When deciding between off-the-shelf and custom software, many companies opt for the former because of its lower upfront cost.
As companies expand, however, off-the-shelf solutions inevitably introduce constraints, inefficiencies, and bottlenecks.
Custom software offers a solution tailored to your company’s internal processes, procedures, and objectives. But selling stakeholders or top management on an investment in a custom software project requires building a strong, fact-based case.
Here are four steps that are critical to making the case for investing in custom software.
1. Put a Dollar Value on Current Inefficiencies
Every successful business case begins with a good grasp of the problems your existing systems create. Before asking leadership to invest in a custom software initiative, determine where your existing tools fall short. Look at things such as the following:
- Manual data entry or repeated tasks that slow things down
- Inefficiencies from repeated errors caused by fragmented systems or legacy systems
- Time spent shifting information between systems
- Insights lost due to an inability to report them
Once you’ve identified these pain points, translate them into measurable numbers. For instance, if employees spend an average of one hour per day duplicating data between systems, multiply that by their hourly rate and number of staff. That wasted time can quickly add up to tens of thousands of dollars per year.
And put a dollar value on the indirect costs — slowed-down customer service, communication breakdowns among employees, and lost sales because of inefficient procedures. Hard numbers will lend credibility to your cause and help secure an investment in custom software.
2. Highlight the Return on Investment (ROI)
Decision-makers care about ROIs — what the company will receive as a return on what it is going to spend. To get your argument heard and seriously considered, show that custom software is not a cost but an investment that will lead to a solid ROI.
You can place ROI into the following three buckets that can help you present your case:
- Improved efficiency: Track the amount of time saved by automation, replacing human intervention, or where systems work with other systems automatically.
- Reduced cost: Track third-party licensing cost savings, integration costs, or redundant subscriptions.
- Improved revenue: Explain how streamlined processes or improved customer experience convert to improved sales or loyalty.
For instance, if your sales representatives are spending fewer hours on data entry and more time generating leads, revenue will increase. And if internal software helps reduce order errors or processing time, that can directly translate into customer satisfaction — building repeat business and word-of-mouth referrals.
3. Link the Project to Business Objectives
To convince decision-makers and make a lasting impression, your proposal must align with the company’s strategic priorities. So, you need to consider questions like the following:
- What are the organization’s highest priorities over the next couple of years?
- Do they want to expand, enhance customer satisfaction, innovate, or become operationally effective?
After answering these questions, frame your pitch for custom software as a means to an end that appeals to these priorities.
4. Minimize Risks — and Show How Custom Software Does So
Managers dislike risk, especially with new technology initiatives that could cost a ton. A sound business case does not ignore risk; it calculates it. Project potential risks and show how a custom solution minimizes them.
Off-the-shelf software introduces security risks, dependence on third-party firms for support or maintenance, and possible scaling limitations.
Building a business case for buying custom software is possible if you consider the four points above. Custom software is not the preserve of industry titans — it’s a necessity for any business that wants to do business better, grow quicker, and build more compelling experiences in an increasingly digital world.
With a solid, fact-based business plan in your hand, you’ll be adequately equipped with all that you’ll require to bring that dream to life.
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