary » Business Case
Business Case
Strategy & Operations
Definition
A structured justification for a proposed decision or investment, weighing costs, benefits and risks.
Explanation
Procurement uses business cases to justify sourcing decisions, technology investments or make-or-buy choices. A sound case quantifies total cost, expected benefits and risk, giving decision-makers a clear, comparable basis for approval.
Example
The business case shows the new supplier saves 12% over three years after switching costs, and it is approved.
Related terms
- Make-or-Buy Decision — The analysis of whether to produce a good or service in-house or purchase it from an external supplier.
- Return on Investment (ROI) — A measure of the value gained from an investment relative to its cost, used to justify procurement initiatives and technology.
- Total Cost of Ownership (TCO) — The full lifetime cost of a purchase — not just the price, but delivery, installation, operation, maintenance, downtime and disposal.
- Cost Avoidance — Value from preventing a cost increase or future expense, rather than reducing current spend.
Frequently Asked Questions
What is Business Case?
A structured justification for a proposed decision or investment, weighing costs, benefits and risks. Procurement uses business cases to justify sourcing decisions, technology investments or make-or-buy choices. A sound case quantifies total cost, expected benefits and risk, giving decision-makers a clear, comparable basis for approval.
Can you give an example of Business Case?
The business case shows the new supplier saves 12% over three years after switching costs, and it is approved.
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