The biggest struggle in creating a fair evaluation is in establishing a baseline of future performance if no changes are made. From macro factors, to maturity of other internal capabilities, to other investments with similar goals, how do you establish a starting point upon which to base the decision? Look for forecasts, dig into the trends, and hold a critical lense to the other initiatives already in play. Imagine we are post-implementation and you are trying to downplay the impact – what arguments would you use?

Storytime…

While working in Chennai, Southern India, I led a project for a client exploring outsourcing options for their business operations. The proposal process had been competitive, and although we had a strong relationship with the client, it was clear that their focus was on the financial value the transformation would bring. Our initial proposal outlined our approach, emphasizing how we would develop a defensible business case early in the engagement. However, the process was moving slower than expected, and we suspected internal resistance from the client’s leadership due to the scale of the investment.

Recognizing this delay as an opportunity, we decided to bring forward the business casework into the proposal stage. I spent several weeks on-site, collaborating with the client’s team to create a high-level view of the projected savings and required investments. For large transformation programs, especially outsourcing contracts, margins are typically tight, and the success of any investment relies heavily on the future business outlook—this is where baselining becomes crucial.

Baselining for a transformation program is one of the most challenging aspects of consulting. It requires not only rigorous analysis but also a deep understanding of existing forecasts, investments, and internal dynamics. In this case, the client had already made significant investments in technology and process improvements that were expected to yield savings. Our challenge was to isolate the specific benefits of our program, separate from those existing investments.

To tackle this, I took a step back from the financial projections and focused on macroeconomic drivers and the company’s overall business outlook, drawing on analyst reports and internal conversations. Establishing a baseline meant including the impact of prior investments that had similar benefits, like productivity and rate efficiency. I built a high-level model to project the future if no changes were made, and this exercise uncovered flaws in the original assumptions, including potential double-counting of benefits.

This deeper analysis allowed us to present multiple scenarios based on various growth projections and external factors. We developed a range of pessimistic, likely, and optimistic net present value (NPV) positions, giving the client a clearer picture of the potential outcomes. This not only built trust in our ability to deliver value but also provided their leadership with a robust foundation for approving the investment.

The key lesson here is the importance of establishing a baseline scenario. Businesses are rarely simple; they have ongoing commitments and investments that must be carefully considered. Understanding the most impactful existing programs and ensuring all assumptions are valid is crucial to justifying new value. It’s not just about the numbers—it’s about knowing the playing field before you start.