Cost-Benefit Analysis
The problem . . .

There is much talk about "adding value" with IT and Managed Services solutions. Added value is the route to greater profit both for the user and for the service provider. But how do you demonstrate the value of a particular solution or service - either in isolation or against another? How do users make sure this value is achieved in practice?

In the current economic climate, users are increasingly needing to prepare well-founded business cases for introducing IT solutions and managed services into their organisations. The stories of expensive IT projects not achieving any clear benefit have heightened concerns, as has the demise of most of the dot-coms.

Service providers are in a strong position to help with this, but all too often do not. Even if they do, their efforts usually fall well short of what is required. For example even if a cost-benefit or ROI (Return on Investment) analysis is provided, the way this is presented is usually simplistic, often based on questionable assumptions (or guesswork) and even more questionable comparisons. It is also usually far from complete. As a result, it may be interesting to users in passing but is seldom credible enough to be of much use to them.

How can a Service Provider present a compelling business case for its solutions offerings? It is all very well to claim big savings and benefits, but why should users believe them? They have every right to be sceptical. 

These are now vital questions for user organisations looking to implement IT and Managed Services solutions - and for Service Providers looking to sell them.

 

Our solution . . .

Our own ongoing work in this area indicates that, for an analysis to be compelling and credible, it must be comprehensive, objective and relevant. This means that the analysis itself must be carefully planned and based on properly researched data. What is the solution really worth to the user? Is it relevant for a particular user’s circumstances? What proof is available to demonstrate that claimed savings will be made? Only adequate research of real cases can answer these questions, yet all too often this is not undertaken.

Further, IT and managed service solutions increasingly offer additional benefits that are difficult or impossible to quantify. Nevertheless, these must also be accounted for as they may represent considerably more value than the straight financial numbers suggest on their own. They may even be the main reason why the solution is being contemplated at all.   

e-principles, together with our partner Revelation Research, provides answers to these questions. We work closely with our clients to conduct in-depth research of data, bearing in mind that such data is not merely a question of asking for people’s views. It needs to be based on multiple pieces of hard evidence in order to stand up to scrutiny. We then use this to build better models and sales tools, using best practice methodologies.

A compelling and convincing business case must be based on analysis that is:

Comprehensive – considers all major elements of cost and benefit and the risks associated with each. This requires careful planning and risk assessment.  

Objective – not based on supplier or user impressions and opinions. Such critical data cannot be “guestimated”, it needs to be observed.

Relevant - based on data that is appropriate for the case being considered. This requires that the research be conducted in a variety of different industry sectors and organisation sizes.

What this delivers . . .

For the user . . . it provides:

  • A basis for building a business justification for purchasing IT and Managed Service solutions in your business.

  • A basis for monitoring and managing their effectiveness after implementation.

For the service provider . . . in addition to these, it also helps to:

  • Develop a better understanding of customer needs

  • Speed up the sales cycle

  • Identify opportunities for creating additional value

  • Identify elements of the current offering that do not deliver adequate value and need reviewing.

 

To find out more about how we can help, contact us at costbenefit@e-principles.com 

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