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Developing a Business Case for Marketing Technology

February 28, 2018

Technology investments must produce positive, measurable outcomes that support the organization's business objectives

Proposals for major investments in marketing technology must be built on a business case, which is developed during the propose stage of the SiriusDecisions Technology Alignment Framework. The business case should describe why the technology investment is needed, the projected positive outcomes and required resources. An executive team or steering committee typically reviews business cases and approves proposals before vendors are selected and resources allocated. In this issue of SiriusPerspectives, we provide an overview of the components of a business case for marketing technology investments.

Business Objectives

For significant technology investments that require justification and approval via a detailed business case, the first required component for the business case is a clear statement of how the investment will enable marketing to support the organization’s business objectives. During the planning process, marketing establishes priorities that support business objectives. When a marketing priority is identified as dependent on technology for execution, the business case should explain how the proposal delivers a positive outcome for that priority.

For example, if the organization has an objective to “improve customer experience across all touchpoints to increase customer satisfaction,” marketing may propose an investment in digital infrastructure to provide customers with personalized content and guidance for online resources. In this example, the proposed technology aligns to a business objective and a metric that measures its impact: customer satisfaction.

Along with business objectives and marketing priorities, include the following components:

Risks and dependencies. Identify the risks and opportunity costs of not investing in the technology. If a marketing priority has a strong dependency on technology and the proposal is not approved, a revised or alternate proposal must be developed for later review. Tie the consequences of non-approval to specific goals marketing has committed to attaining.

Executive champion. Every proposal must have an executive to champion the investment. The champion must be briefed and supportive to ensure the proposal gets a fair hearing, particularly in discussions in which the proposing team is absent.

Budget allocation. If budget has already been allocated for this investment, indicate the source of funding for the entire project, or if incremental budget is required.

Functional Capabilities

Technology proposals are often generated from a gap analysis between the current infrastructure and the functional capabilities required to meet new business objectives. The business case should identify the following components:

New functional capabilities. Start by listing the capabilities the organization will gain with the new technology. In the customer experience example above, functional capabilities may include the ability to identify customers and monitor their interactions to provide personalized Web content.

Use cases. Describe specific use cases that the proposed technology will execute. These are the particular steps or sets of actions through which users or other systems interact with the proposed technology to offer new capabilities.

Process overview. Identify the existing processes that will be affected or ones that will be created by the new technology. If necessary, diagram the process workflow to clarify what actions and users the new technology will support, and where it integrates with other processes and existing systems.

Process owners. Identify the process owners, and assure the reviewing committee that the proposing team has incorporated process owners’ input into the business case and obtained their agreement on it.

Change management considerations. The proposing team must convey that they have performed their due diligence to determine the impact of the new technology on the organization. This includes identifying users and assessing their competencies for training, determining localization requirements, and developing a communications plan to ensure adoption.

IT standards and governance. The proposing team must work with IT to ensure the proposal adheres to the standards that enable the technology to operate well in corporate infrastructure. These standards include proper data governance, security, data privacy, user authentication, vendor preferences and integration with other systems.

Business Impact

Many organizations struggle with setting guidelines for how to define the potential returns on a tech investment when a proposal requires an in-depth business case. Projections of the new technology’s business impact must be precisely quantified in the business case in order to calculate the proposal’s net return. Positive business outcomes of implementing the new technology may include:

Increased productivity. Project how the new technology will improve productivity in the processes noted in the functional capabilities by increasing throughput, boosting success rates, lowering defect rates or improving user satisfaction. These measures can be internal (e.g. saving time for teams that publish online content) and external (e.g. driving more conversions, improving customer engagement). Increased productivity is typically measured in terms of reduction in staff time and costs to attain desired results.

Associated revenue gains. New technology often supports initiatives that drive revenue, such as driving traffic to e-commerce offerings or reducing customer churn with improved customer experience. In these cases, the business case must demonstrate how the technology enables the organization to successfully achieve the revenue objective without affecting profitability with its costs.

Cost savings or cost avoidance. The new technology may generate savings by eliminating material costs (e.g. online event platforms reduce the need for physical exhibits), eliminating outsourced services or improving use of existing resources (e.g. a marketing resource management solution can improve budget utilization). If the new investment is replacing an existing technology, include that system’s subscription and support fees and administrative staff in the cost savings.

Risk avoidance. Implementing new technology that reduces exposure to risks, such as data privacy violations or inability to meet local regulations, can result in quantifiable cost savings, such as avoiding fines, legal fees or agency fees.

Increased customer satisfaction. When technology is intended to improve a customer’s experience with the organization, projecting customer satisfaction improvements may be difficult. Establish a method for assessing current customer satisfaction, reduced churn or long-term value, then leverage benchmark data to demonstrate the effect of moving from the current state to the future state enabled by the new technology.

Investment Costs

The business case must quantify the proposed technology’s external and internal costs. External costs are the fees charged by vendors and contractors to implement or build the technology. Internal costs that may add considerable expense, such as staff time to support implementation, training or operation, should be part of any costs summary. Investment costs may include:

License or subscription fees. Capture the estimated costs of purchasing the technology, including those of the first year and subsequent years. A three-year time horizon is typical for depreciated capital costs. If options exist for subscription or one-time license fees, compare the returns over a longer time horizon.

Implementation and support services. If the new technology requires implementation; maintenance; integration with existing systems; or ongoing support from the vendor, contractors or systems integrators, include those costs in the multi-year evaluation.

Internal staff. If implementation, support services or administration will be provided by internal staff, capture the cost of existing staff and any necessary additional full-time and contract hires. Use the fully burdened costs of these staff members to provide an accurate estimate.

Training. Enablement is an important element of the success of any technology. Capture the costs of trainers and materials not already considered in internal staff or support services over the time horizon of the proposal.

Projected Returns

The proposing team must scope the proposed technology investment to ensure it delivers a positive financial return soon after implementation and grows those returns in subsequent years. With an accurate assessment of positive business impact and investment costs, project a net return over three or more years to demonstrate long-term impact and account for depreciable assets. Use a discounted cash flow analysis that itemizes cash inflow and outflow over the time horizon to determine the investment’s net present value. Include low, medium and high estimates to demonstrate that the proposal reflects a positive impact under worst-case and best-case scenarios.

In addition to financial returns, projected results should include user acceptance and business acceptance. Proof-of-concept testing may be required to demonstrate the investment’s ability to deliver anticipated benefits. The results of these tests should guide implementation, and user engagement must be tracked after implementation to ensure success. Set expectations for how financial returns and test results will be tracked and reviewed, including the cadence for project updates.

The Sirius Decision

Marketing technology investment proposals are always evaluated among competing investments, either because they are one piece of a larger technology roadmap or there are other priorities that may deliver greater returns. Although executive team or steering committee members understand that new technology is necessary to deliver new capabilities and efficiencies, when the anticipated cost is high, there is often a tendency to minimize risk, avoid change and prioritize additional program or staff rather than infrastructure. Creating a business case that accurately represents the objectives, benefits and costs of a new technology is essential to position it as a preferred investment option.