The business case for business productivity software is often diluted due to the lack of clarity on the factors that contribute to the return on investment (ROI). This post sheds clarity on the intangible factors that can help improve the case for an online spend software management platform.
One of the biggest obstacles to the deployment of business productivity software at the workplace is the business case for it, or more importantly, the lack of it. Unlike some of the other projects a firm undertakes, the return on investment (ROI) on a software platform deployment project is rarely direct or easy to calculate.
Software platforms such as the spend management platform or customer relationship management platform help in the management of internal business processes and rarely produce direct revenue. Often, in making the business case for it, line managers do not take into account all the factors that impact the ROI of the software, both tangible and intangible, and therefore fail in making their case convincingly and coherently.
Drawing on the work of Misra & Mondal (2011), we will take a look at some of these tangible and intangible factors that could help make the business case for the online spend management software platform more coherent and watertight. The online spend management software platform is a software package that contains the modules for travel booking, expense management, procurement, wireless expense management, accounts payables, invoicing, and analytics, delivered in the Software-as-a-Service (SaaS) model.
In the frenetic business world today, the pace at which a problem realized and solved is almost as important as whether a solution was found. With features such as detailed reports and analytics, the software helps organizations recognize a problem quickly and develop the right solution for it.
Furthermore, it also helps implement the solution quickly, making the organization more agile. In calculating the ROI for the spend management platform, one of the factors to be considered is the speed at which the software helps resolve queries and implement more efficient patches to the process.
Rigid processes can often lead to red tape. Take the case of approval for a travel booking. Sometimes, when the amount in question is low, self-approvals or pre-approvals can help more the process along without bottlenecks. However, there might not be a mechanism for the same since the process is standardized.
With software, there is flexibility in such issues. The software can automatically classify expenses based on pre-set limits and sort those that don’t need approval from those that do. Processes such as procurement also need a fair amount of flexibility to account for the many things that might go wrong or have to be improvised. The amount of time saved on abnormal or unusual tasks can also bolster the case of software.
In the normal course of business, employees sometimes might have a need for more resources than those that are available at that moment. This lack of ready access to the necessary resources might cause a business failure, which might have an adverse impact on the bottom line. Both the availability and the speed of availability of resources-on-demand have to be taken into account while calculating ROI for the software platform.
Time to Market
Technology can help in reducing the ‘time to market’ of new products and services, helping organizations design, prototype, develop, and launch them quickly and effectively. With the procurement management solution, organizations can tighten their ordering and delivery processes, allowing for the timely and even before-time product and service launches.
Furthermore, technology can be an invaluable aid in versioning and iterating, helping innovation. The invoicing and accounts payables solutions help maintain timely payment schedules, both incoming and outgoing. By calculating the cash flow from faster times to market, we can understand the contribution of the spend platform towards this cause.
Every organization has both internal and external customers, and while most organizations care about external customer satisfaction, they rarely do so about internal customer satisfaction. Employees have to work together, and the value chain often works sequentially.
When employees of one business unit hand over their work to the next business unit in the value chain, they should do so in a manner that is demanded by the subsequent business unit, or there is the risk of business failure. A software solution like the spend platform ensures improved customer satisfaction internally and contributes to external customer satisfaction too.
Also, it can help with suppliers. Consider your vendors with their delivery and payment schedules. Procurement and accounts payables modules ensure timeliness and transparency, keeping all parties happy. Both internal and external customer satisfaction can be measured using surveys, and these numbers help increase the clarity in understanding the ROI of the software.
Apart from the ‘time to market,’ there is another time-related factor that can improve the business case. A spend platform helps with the standardization and streamlining of multiple business processes, helping a wide range of stakeholders decrease their respective lead times and, in cumulation, save a lot of man-hours for the organization.
With the travel booking application, travelers can now seek approvals and book their tickets in a tenth of the time it would otherwise have taken. The built-in automation of the expense solution drastically reduces the time it takes for an expense report to be prepared and submitted, allowing for more time for other job-related activities. by calculating the number of man-hours saved, we can more accurately calculate the ROI of the software platform.
Risk Reduction & Disaster Recovery
Businesses face server management-related risks and service outages. Added to this are the risks of recovery in case of disasters. Since the spend platform uses the SaaS model of delivery, server management now becomes the responsibility of the service provider and not that of the firm.
Also, since data is backed up in multiple places, recovery in cases of disasters is quicker and painless. By calculating the costs of server management and disaster recovery and subtracting the same from the overall expenditure, the case for ROI becomes better.
In addition to the above, firms can save their server-related expenses, which is a major tangible factor that contributes to ROI. This factor assumes more importance if the firm has an on-premise solution previously deployed.
Value and Core Competency Focus
Activities involved in spend management such as travel booking, expense reporting, and wireless expense management are auxiliary activities and not necessarily value-creating activities. Furthermore, these activities take the focus away from the core competency of the firm and instead waste their time.
By allowing technology to carry out these activities in the least possible time, the platform allows firms to focus on value-creating activities and their core competencies. Also, there will be a significant increase in productivity across the board because of the reduced lead times. By calculating the improvements in marginal costs and marginal benefits, we can capture these factors in the ROI.
The next time you struggle to justify your case for business productivity software, include the above factors in your submission so that it might become easier to goad the reluctant finance department into Okaying the necessary budget for the project.