How to Build a Business Case for Automated E-procurement

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1 How to Build a Business Case for Automated E-procurement

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3 Introduction Any time an organization needs to make change, start a new program or implement new technologies, the first step in the process is to build a business case. No department works in a vacuum and it s important for other key stakeholders to understand why a change makes sense, what the advantages and challenges are, and what the overall cost will be. The migration to an e-procurement system is no different. While the benefits of an automated e-procurement system may be obvious to a Senior Buyer or other procurement pro, it may be less obvious for a CFO, CEO or other members of senior management. This ebook will explore how to build a strategic and solid business case that will help stakeholders and decision makers understand why migrating to an automated e-procurement solution is a smart choice. Create Your Team The first thing to do is to assemble a team that will create the business case. One or two people should be assigned to do the writing, while the other members of the team will be in charge of gathering information and research. Are there people outside of the purchasing organization who would be helpful and strategic? Look at each possible member, not only for their capabilities, but also for their strategic value to the team and to the success of the project. It should only take four to five meetings to complete the business case. Gather Intelligence Before Starting Begin by identifying your audience. Who influences the decision? Who will give the final approvals? Another question that needs to be answered at the beginning of the process is if there are any budgetary or regulatory issues that need to be addressed. Once you have a clear picture of these factors, you ll be ready to start gathering intelligence. A business case should explain in clear terms why e-procurement should be adopted. It should answer financial, organizational and long-term results from adopting e-procurement and the consequences of staying with the status quo. The business case should be logical, clear, objective and above all, persuasive.

4 Create the Business Case There isn t one definitive template for business cases. However, most have common elements. Overall, make sure that the business case is concise, free of jargon and impartial. Add elements like graphs, charts and illustrations to make the business case visually appealing. Executive Summary This is a one-page section that briefly outlines the highlights of the complete business case. Having a strong executive summary is key because many executives will read this section and skim or skip the other parts of the business case. Goals of the Organization It s always good to create a section that reminds decision makers of the overall goals of the organization. It sets the stage for later discussions on how e-procurement will help the agency reach their goals. This section may be hard to quantify, but if you align the project with mission and values of the agency, it can be more meaningful than operational efficiencies and hard numbers. Identify the Problem Most stakeholders will shy away from any change or expenditure that doesn t improve the agency or fix a problem. Outline the issues and be brutal. This is not the moment to sugarcoat anything or downplay issues because you think it may cast a bad light on the purchasing department. Remember that this is really a moment to prove that the department is forward-thinking and is preparing for the future. Quantify issues like employee hours, paper management and hard costs like postage and paper. Make sure to recognize shadow systems like spreadsheets and databases, as well as s and Word documents. Is your organization being run with a combination of spreadsheets and paper files? Make sure to call those out.

5 Possible Solution Remember that a business case is all about due diligence. Once your team has gathered information, it should make a recommendation. Elaborate on how the research was done, then discuss how an automated e-procurement solution will address the specific goals of the organization and solve current challenges. Include the criteria or capabilities that are needed to fit your organization s needs. Cost/Benefit Analysis A cost/benefit analysis estimates the equivalent money value of the benefits and costs of the project. There has to be a common unit of measurement, or a bottom line. Ask the question: How much will an e-procurement solution cost? Look at not only the hard costs, but also the time needed to implement the solution. Then look at the costs that would be accrued if nothing is done. Estimate all of the costs that are invisible in your day to day work life time, power to run copy machines, paper, ink, shredding anything that is used that could be replaced by the e-procurement solution. While intangibles can t be quantified, call those out; transparency = public good will, etc.

6 Address Possible Roadblocks If you know that there will be specific questions or issues that may slow approval, create a separate section to call them out and address them. Some possible roadblocks could include hesitation about cloud-based systems, compatibility, interoperability, deployment time and migration issues. Hesitation About Cloud-Based Systems According to analysts at Gartner, the transition to cloud-based systems in the public sector has been much slower, due to concerns of security, privacy and dependency. Address these concerns openly and talk about the benefits, including lower costs, reduced IT infrastructure to maintain and unlimited user access. When doing research and talking to possible vendors about e-procurement, ask them about cloud-based issues. They will be able to give tangible information about their solutions and how they address these concerns. Compatibility/Interoperability Outline the specific legacy systems that are used in the procurement process and then note how an e-procurement system will interact with them. When your team looks at possible solutions, make sure to have a list of the existing systems that your agency uses, so the vendor can help give specific information. Deployment Time/Migration Issues Work closely with team members and possible vendors to identify and outline what the process will be for the migration to an e-procurement system. Talk to existing users of the solution so you can gain an understanding of their migration process. If you come prepared with data that addresses this, it cannot be used to dismiss the project out of hand.

7 Making the Presentation The background work is done, the business case has been written, and graphs and illustrations have been created. Now it s time to present the business case. It s important to focus on ROI. Highlight the work that members of the team did to prepare the business case. Be prepared to answer any questions that may come up. If you and your team have done the background research, you will be able to handle any presentation with confidence and answer any questions with aplomb. Remember that your team has the domain expertise on e-procurement for your agency. If you come to the discussion ready and enthusiastic, you have a much better chance of success. Download Resources Download Business Case Template

8 About BidSync BidSync s comprehensive end-toend e-procurement solution helps public sector agencies streamline their procurement process, maintain compliance, reduce costs, enable transparency and save time. The cloudbased solution delivers cross-functionality through the entire procurement process from request to settle. BidSync not only offers procurement excellence to the public sector, but also delivers bid notification services to 800,000 qualified vendors nationwide. BidSync has 15 years of experience and its awardwinning solutions have been relied on by more than 1,000 public sector agencies nationwide. Call us: us: sales@bidsync.com