Building a Business Case for Bots? Throw Out Cost-Benefit Analysis

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Wait a minute! How can a business case even exist without cost?  Isn't a business case all about financial costs vs. benefits?

If we're talking about your father's business case, the answer is yes. But take it from someone who may be old enough to be your father, times have changed, and so has the business case.

Of course a cost-benefit business case can be constructed for your AI initiative, but, frankly, only to the end of satisfying those who don't know another way. The conventional business case model is an industrial-age construct using industrial-age assumptions.

Consider the following:

  • The payback horizon for a significant AI initiative is likely to be beyond the point in time where predictions can reasonably be made, simply due to the pace of disruptive change.
  • The case for change, being based on a predicted future state versus current state, is based on a false premise that the current state otherwise would remain unchanged over the same period of time. It won't.
  • Finally, hard-dollar benefits based on FTE reductions assume that bots are replacing human beings, when the real benefits of bots will stem from their ability to do things that human beings cannot.

So, go ahead and build that cost-based business case if you must. But if you really want to serve the business I'd like to suggest a different approach.

The Value-Driven Business Case

Value is not the same as cost, nor is cost necessary to articulate value. When it comes to delivering HR services, I define value as the fulfillment of customer-valued outcomes. By "customer-valued" I mean they are states of existence for which the customer, which generally speaking is the enterprise, would be willing to pay money. An employee in possession of the correct amount of pay on pay day is an example of a customer-valued outcome, because it is a state for which the enterprise is willing to pay money. As a rule, customer-valued outcomes are expressed without verbs, forcing the thought process away from valuing activities and instead valuing desired states. I sometimes call this the genie test, because if the organization had a genie it would be ridiculous to ask the genie to perform tasks when it could simply make things be. No activities. No verbs. Just outcomes. Poof.

The value-driven business case is an articulation of how the proposed solution, in this case AI, will produce valued outcomes better than the current solution. Perhaps it is an outcome that the current solution cannot produce at all. The business decision is based on how much the organization is willing to pay for the outcome(s) in question.

Identifying Valued Outcomes

What are the customer-valued outcomes on which you will base the value-driven business case? Here is where creativity becomes critically important. If the valued outcomes you contrive are merely the outcomes currently produced by human beings, only at a lower cost, your business case will fall flat. But now that you've thrown cost out of your equation, you're free to think beyond cheaper and instead think better. What can AI do that human beings cannot do? What valued outcomes do those things create, increase or improve? And, finally, how much is the organization willing to pay for them.

The key to creating a compelling value-driven business case is creating a vision in which AI is delivering customer-valued outcomes that human beings are unable or ill suited to deliver. Is it answering questions at 3 a.m. anywhere in the world? Is it processing massive amounts of data that would take human beings days or weeks to analyze? Or is it performing mind-numbing tasks that send human beings looking for another place to work?  

Now that cost is no longer driving your business case, let your imagination run wild. What you come up with may be more compelling than any mere cost-benefit business case could ever be.