The purpose of a business case when contemplating technology upgrades is to provide information on the benefits, costs and risks associated with the upgrade. Such information becomes necessary in the decision-making process to ensure a) the investment has value (in terms of its importance and relevance), b) the implementation will be properly managed, c) there are capabilities to deliver on the investment’s stated benefits and, d) the organization is optimizing its value opportunities. Ordinarily, upgrades are expensive and so without clear evidence of a return from the investment it will be quite difficult to get upgrade proposals approved. Nevertheless, expensive upgrades offers the best option for making system improvement, especially if the vendor is continually making improvements to the software.
For many organizations, the need to upgrade might arise because a vendor no longer provides support for a particular release or, it is the best option for aligning companies’ business processes to industry best practices. Whatever the reason, those presenting the proposal must present a compelling business case that evaluates the use of resources in support of a specific business need and, the return on investment (ROI) for the particular technology upgrade.
In presenting the business case for an upgrade the potential benefits must be identified and quantified. Upgrades that improve productivity by reducing “low-value” activities with that of high-level ones, reduce errors, improve decision-making with accurate business intelligence must all be highlighted in making the case. Conversely, costs and risks must also be considered. The greater the level of understanding regarding the risks involved with an upgrade the more likely it is for companies to make informed decisions that will lead to success.
Drivers
IT departments need to present their business case based on the contributions an upgrade will make to future revenue-producing and cost-cutting projects throughout the organization. This will serve to convince other functionaries in the organization of IT’s strategic role, instead of what is often described as, transactional. The key drivers of technology upgrades are as follows:
New Functionalities
– Leveraging investments made in core applications through the activation of new functionalities and enhancements can support the case for an upgrade. For example, adding self-service to the human resources module or, reporting features to business intelligence can ensure improvements in operational efficiency and decision-making.
Business Process Improvements – Upgrading a company’s core application based on further streamlined business processes can serve to improve a company’s productivity gains. Improving workflows in HR employee and manager self-service applications will serve to remove transactional processes from HR so that they can function as strategic partners in organizations.
Easing Regulatory Pressures – More and more companies such as those in the financial services sector are required to meet stringent regulatory requirements, which requires such organizations to upgrade their technology. Upgrading business analytics tool will not only result in improved data capture and analysis for decision-making purposes, but through the efficient generation of critical reports, information can be obtained quickly and with the minimum of effort. Thus, the pressure to be in compliance is eased by the efficient capture, storage and retrieval of information for reporting purposes. Besides, failure to be compliant could result in security breaches that could prove costly to the company.
Reduction in Enhancement Modifications – Upgrading to newer versions of an application not only render new capabilities and functionalities available to customers, but it reduces the number of enhancement modifications required after the upgrade. As a rule, the upgrade version of the software comes with standard features that align with industry best practices and conform to country specifications. Furthermore, upgrades reduce the need for support packages and patch maintenance. Overall, the benefit to organizations of an upgrade will be realized in reduced maintenance costs and reduced effort when next the organization must upgrade to a new version of the application
Growth – The current business trend towards consolidation of assets through mergers and acquisitions have resulted in the formation of larger enterprises with complex business processes and applications. Usually, existing systems are unable to support the new subsidiaries, especially if the number of users and transactions have grown. These scaling issues would require upgrading existing software applications in order to standardize processes across the organization and turn on advanced functionalities.
Termination of Vendor Support – If nothing else, a pending termination of vendor support for an existing software release will always get the attention of those responsible for the approval of an upgrade. The reason is that although some vendors might provide a truncated version of a maintenance and support service, usually it does not cover all functionalities. Overtime, the cost to maintain an out of date release becomes prohibitive and counter-intuitive when matched-up against all the reasons to go ahead with an upgrade to a newer release.
The approach when building a business case for IT technology upgrades is no different than when approval is sought for investing in some other type of business solution. IT departments must ensure that it communicates information that is balanced regarding the benefits, costs and risks associated with the upgrade. Accordingly, the proposal for technology upgrade must highlight areas such as, the capabilities of new functionalities, business process improvements, reduction in enhancement modifications, improved business processes, growth and, termination of vendor support when seeking approval.
Innovative Methods Consulting (IMC) is an Oracle Fusion Applications consulting company specializing in Human Capital Management (HCM) implementation that drive business value for its clients.
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