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Find the unexpected economic benefit

Find the unexpected economic benefit

Public sector deals are driven by similar cost saving benefits that impact private sector deals but there is often an additional political driver that makes the business case discussion particularly difficult. This can be compounded by the need to save costs driven by central government initiatives. However, it is often difficult to realize headcount savings for various reasons, not least of which is the staff affected may be in your sponsor’s department!

Being creative in identifying the business benefits can allow a sponsor to justify the solution without impacting headcount in the immediate future.

Background

The finance controllers in a large County Authority are trying to rationalise their operations but they are constrained by outdated systems.

Problem

The County Authority’s finance department has a notional business case to invest in a new accounting system but it has not put pen to paper yet. The supplier has the ideal accounts system but convincing the authority to move forward has been a tortuous process.

Solution

The business case produced by the supplier was a conservative view of likely benefits. However, it did not include other benefits that were considered but were not valued owing to lack of substantial information, including:

  • Benefits discussed around the budgeting process.
  • Better financial management and decision making through better reporting will also be possible.
  • County Authority internal end-user training costs have not been included in this analysis.

Benefits were found for each impacted department in turn. For example, technical experts are hard to come by at an affordable rate, so justifying a solution on headcount saving is a non-starter but freeing up time to perform more front line duties is allowable.

Result

What appeared to be a difficult justification became very easy once the benefits were closely aligned to the departmental drivers. A saving of one day from their current debtor days of 61 was sufficient to warrant the capital investment of $430k

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