Measuring Value

You are two years or more after implementing an enterprise software solution, and you get the question, usually at renewal and usually by someone in procurement: Why the hell am I paying this much for this software? (or some version of that). If you get that question, having a prepared response is helpful.

Even better, it’s good to know you will get asked this question well before you get asked it. The following steps will help prepare.

Step One.

Always Baseline. Before you get into any software implementation, measure your current stats (headcount, throughput, level of effort, lost time, asset re-use, agency spend, etc…) that will eventually prove the value of the software.

Step Two.

Establish Value on the User level. What is critical to your end-users? Why would someone use the new software? What pain are you addressing? What gain will they see from using the software? The hope is that using the new software will address some pain or make their work more efficient. The key to establishing a value on the user level is knowing your end-users and being able to answer – What’s in it for them?

Step Three.

Departmental Value. What is critical to your departmental leaders? Are there metrics that need to be reported? What will quarter-over-quarter data help tell the story? The intent with departmental value is to show the efficiencies gained with the new software. Have projects, processes, or people become more efficient, allowing for greater throughput? The key to this stage is gathering the data that show throughput and quarter-over-quarter progress.

Step Four.

Executive Value. What are KPIs (Key Performance Indications) critical at the executive level? What strategies/goals are improved by introducing or expanding the software? The key to proving Executive value is to show critical, strategic metrics. If you don’t know that, proving the dollar savings is a good start.

Ultimately, value is particular to your organization and the level of the person inquiring (individual, departmental, and executive). It’s helpful always to predict these questions and have answers/metrics prepared in advance.

Step Five.

Alternative Value Measures. For example, if you bought a software solution to track projects, there are more metrics than just project completion, budget management or on-time delivery. There is employee retention – do the employees enjoy knowing what they are working on? Did employee engagement increase with the visibility of all of the work, and by how much? In many cases, the “value” of a product is not just in the intent of the tool but in the intrinsic alignment across your employees and departments.

Executive Summary

• The implementation of SaaS Enterprise Software is never done, and its value should always be understood and may need to be perpetually justified.
• In preparation for a cost conversation with Procurement, there are Five steps you can take.
• Step One: Before implementing the software, measure and establish a baseline of the company’s current statistics to later compare with the value provided by the software.
• Step Two: Identify the value of the software on the user level by understanding the specific pain points it addresses and the benefits it brings to end-users.
• Step Three: Determine the value of the software on a departmental level by assessing the efficiencies gained and analyzing metrics that demonstrate progress over time.
• Step Four: Establish the executive value of the software by identifying how it aligns with the organization’s key performance indicators and strategic goals.
• Step Five: Consider alternative value measures beyond the primary purpose of the software, such as increased employee retention or improved employee engagement.

Originally Published May 9, 2019