Part Two: Definition and Measurement
Will our savings and increased revenues surpass the investment?
This is the most basic form of examination. You will be laying money on the table for software licenses, yearly manufacturer and/or implementation partner support and maintenance, consulting services and training (system administrator and end user), content conversion and loading from your existing system(s) to the new system (if needed) and integration with other systems (if needed). So, will the savings and increased revenues to be realized, be greater than those invested? Depending on the cost of your overall investment, the span of time required for payback is generally a multi-year proposition. Three to five year payback period calculations are common and estimates for today’s value of future returns are generally predictive.
Will this initiative “pack a mean punch?”
I advise selecting a project or initiative that is of importance to a high profile person within the organization. An inaugural project, for example, should be visible but not overwrought with risk. If successful, can a positive project experience lead to a “spring boarding” effect? In a word, yes. When project goals are clearly defined, met, and even exceeded, momentum can be established.
What else can be achieved and what else can I get?
There is an upside and downside here. For example, with some in depth research and/or experience, you may be able to negotiate a better deal for your organization. However, you don’t want to “beat down” your chosen supplier to the point that they cannot afford to support you in the manner that will produce the greatest results. Additionally, a ‘bargain shopping’ philosophy requires time and effort as other vendor offerings are examined. The right balance must exist between that which can be realistically achieved versus the time, cost and complexity of analyzing competing offerings.
Are “soft” costs a component of your equation?
Many times the answer to this question depends on your company. Examples include intangibles like improved morale or happier employees. Financial systems don’t generally take into account these costs.
See Part One here