Optimizing the ROI of your Business Planning Software is obviously a priority. So how would you go about it and what are the prerequisites?
Business Planning Software ROI: TLDR
Maximizing the ROI of your Business Planning Software is not as simple an affair as it might initially seem. Expediting the implementation process, maximizing the software’s efficacy on your gross margin and reducing total cost of ownership are your primary levers to increase your solutions ROI – common sense, but each of those factors consists of different pieces with sometimes contradictory properties. Maximizing improvements on your planning processes will take time … which will drive costs up.
Granted, it’s a tight rope to walk but getting it done perfectly can shave off weeks or even months off your amortization time.
Maximizing the ROI of your Business Planning Software – Success is measured in … money – duh
‘But moooooom, all the other kids have them!’ – Ten-year-old me in the shoe store pointing at a pair of overpriced sneakers.
Damn, I wanted those stupid things so bad even though I was growing out of a pair of shoes in like 10 months. But mom wasn’t having any of it. She understood very well that social pressure is a way for brands to charge a hefty premium on products and that it has zero positive effect on the expected ROI of some factory made linen-plastic footwear …
Okay, maybe that wasn’t exactly what she thought but the point is: They were way too expensive for a ten-year-old football-loving sandbox dweller like myself.
Now, had I known then what I know today, I could have been more persuasive. I might have highlighted the brand’s reputation for quality or argued that the sneakers’ popularity would boost their resale value, thereby reducing the total cost of ownership. Obviously, that would only have worked If I also pledged to implement sound behaviorisms, staying out of mud, no football playing in the dirt and the like.
Doing that was out of the question for me so I got a pair of cheap, robust treaders which looked like they had been through hell after one week but went on to grace my feet for a good year still.
Right, where am I going with this … well, weirdly enough there are some parallels between shopping a pair of shoes and purchasing a business planning solution …
- They can support your weight structurally and really help you maintain good posture.
- You could outgrow them unless you are all grown up or they’re like super stretchy.
- It’s something that you can somehow survive without for a time but …
- … you won’t be competitive long-term without
- They really should fit well but you must also break them in with consistent usage.
- There are different types for different purposes.
- A custom-made product can carry you to the next league …
- … but it comes at a premium with higher time and material costs.
Cost Management
Very similarly to what my mom did back then, maximizing the ROI of your business planning software entails understanding what your software gets to do, how long it will last, how your team will treat it and what the total cost of ownership will be.
On that last subject: Total Cost of Ownership (TCO) for Planning Software is primarily influenced by just a few cost-types.
- Licenses
- Implementation
- Initial Software Price
- Time and Material Costs
- Recurring Development Costs
- Staff Training
- Support Contracts
And yes, most of these costs can be influenced in some way or another. Costs accrued from recurring development requirements, training and support contracts can be managed by creating a business intelligence competence center (bicc) within the organization, enabling self-service development and largely internal support. This in itself will require a specific approach on the choice of software which may mean a higher initial implementation cost from increased time and material requirements … when you’re choosing a shoe that will grow along with you, there are some upfront costs associated with that feature.
However, using internal resources can also make initial implementation costs more flexible. For example, we reduce costs by coaching client personnel during implementation, which decreases the hours our team needs to invest. One area where cost manipulation involves negotiation is in licenses and software pricing, which primarily depends on vendor policies and flexibility. Software providers have effectively no resource expenditure and hence mostly off-set staffing- and R&D costs. On that end, presented with the choice of making less money or making no money at all – most of the more flexible providers are willing to talk discounts.
Alas, cost management alone will not suffice to maximize the ROI of your business planning software. Implementation time can have a major impact as well.
Optimizing the implementation time
When it comes to reducing the time required for implementation, there are a few hard truths to unveil first.
- Pushing more manpower onto a project does not necessarily produce faster results.
- ‘Out-of-the-box’ is generally the fastest but does not predictably offer the best ROI.
- Manual data entry as well as adjustments in data governance are time consuming but necessary.
Good internal processes and a pre-existing data governance ruleset that is enforced on all levels can significantly reduce the implementation time. Ironically though, the ROI of your business planning software improves, if your organization struggles with good process hygiene – simply because the value of data validity and good planning increases in proportion to how bad it was beforehand … getting custom made shoes when you’ve been barefoot is much more of an improvement than just getting a new pair.
Nevertheless, data governance, naming conventions, file structure and data clustering are some areas in which you can reliably influence the time it takes to implement and hence can improve on the ROI of your business planning software before the project has even begun.
Project Team and contracting
Another very sound practice is to build a permanent project team that can implement and later support and develop the solution. Either in self-service or in cooperation with the implementation partner. In our experience, this is a major fracture point. Project members switching to another department, getting called off the project, falling ill, going for parental leave or even simply leaving the company can spell doom for the implementation and completely trash the ROI of your business planning software.
So be mindful when forming your project team. Prioritize IT-affinity, loyalty and try to assess risks like parental leave, long term sickness or potential for a change in employment. Adjust employment contracts to add non-compete clauses and perhaps even training cost repayment agreements. Fair enough, good employees generally react poorly to mistrust so good practice is to offer promotions, raises or project delivery bonuses alongside. If your solution is a pair of shoes, your team-members are the shoelaces without which your footwear will do you little good, so do everything feasible to tie them up … as in, retain them.
Post Go-Live: Hypercare, adoption and future proofing.
Once your application is live, maximizing the ROI of your business planning software becomes a matter of adopting the software and utilizing it for effective planning. Most implementation partners will offer a hypercare period right after the Go-Live, where the development team will support heavily to ensure a smooth transition.
In our metaphor, this early period is the phase where you break in your shoes until they really fit well. From now on, the ROI of your treaders will depend on how long you’re able to make them last and unfortunately this is where the similarities to software purchasing might end. With good maintenance and reasonable behavior, you have a great deal of influence on the shoes life-span. In contrast: business planning software is still a tool to keep you competitive and hence must itself be competitive which depends heavily on how the software is set up, the developer and the market at large.
This is where out-of-the-box solutions tend to fall off. Without the flexibility to adapt to changing environments they may lose the competitive edge rather quickly. Plus: Developers might lack incentives to adapt existing software in favor of creating a new product.
The flexibility of a framework solution with self-service capacities can really shine in this scenario. Be it the newest set of data regulation laws by the EU or the latest advancements in AI and Machine Learning, or just a growth spurt after a few good years – as long as you can adapt, the software can too … like a shoe that’s super stretchy.
Identify your profit drivers
Now here is where we strike gold. To get any returns on your business planning software, you’re going to have to be able to leverage the data gathered and the forecasting or planning functionalities. As briefly mentioned before, this, ironically, becomes easier the less developed your data management processes are to begin with. A tendency for bad decision making is another really good predisposition for excellent returns. Jokes aside, a few areas tend to be reliable profit drivers.
Risk / Opportunity assessment and simulated forecasts
simply having multiple plans for various different scenarios can be a powerful asset in situations where speed is of the essence. For procurement in volatile markets for instance or when purchasing power is asymmetric. In some industries, risk assessment is a major profit driver such as in banking and insurance. Even in marketing and sales planning, understanding what customers have historically reacted to positively or negatively towards can directly improve sales.
- Cost-calculation excellence
In some settings, calculating costs with high precision can either give you a more competitive price or simply free up capital for other uses. In the retail industry, calculating the costs and opportunity costs for storage space, logistics and shelfing with superb precision is extremely margin effective (more on that here). In most procurement-heavy environments, utilizing historical data on demand and price can allow for much more cost-effective purchasing, relieving budgetary stress on the supply chain.
- Personnel cost savings through automation
One topic that is often avoided is the factor of labour savings, which is of course significant. Automated workflows, especially for data entry, recording, management and analysis, mean that processes that would otherwise consume man-hours are carried out automatically. Fortunately, these are the dullest tasks that nobody does voluntarily anyway. The freed-up working hours can of course be allocated elsewhere, which means that fewer FTEs are needed overall.
- Operational benefits of data stream integration
While the integration of data from various systems into a single source of truth is a major benefit in reporting and decision making – it also has a few straightforward effects on the bottom line. Namely: By reducing operational downtime from having to manually adjust data spreadsheets. This is especially true in manufacturing processes where planners routinely align inventory and production schedules and align both with the procurement office – risking production hiccups at every step.
Every industry has different profit drivers and not every one of them benefits from business planning software to the same degree. So it should go without saying but do make sure you have identified your actual profit drivers before investing into a BI- or EPM-System in the first place, you may also want some competent outside eyes looking at it *wink*.
Partner up!
Finally, time for some self-advertisement, while it may seem counterintuitive, having a capable, independent and experienced implementation partner, which obviously comes at a price, can open up your options. For instance, we at bdg have been in the business for 15 years and have standardized implementation projects and developed pre-built templates to offer the best of both out-of-the-box, and customizable framework solutions. Thereby cutting the implementation period and improving on the UI while retaining the flexibility and performance of frameworks to maximize the ROI for our clients.
Or in other words: We’ll help you find a shoe that fits and aid you in putting it on.
Also … we’re quite fun to work with – which is really important too.
