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What are the requirements for building an effective financial analysis to obtain approval for a contact center technology investment?

1/14/2014

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Question
What are the requirements for building an effective financial analysis to obtain approval for a contact center technology investment?

Answer

DMG expects 2014 to be a good year for contact center IT investments – the best since the Great Recession. We recommend that buyers draft a business case that includes a return on investment analysis to speed up the process of obtaining senior management approval. In many companies, new IT investments are expected to pay for themselves in 9 to 18 months, although CFOs are still more inclined to approve short-term projects that have a return on investment in less than 9 months.

  
There are five major components that should be included in a business case for a technology acquisition. These are:

  1. A concise description of the challenge or problem that needs to be addressed, along with its financial impact on the organization. To get the investment approved, show the financial impact of the problem on the company’s bottom line. If the investment is for a service organization, it is also a good idea to address the impact on the customer experience or journey; however, this is a “soft” benefit that CFOs may not take into account when evaluating IT investments.
  2. A description of the investment, highlighting its major benefits and contributions to the organization.
  3. A review of the selection process to explain how the preferred solution was chosen and why it’s better than the alternatives.
  4. A detailed presentation of the specific quantifiable and qualitative benefits that will be realized from the investment – be as specific as possible. Identify benefits that tie back to corporate and contact center goals; specifically, look for cost savings, incremental revenue and cost avoidance opportunities. Clearly communicate the path to payback. Unless the investment yields quantifiable benefits that are cost savings for customer service departments and incremental revenue for sales or collections organizations, the investment is unlikely to be approved. (It’s fine to include soft benefits, but not for cost justification.)
  5. A detailed financial analysis; the format and financial models used will vary based on the acquisition model.