Making A More Effective Business Case for Investing in Software


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When it comes to buying software, the Office of Finance has multiple options in a broad range of categories covering every aspect of financial management. Today’s applications can substantially improve the performance of Finance. Yet, the software selection process is complicated and the stakes are high. Too often, companies put off making a decision because the full range of benefits from the investment were not communicated effectively, perceived risks were not properly addressed and the reasons for immediate action were not presented persuasively enough. Join Robert Kugel, SVP and Research Director at Ventana Research, as he shares findings from recent research and reviews the “how-to” for making the right software selection.

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  • One of the hardest things to do in business – and especially in finance organizations – is driving change in an organization. There’s a natural inertia that works against it – people are busy or are comfortable in their routine. New methods may seem to be a threat. These days, changes in how a company does something – its accounting close, planning and budgeting, analytics, whatever – may require an investment in software. Because of this, change will also require authorization to make an investment in some combination of software, hardware and services. Building a solid business case for making a software investment – either to support change or to replace outmoded software – requires thought and serious preparation. Today, I want to outline what I think you need to do to create a successful business case for software investment.

    The single most important point I want to make here is that making a solid business case isn’t simply a matter of assembling data in a spreadsheet model to prove that the investment meets corporate standards. It’s much more than that. It’s an internal marketing and sales campaign. Even if you’re aware of a problem or opportunity, it doesn’t mean that all those that will make the decision are – or that they will view the situation the same way you do or understand benefits or even value them correctly. Before you can even propose some new initiative or software investment, you may have to begin to create awareness of the problem you’re trying to address. That’s marketing 101. You need to consider your audience and their individual motivations to understand how to present your business case. You need to understand what’s likely to persuade them and anticipate their objections in determining the elements that make up your business case.
  • Ventana Research does a lot of benchmark research, where we examine some business or business-related technology issue and assess how well companies are addressing that issue. One of the questions we routinely ask in these benchmarks is about the business considerations for making software investments. The chart I’m presenting is from a recent benchmark on Finance Analytics but it’s typical of the responses we get from other accounting and finance-related research we’ve done. Here we asked our research panel to rank the importance of a range of business considerations that go into making a software investment. This is an abbreviated list, only showing the top 7 items and ranking by the percentage of participants that listed these as the most important or second most important to making a software investment. At the top of the list is executive sponsorship – two thirds ranked this first or second in importance. That’s just ahead of understanding the potential value of the investment, which is followed by having a budget. I won’t walk you through the chart. When I look at this data, here’s what I conclude: Making a successful business case requires executive sponsorship, a clear value statement, and better perceived value than competing investments. It helps if the proposed investment promotes efficiency, addresses risk and regulation effectively and reduces costs. I’ll come back to some this in a bit, but note that an airtight, cash-on-cash business plan isn’t near the top of the list. Gaining executive sponsorship means that you’ve managed to convince – sell – an important influencer in the process by ensuring they are aware of the issues or opportunities and that you’ve presented it in a way that is compelling enough for them to vouch for it.
  • When we ask our research panels why a software-led initiative did not succeed, here’s the sort of responses we get: there’s a lack of resources, no budget, a business case that wasn’t strong enough, not a priority and so on. It may be the case that there aren’t enough resources budget and so on, but I’ll bet in most cases, if the reason is that the project is a low priority, or there’s no budget or insufficient resources it reflects a failure to make a strong enough case. A lack of awareness means there was insufficient preparation ahead of time to generate awareness or not enough depth in making the business case. I don’t mean to suggest that a poorly positioned and presented business case is the single reason for failure. There are a lot of bad ideas out there that thankfully don’t get funded. But unfortunately there are too many good ideas that don’t get funded because it wasn’t supported by an effective business case process.
  • So, here’s my agenda for the next half hour or so. I’ll be covering what you should do Before You Get Started, a very brief overview of how to go about defining the project requirements, creating the Business Plan itself, crafting your Elevator Pitch, plus a few brief thoughts on selecting the software vendor and the implementation partner. Along the way, we’ll ask you to participate in a couple of polling questions.
  • The first step in building the business case is asking your yourself what you want to do. It’s a simple question but it demands clear answers.
  • Before you start charging off at some solution you have to ask yourself - what are the objectives? Not just your objectives but what you believe your organization wants to achieve. What your executives want to achieve collectively and individually. You may want better software to be able to get home in time for dinner every night but frankly nobody cares whether you do or don’t. A more automated, less error prone approach to some process may enable you to work less insane hours but the value of the investment for the organization as a whole and specific executives are likely to be different – and it’s important to focus on those in building your business case. So it’s important to consider all of the ways that a software-driven initiative can address issues that are important. I’ve listed eight of the more common of these here. Software may help your department or company enhance productivity. These days, this usually doesn’t mean being able to reduce headcount like it did in the early years of business computing. Then, simple automation allowed companies to eliminate many clerical positions. Today, finance departments operate lean – the average cost of operating a finance department as a percent of sales is about half of what it was 15 or 20 years ago. There are limits to headcount savings, especially when people wear many hats. Instead, productivity means getting better value from skilled people. Its about eliminating the need for them to spend time on mindless, repetitive work that can be automated with the right software and allowing people to devote more time to doing things that require judgment and experience. There’s the ability to cut the time it takes to complete processes. This isn’t just about cutting costs. Getting results faster means there’s less pressure to meet deadlines and provide greater agility to the organization as a whole. Decision loops is a reference to analysis done during the Korean War which explained why the US was able to shoot down far more MiGs even though the United States had planes that were inferior in almost all respects. The reason was that the US pilots were better trained to observe, orient, decide and act – so they were able to adjust much faster in dogfighting maneuvers to gain a spacial advantage that allowed them to overcome the limitations of their hardware and shoot down their oponent.. Companies that are nimbler are better able to beat the competition. You can make the case on improving quality - quality issues may drive costs or limit options if addressing them diverts valuable time. Quality in accounting in finance has implications for external and internal audit and compliance. Software can address effectiveness issue – giving people information sooner or giving them more information that improves the outcomes of their decisions. It can promote transparency or visibility in processes allowing people to anticipate more. It may make the organization more responsive to change or have a direct impact that reduces risk and promotes regulatory or statutory compliance.
    And it may indeed reduce costs or improve cash flow. Each of these has a potential impact on individuals or departments in your company, so you need to use this as a framework to determine which of these are important – and how important – to the individuals that will be involved in deciding whether to make a software investment.
  • Another aspect of building a business case is who needs to be involved. There are political as well as objective reasons to include people in crafting the business case that shouldn’t be ignored. Do you know what’s possible after you deploy some new software? I mean the full range of transformational possibilities. The things that will address the issues and highlight the benefits that I just discussed. More to the point, do the executives know what’s possible? Do they understand the benefits – the issues that you can address. Don’t assume they can. And to that end, can you explain what’s possible to executives and others in your company in way that addresses their needs – collectively and individually? Do you know what those needs are? And getting back to that most important element for success, do you have executive sponsorship? Do you really? If your project is 17th on a list of priorities for some senior executive sponsor – you don’t have a real sponsor. You need to find someone senior enough that believes in the value of the project almost as much as you do. In preparing to craft the business case, have you worked out a process for identifying the gaps between where your company is now and where you want it to be? How you quantify them? Do you have a process for determining how to eliminate those gaps? For determining what success means? Ask yourself, how important is this initiative to those that must approve it? If it’s not really that important then you need to focus on how to improve its profile and urgency. If you can’t figure that out – you may be wasting your time. And do you have a budget? I mean, do you really? Or is the money that was supposed to go to your project going to wind up in the hands of someone who can make a better case for investment?  To be successful in making a business case, it’s necessary to ensure that everyone understands and agrees that these are the issues that must be addressed and that there’s considerable value in addressing them. That the risks associated with the change are low and the risks in not acting immediately are high.
  • After you’ve done your prep work you’re in a better position to define your project’s requirements. I should note that in this webinar I’m doing a high level overview of this process. Even so, you may think that this is a lot of unnecessary work and that you won’t have to do all of this for your project. That may be true. But keep in mind that building a business case is lot like painting your house – the quality of the job is proportional to the quality of the prep work. And the phrase – fortune favors the prepared comes to mind, too.
  • Making A More Effective Business Case for Investing in Software

    1. 1. Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals Making A More Effective Business Case for Investing in Software
    2. 2. Learning Objectives After attending this event you will be able to: • Understand the basic questions you need to ask and have answered when evaluating software options • How to build an effective business case for software investment • How to identify the most appropriate vendors and implementation partners for your company
    3. 3. Welcome to Proformative Proformative is the largest and fastest growing online resource for senior level corporate finance, treasury, and accounting professionals. A resource where corporate finance and related professionals excel in their careers through: • Uniquely valuable, online Peer Network • Direct subject-matter-expert advice • Valuable Features and Resources All of it completely noise-free Check it out at
    4. 4. Building a Solid Business Case for Software Investment 4 © 2014 Ventana Research Proformative Webinar Robert D. Kugel – SVP and Research Director
    5. 5. Why Companies Decide to Invest Making a successful business case requires: • Executive sponsorship • Clear value statement • Better value than competing Business Considerations for Investments (Most or Second Most Important) 67% 66% 62% 56% 54% 47% 45% Executive… Understanding of… Budget required… Shortens… Audit and… Reducing total cost… Aligns with… 5 © 2014 Ventana Research investments It helps if it: • Promotes efficiency • Addresses risk and regulation • Reduces costs Source: Ventana Research Next Generation Finance Analytics Benchmark
    6. 6. Why Companies Decide Not to Invest It’s all about making a strong case: • Low priority, no budget or resources all reflect a failure to make a strong enough case. • Lack of awareness – insufficient depth in making the business case. Other factors (fewer than one-third citing): • TCO too high, too much training, too long to deploy • No suitable software (20%) Barriers to Investing in Analytics (Six Most Frequently Mentioned) Lack of resources No budget Business case not strong enough Low priority Lack of awareness No executive support Source: Ventana Research Finance Analytics Benchmark 47% 45% 44% 43% 40% 32% 6 © 2014 Ventana Research
    7. 7. Agenda Before You Get Started Defining the Project Requirements Create the Business Plan Craft the Elevator Pitch Which Vendor or Partner? 7 © 2014 Ventana Research
    8. 8. What do you want to do? 8 © 22001144 VVeennttaannaa RReesseeaarrcchh
    9. 9. Analyze the Situation What are the objectives? • What do you want to accomplish? • What does your organization want to accomplish? • What do the executives want to accomplish? What issues will the project address? • Productivity issues (get better value from skilled people) • Time issues (not just cost – deadlines and decision loops) • Quality issues • Effectiveness issues • Transparency or visibility • Responsiveness • Risk or compliance • Cost issues (cut payments) How important are each of these? To whom? 9 © 2014 Ventana Research Before You Get Started
    10. 10. Analyze the Situation Who must be involved in creating the business case? Do you know what’s possible? Do the executives know what’s possible? Can you explain what’s possible to executives? Do you have executive sponsorship? (Really?) Do you have a process for identifying the gaps between the current and end states? Do you have a process for determining how to eliminate the gaps? How important is this initiative to those that must approve it? How do you make it more important to everyone involved? Do you have a budget? (Really?) 10 © 2014 Ventana Research Before You Get Started
    11. 11. Defining Project Requirements s 11 © 2014 Ventana Research
    12. 12. Making a More Effective Business Case for Investing in Software Thank you for your interest in this presentation. View the on-demand webinar or download the full presentation at: