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It happens all the time. A common question we encounter as a software company from nearly every prospect is, “Can you give me the ROI of your product?” And clearly, it’s a very reasonable question to ask. If you were about to invest thousands of dollars into a software solution that your organization has never heard of before, let alone had experience with, you absolutely should be asking about value and return. And, of course, as any good software company does, we’ve got some good data and good references to answer the question.
But, I’m going to be a little too forthcoming here, and share the reality…
It’s not easy to answer that question.
We’re not alone here, as many other software solutions struggle with this question, it can be hard to truly quantify the value of software whose main output is information. And that’s what we sell. Information, analytics, data, and process. Other industries, like Business Intelligence, also sell on “better information” and “better decisions,” and have also struggled for years with an easy-to-calculate ROI for their software. Many of them, instead, focus on comparing the Total Cost of Ownership (TCO) of their software against that of their competitors. That focuses on the ease of implementation, maintenance, and upgrade of their solution against others. Certainly a good way to show value. But, it, sadly, still ignores the overall value question.
So, my question to you is – how do you judge the value of better data? Of process improvement? Of avoiding making bad choices? Of getting more value for your dollar than you would have otherwise? It’s tough, and it’s certainly not clear. I’d love to hear your thoughts.
Here’s how we tend to break it down, and I’d appreciate your feedback and comments. To us, the value of Portfolio Analytics is defined by:
1. Business Outcomes
- Cost Savings – Identifying the right initiatives, projects, and investments to cut in order to save resources.
- Strategic Fund Redistribution – Identifying the right initiatives, projects, and investments to cut in order to redistribute the resources to higher value, more strategic initiatives.
- Strategic Alignment – Making a clear, objective, direct connection between investment and resources choices and business strategy.
2. Process Outcomes
- Reduced Cycle Time – Removing wasted time in the portfolio analysis and selection process, especially in the scenario and what-if-analysis parts of the process.
- Improved Transparency – Setting a common set of rules and reasons for funding decisions across the organization.
- Increased Analytic Depth – Having more of the ability to analyze options, scenarios, and investments to make more strategically-valuable selections for your portfolio.
- Improved Data Quality – Ensuring all portfolio data is stored in one place and is up-to-date and complete.
How does that look to you? Is that valuable?
Interested in learning more? Then you'll want to watch our latest webinar, "Improve Your Decision-Making Skill Sets".
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