We are coming back with another article from the Business Value Assessment series written by our Senior Digitalization Consultant, Kris Honkola. Kris is a business and solution consultant at Espeo Software, in addition to also working as a Project Manager for our Finnish customers. He specializes in solution consulting, business analysis, and digitalization brainstorming, focusing on the business impact of digital solutions. Kris has more than 30 years of experience in the IT industry, significant hands-on knowledge of developing commercial systems and managing the entire lifecycle process of IT product development.
In this article, Kris discusses the benefits of Business Value Assessment which are sometimes overlooked while considering digitalization:
- justifying an investment in digitalization with business reasons
- creating a professional and accurate investment presentation
- coaching the technical leadership in order to deliver the presentation well
How to justify an investment in digital transformation
The key benefit of a Business Value Assessment (BVA) is the financial justification of investment in digitalization. BVA supports the financial justification with ROI, calculations as well as in-depth explanations of the investment benefits. However, there are many other benefits that companies can derive from working with Espeo Software during Business Value Assessment workshops. Let us look at a few examples.
A business story explaining the benefits of the investment
Having an excellent ROI calculation does not always mean that funding will be forthcoming. Therefore, the justification of the investment needs to be a part of a story that supports the goals of the organization. Let’s consider a scenario where the main goal of the organization at the time is to improve customer satisfaction visiting their web portal. To demonstrate that the investment will improve customer satisfaction, the investment story needs to demonstrate concrete examples of how the investment will benefit the organization. This is something that IT directors and CIOs often do not include in their funding requests. In my role as an external consultant, I can help develop a financial impact story that supports the funding request.
Providing professional presentation that supports the objectives of the investment
In my 30 years of experience, I have seen quite a few funding requests for various IT and digitalization projects. Usually, they include a technical document explaining the technologies to be used, along with a brief description of the potential benefits. In most organizations, these are targeted at financial leadership, such as the CFO. Sometimes they may even target the board of directors. These people, however, usually have a substantial background in finance and often do not fully understand the technical document of this kind. Moreover, are they really interested in the content of the document? To justify their investment, they need a well-calculated return on investment (ROI), as well as the understanding of what the potential business benefits are.
Coaching the technical leadership to deliver the findings well
When we at Espeo Software finalize the BVA report, we often present the results to the CFO of the company. However, this is not always the case. Many companies do not allow external consultants to report directly to the Board or the CFO. On those occasions, the person who will report the results needs to be coached in order to deliver the findings correctly: using the business story and the right materials. Nevertheless, it is not enough to have the right story and materials. One has to be careful how the information is delivered. Despite their desire to cut costs, CFOs are eager to see what kind of return an investment may produce. Because of this, it is important to communicate that a particular digitalization project has no costs, but that it is an investment opportunity that supports the company’s goals.
Interested in learning more about Business Value Assessment?
Don’t miss out on our expert’s insights and make sure to check out all articles from the series:
- How to identify what digital technologies to invest in [Part 1]
- Identifying the best digital investments: Use Cases [Part 2]
- How to use business value to your company’s advantage [Part 3]
- Ideation. Gaining advantage with the ideas of the Espeo Consulting team [Part 4]