Looking for the Unexpected Benefit

To protect the confidentiality of our client and their customer, we have not detailed names.

Profile

Sometimes a solution will have an effect on the deployment of staff inside the customer's business. However, this is often difficult to realise 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.

Background

The CIO is often charged with making the technical systems suitable for a business to flourish and his only reward is criticism if there is downtime. Also, technical experts are rare, so justifying a solution on headcount saving is a non-starter. In this case, the CIO required a $430k Intrusion Detection System (IDS) which he knew would reduce downtime based on the number of intrusions suffered in the last 12 months. But he was finding it very difficult to justify to his CIO colleagues. The other company offices were sure that downtime was expensive but couldn't come up with an acceptable measure.

The company was in the process of implementing a company-wide ERP system that would depend on a robust network that has a higher level of availability than was currently being experienced. The CIO was able to identify with the help of the IDS salesman that one of the main benefits would be an improvement in debtor days as a result of improved network availability for critical tasks such as invoice production. He agreed to sponsor a one day reduction in debtor days at board level and this would justify the technical solution.

The business case produced by the IDS salesperson was a pessimistic view of likely benefits. However, it ignored many other benefits that were considered but were not valued owing to lack of substantial information. They were:

• Direct savings due to reduced downtime
• 24 hour monitoring capability
• Reduction in costs for managing fewer suppliers
• Better utilisation of existing network equipment
• Reduction in engineering resource
• Centralised management of internet gateways (reduced vulnerability of network to attack and / or loss of vital business data)

Result

What appeared to be a difficult justification became very easy once the benefits were closely aligned to the customer drivers (i.e. successful implementation of the ERP system). A saving of one day from their current debtor days of 61 was sufficient to warrant the capital investment of $430k

Deal Details

DEAL DYNAMICS	Initial Cost	$430k
	Benefits total	$22k per month
BENEFIT	Reduction in debtor days by one (1) day	$22k
ROI MEASURES	Payback	20 months
	IRR	56%
	NPV	+ $284k

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