Scenarios

Why scenarios matter

A single-point business case is a liability. When the underlying assumptions prove wrong — and some always do — the entire model is discredited. Scenario analysis provides a more honest representation of the range of possible outcomes and gives the board a framework for decision-making under uncertainty.

Three scenarios is the right structure: conservative, realistic, and optimistic. The conservative scenario assumes the most challenging conditions that are still plausible. The realistic scenario uses central estimates for each assumption. The optimistic scenario assumes favourable conditions without being implausible. The board should be able to evaluate whether to proceed under the conservative scenario — if the conservative case does not justify the investment, the decision needs more scrutiny.

The conservative scenario

The conservative scenario assumes that the migration takes longer than planned (add 20–30 % to the base timeline), that licence renegotiation is more difficult than expected (assume current licence costs persist for the first two years), that staff reallocation is slower than planned (assume one year before freed-up capacity generates business value), and that indirect ROI is excluded entirely.

Under conservative assumptions, the business case rests entirely on direct cost improvements. This is a deliberate discipline: if the direct case is not compelling on its own, the indirect benefits should not be used to rescue it.

The realistic scenario

The realistic scenario uses the central estimates from the TCO analysis and ROI model. The migration timeline is as planned. Licence renegotiation achieves the expected outcome for the majority of licences. Staff reallocation begins generating value in year two. Indirect ROI is included for the two to three business outcomes that can be quantified with reasonable confidence.

The realistic scenario is the primary scenario for board presentation — presented alongside the conservative and optimistic cases to show the range.

The optimistic scenario

The optimistic scenario assumes the migration completes ahead of schedule, that licence costs reduce more rapidly (through aggressive cloud-native licence substitution), that indirect ROI captures the full range of quantified business outcomes, and that FinOps optimisation achieves above-average savings in years two and three.

The optimistic scenario illustrates the upside potential but should be clearly labelled as contingent on favourable conditions rather than treated as the base case.

Sensitivity analysis

Beyond three scenarios, a sensitivity analysis shows what happens to the overall ROI if individual assumptions move by ±20 %. The assumptions that typically have the largest sensitivity are: migration timeline (every six-month delay in migration completion shifts the payback date by approximately the same amount), operations cost reduction rate (the largest single component of direct ROI), and cloud consumption growth rate (if cloud consumption grows faster than expected, costs increase — this is a material risk if FinOps practices are not in place).

Present the sensitivity table alongside the scenarios. It demonstrates analytical rigour and helps the board identify which assumptions to focus their scrutiny on.