How to build a business case for investing in an asset management solution
A guide to highlighting the benefits of asset management software in a business case
Asset Management Information Systems (AMIS) are still seen, by those who control the purse strings, as a 'nice-to-have' - because the benefits are seen to be long-term -not as something that is essential for asset planning in today's increasingly digital world. The reality is that increasingly, a modern, digital asset management system is becoming a necessity for most organisations, which is essential to highlight when developing a business case for investing in an asset management planning solution.
Why you need a business case
Bringing an asset management solution on board isn't just about the financial investment. It requires commitment, leadership, and organization-wide buy-in. Once implemented, the relevant people need to be trained on how to gain value from the software, how to use the data to facilitate decision-making, and to benefit from the insights an asset management system can provide. All of this needs to be taken into consideration and then presented in a strategic format - and that's the business case.
An effective business case gives the project a company-wide profile, which means it is more likely to gain the organisational buy-in you require - something that doesn't happen if you try to keep it on the down-low.
Too busy fighting fires to invest time in preventing them
It's ironic that often, the powers-that-be are spending a large chunk of their day dealing with exactly the kinds of issues that an asset management solution would resolve. This is the classic struggle that you'll come up against when attempting to convince them to implement a more structured and resilient approach.
For that reason, your business case has to be compelling and to-the-point. You've got a better chance that they'll take it seriously if you can grab their attention on the first page. And one of the most effective ways of doing this is to point out, in no uncertain terms, the risks your organisation is facing if it doesn't innovate - and what the potential consequences could be.
Risk and compliance - two major drivers
It's surprising how many enterprise-level organisations are still using spreadsheets for asset management and planning. Digital transformation is impacting business models on a global scale. There is a need for greater rigor and accuracy, and when it comes to the application of asset management, the reality is that spreadsheets are no longer up to par in those areas.
What this means is organisations that are sticking with outdated legacy systems are putting themselves at greater risk of inaccuracies and non-compliance. Not only that, but their data integrity is being significantly compromised; without a rules layer sitting on top of a spreadsheet, there's nothing stopping people from inadvertently corrupting data in the asset register – data that’s riddled with errors that you rely on for reporting and decision making.
When you're building a business case for investing in an asset management solution, it's important to highlight the risks your organisation is running by not going digital. It's not just compliance and data; knowledge siloes mean that information isn't being shared effectively, and if the holders of that knowledge leave the organisation, that information goes with them. Key-person risk is a real … risk.
Strategic Case
Outline the asset management problems and challenges facing the organisation. Provide examples of mistakes that have been made, fires that need to be fought, and the time and resources it takes to fight them. Identify the risks and hazards the organisation must deal with while using out-dated, legacy systems, and the potential consequences.Then, outline the opportunities that arise from investing in asset management software:
• Comply with regulations and your organisation’s governance of what level of information they require
• Understand the state of your current physical assets
• Develop effective maintenance and renewal programmes
• Plan projects and forecast more effectively
• Achieving better outcomes
What you're aiming to get across is how an asset management solution will provide more robust information to plan to support the future demands placed on your organisation. From here, you can drill down and list all the quantitative tangible benefits (measurable) and the qualitative intangible benefits.
To help you evaluate the ROI, we recently published a blog that will show you how to emphasise the importance of non-tangible benefits, and how they're just as valuable as their tangible counterparts. It also highlights the importance of forward-planning and how it can mitigate risks - and save money.
You should also check out our eBook: The definitive guide to property lifecycle management planning, which goes into greater detail and will help you align your organisation’s strategic objectives.
Financial Case
Here's where you lay out what the solution is actually going to cost. Flesh out all the potential costs into a spreadsheet (which you can include as an appendix) and summarise it in this section, with details about the fixed or one-off costs and variable or ongoing costs.
Remember to include:
• Expenses relating to supporting infrastructure, administration, maintenance, and resourcing
• Costs for planning, design, or implementation costs for change management, training, ongoing benefits
• Operating costs like licensing: how much will the system cost to manage on an ongoing basis?
Remember there will always be financial benefits to offset the financial investment. While these may not drive a compelling return on investment, it is important to recognise them. Always include a contingency cost. Typically, an additional 10% – 30%; you don’t want to get caught out with unforeseen problems and no budget to fix them.
Commercial Case
Outline the procurement plan you've identified as most effective. It should outline the entire procurement process, from sourcing to contract to exit. List what's being procured, and the costs involved, key stakeholders and how you're going to engage them, and the type of procurement approach you'll use. Remember to consider procurement policies and constraints.
Make sure to include a realistic step-by-step timetable for the procurement process.
Management Case
This includes the activity scope - what's going to be included and what's out of scope. Outline the degree of change required to successfully achieve your objectives, e.g., What is a core 'must-have'? What is desirable, aspirational, or out-of-scope?
Then you need to outline the assumptions you’re working under in carrying out the project, which leads onto dependencies and constraints - what are the limiting parameters within which the investment must be delivered? What other actions outside the scope does success depend on?
Finally, outline the risks and your mitigation strategies - what events could impact on the achievement of the objective and what initial mitigations will be applied to avoid the risk?
Appendix
Use the appendix to attach any reports, spreadsheets, case reviews, and testimonials - anything that supports different areas of your business case and your overall objectives for investing in an asset management planning solution. Remember, it’s about presenting a compelling case that appeals to the key areas of the organisation – from customers, to operations, and to finance.
Conclusion
Asset management is becoming recognised as a critical business process. Getting it right requires an investment in the right processes, information, systems, and people. Presenting your business case to your organisation's decision-makers in a structured way gives you the best chance of gaining buy-in and approval. It needs to be robust and compelling, and aligned with your organisation's strategic goals and objectives. Present the risks and potential consequences clearly - then map out how risks can be mitigated, consequences avoided, and business benefits across the organisation.