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When it comes to making a business case for software investments, many people fail to recognize that the case itself is just one part of what amounts to an internal sales and marketing effort that they must perform well to be successful. Focusing only on the numbers and assumptions in a spreadsheet is not enough. Making a successful business case requires an understanding of the audience’s perspective and motivations. Since the individuals who will review the business case may not be sufficiently aware of the issues that are behind it and their seriousness, it may be necessary to begin an awareness-building program before presenting the business case. And because the benefits of software investments can be difficult to quantify, executive sponsors are useful in achieving acceptance of these calculations. Unfortunately, many business cases founder because proponents do not realize the importance of taking a sales and marketing approach.

We usually ask participants in our benchmark research what softwarevr_NG_Finance_Analytics_16_barriers_to_investing_in_finance_analytics they use to manage or support a process and whether their company recently considered replacing it. Typically, two-thirds of companies have within the past year or two evaluated an alternative to the software they’ve been using for the subject of the research. However, only 15 to 20 percent actually acquire and deploy new software. The remaining number is divided between those that decided not to replace their software and those that are still considering it. Those that have opted not to replace the software typically give as the main reasons a lack of resources (47%), of budget (45%), and of awareness of the problem (40%), as well as no executive sponsorship or support; they also often say the existing software works well enough and the business case wasn’t strong enough. We get much the same responses from those that are still considering replacement, as well as that they’re still in the evaluation process. Of course it may be true that there was no budget or sufficient resources, or that the existing software works well enough, but we think it’s more often the case that the business case wasn’t strong enough and so the investment was deemed a low priority.

One common mistake of advocates for new software is failing to consider how the proposed investment will meet the needs and motivations of all of the people who will be evaluating the project. Their needs might be different, or they may have different priorities. For instance, the advocate may want to make some process more efficient so that he or she won’t have to work so many nights and weekends, but this is likely to be of little concern to those who have to approve the investment. For those decision-makers, the ability to get information sooner, gain deeper insight or reduce their risk exposure may be the key benefits. In some instances, those evaluating a project may not be aware of what’s possible. Awareness-building may be a step that has to precede by weeks or months the formal presentation of a business case. For example, executives may not understand that they can get information in real time or the following day rather than having to wait a week, and that the competition is already able to do that. They probably haven’t given it any thought.

Another pitfall for advocates is failing to secure executive sponsorship before proposing an investment; lacking that substantially reduces the chance of success. This can be tricky because today’s software investments are rarely made for direct cost savings alone. In the early days of business computing, IT investments were made to eliminate the need for clerks and bookkeepers, so there was a direct, measurable savings involved. Today, these sorts of benefits represent a fraction of the value of software investments. Instead, the benefits include, for instance, getting information sooner or shortening the end-to-end length of a process. The end result may be improved customer service and, therefore, customer satisfaction – benefits that executives understand. When the business case presents an answer to the question, “What’s it worth to this company to cut cycle times from two months to one week?” It’s important that someone with sufficient stature in the decision-making process will vouch for the answer in the business case as well as reiterate the urgency for making that particular investment right away. It’s even more important to have the right sponsorship when the impact of the investment spans business units or functions; this should be either an individual with sufficient seniority or multiple sponsors from within these groups.

vr_NG_Finance_Analytics_15_business_considerations_for_investmentsProbably for those reasons, participants asked to identify the most important considerations that lead to the successful presentation of a business plan  most frequently cited executive sponsorship (67%) and an understanding of the potential value (that is, those making the decision were aware of the problem and the value of addressing it). Being able to demonstrate increased efficiency, reduced risk and enhanced effectiveness (such as by being able to meet audit or compliance needs) are also important.

Independent information technology research from a reputable source can help software advocates make their case more effectively. It can illustrate the common issues that companies face and quantify the impact of addressing them. At Ventana Research we design our benchmark research to be able to assess how well companies perform in executing core business requirements. Research is constructed to measure the connections between the people, process, information and technology components used and the results organizations achieve. Since software investments are rarely made solely on efficiency gains, our research measures effectiveness as well. That includes a range of topic-specific aims, such as customer satisfaction, cycle time reduction, deeper understanding of root causes, increased visibility, greater agility and improved coordination in responding to change, to name just a sample. This type of research can be helpful in making a business case as well as in creating awareness within an organization of the need for change, generating interest in implementing change, and justifying the investment in technology that enables information improvements to achieve the organization’s objectives.

I’ll repeat that building a better business case for buying software involves more than just putting numbers on a page. It’s a sales and marketing effort that begins with understanding the full range of objectives that the investment can achieve. It’s essential that the proponents understand the aims of all the decision-makers and influencers in the company, not just in their own department. They must be able to clearly communicate how the investment will address the needs of all concerned. Identifying others’ objectives should make it easier to gain the necessary executive sponsors while failing to secure sponsorship diminishes the chance that the investment will be funded. Moreover, having credibility at each stage in the process of making the business case is also essential. Please investigate some of our benchmark research that bears upon your work and business issues, and let us know how we can help.


Robert Kugel – SVP Research

FinancialForce recently introduced FinancialForce ERP, a family of cloud-based software designed to support a variety of customer-centric businesses such as professional services organizations or companies that specialize in business and industrial distribution. Many of these types of businesses are midsize or smallVRLogobug400x400 (having 50 to 1,000 employees) and can benefit from the integration of FinancialForce’s accounting, professional services automation, human capital management (HCM) and supply chain management (SCM) software. The company added the last two capabilities at the end of 2013 with the acquisitions of Vana Workforce and Less Software, respectively, which I commented  on. Like FinancialForce’s, their software runs on the Salesforce1 platform, which means that integration of these elements was straightforward. It also enables companies that use or are planning to use for sales and customer service to simplify integration of those with the operational and back-office software, by enabling single sign-on, end-to-end process management and a single data source for reporting and analysis. This integration can significantly reduce or even eliminate the need to re-enter information into systems or to use spreadsheets, documents and email to manage processes. With all of the data available in a single system, creating reports and automating their distribution becomes easier. All of this, in turn, should cut the amount of time and effort spent on administrative and clerical functions and enhance the productivity of the organization.

From its inception, FinancialForce has had a two-pronged market strategy. Like all ERP vendors, it offers a suite of back-office functionality, but it also offers the option of buying separate component applications that address specific needs. Because all of the code within its suite is running on a single platform in the cloud, FinancialForce can offer an interoperable set of capabilities that can be purchased as a single application or in components. In the latter case, its sales order processing module can be used to bridge the cloud-based sales process to the user company’s on-premises ERP system. This enables companies to replace desktop spreadsheets or paper forms to pass order information from one system to the next – a time-consuming and error-prone process. The unified approach also makes it possible for buyers to acquire a full suite in stages, which may be more appropriate for their needs and budgets. FinancialForce’s recent acquisitions and their integration into the single offering takes the strategy a step further. Companies can buy additional component pieces (HCM and supply chain) that operate on the Salesforce1 platform. Moreover, FinancialForce now has a more comprehensive suite for two types of businesses, professional services organizations (PSOs) and distribution companies.

The recent release of FinancialForce ERP was designed to put additional emphasis on the suite offering. As an ERP suite, FinancialForce is suited for a variety of businesses, but two in particular are worth highlighting. One is PSOs (consultancies and the like) as well as stand-alone professional services organizations within a large corporation that need systems to manage their operations effectively yet interoperate with the parent company’s core ERP system. The integration of the accounting and human resources capabilities with  professional services automation (PSA) software provides a way of simplifying the management of day-to-day operations while substantially reducing the administrative burden for record-keeping, accounting and compliance. These sorts of businesses are well-served by an integrated suite of capabilities that automate and manage the sales, staffing and project management elements of their operations, while increasing the efficiency, timeliness and accuracy with which they perform critical tasks such as customer billing. Once a professional services company expands past a handful of billing individuals, the administrative burden on the senior members of the firm can be anything from a nagging distraction that saps their productivity to a time-sink that diminishes revenues. The right software enables them to scale their business without having to make corresponding investments in administrative personnel. Human capital management is especially important for PSOs since people are the core of their business model. Applications like Vana Workforce have the potential to improve the effectiveness with which a PSO handles its members. For small to midsize consultancies, however, the use of human capital analytics is especially important for improving efficiency and productivity, as our research has shown.

The other type is business and industrial distribution companies. vr_HCA_01_issues_driving_human_capital_analytics_investmentThese tend to be sales-oriented and, as such, might already be customers. In addition to the financial management functions, FinancialForce ERP provides necessary capabilities that support some of the supply chain management aspects of their sales processes, including configure, price and quote (CPQ) to maximize revenues as well as efficient and accurate order fulfillment, and contract, inventory and supplier management. Note, however, that although FinancialForce calls this part of its offering SCM, the software does not have the full set of supply chain functionality offered by established vendors in this field.

Since FinancialForce ERP is a cloud-based application, it’s suited to the needs of companies that have outgrown small business accounting software packages and can benefit from having the ability to connect sales, marketing and customer service capabilities with their back-office functions. Many companies with 50 to 500 employees still use basic financial software packages because they hesitate to make the investment in an on-premises accounting package and the IT staff they would need to support it. But they are foregoing the operational and management benefits they could have by using more capable software that doesn’t require a large up-front commitment and ongoing reliance on staff to support an IT system. The Salesforce1 platform also incorporates Chatter, messaging software that facilitates collaboration in context among employees.

Companies with 50 to 1,000 employees, especially those in professional services and distribution, that have a fragmented collection of software for sales, accounting, order and inventory management, and HCM, should consider FinancialForce to address their needs. This is especially true for midsize companies that have outgrown their entry-level accounting packages and are held back by their limited analysis and reporting capabilities.


Robert Kugel – SVP Research

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