How do systematic business cases guide decisions for major IT investments?
hpo Practical Case Digital Core Design
Whether a new ERP solution, a modern manufacturing execution system, or a firm-wide office solution: Manufacturing companies must invest in future- proof IT solutions on a regular basis to gain – or retain – an edge over their competition. Beyond immediate business impact, such systems are essential to enable efficient and standardized end-to-end business processes.
Avoid costly IT misinvestments
The necessary investment decisions are complex and often not all the necessary data are available, but wrong decisions can have a very negative impact. Competing for money and time with other promising investments, picking an inferior option can cripple a firm’s success and innovative spirit.
Project goalIn a specific case, hpo was commissioned by a multi-national company to evaluate the cost, benefits and expected return on investment of a planned group-wide IT solution which represented one level of the firm’s automation pyramid (see Figure 1). This would serve as the fundament of an informed investment decision in line with the strategy and innovation plan of the company.
To determine the economic merits of the IT solution, it was necessary to have a sound understanding of both the specifications and the intended outcomes of the project. To that end, a detailed project proposal was evaluated in terms of monetary cost and other resource requirements. As for the expected outcomes of the implementation, both quantitative aspects (e.g., cost savings) and qualitative factors (e.g., time-to market or customer satisfaction) were considered.
When resolving any kind of business case, one of the biggest challenges is to clearly understand a solution’s impact despite scarce data. hpo resolves this by combining case data from similar IT implementations with profound assessments from specialists. Conducting in-depth interviews with the key experts in all functions touched by the IT solution allowed the project team to thoroughly understand current challenges as well as the potential impacts of the solutions. Where data were available, they were used to further solidify and validate the picture.
To optimally steer a large-scale IT project, hpo recommends developing a more detailed version of a business case after more data become available. A pilot implementation in one area can provide invaluable information as to which features of the solution yield the largest impact. This allows for a more accurate prediction of the financial performance of the investment and gives program managers the ability to further fine-tune the rollout plan.
On a purely monetary basis, the hpo analysis demonstrated an expected return on investment within about five years. At the same time, hpo’s holistic approach identified major risks, including a substantial (human) resource requirement within the programme. On this basis, our client was able to make a well-founded investment decision.
With profound expertise in the manufacturing industry and with IT solutions, hpo is the partner for your firm’s digital core design. Our holistic approach optimally aligns substantial IT decisions with the appropriate business processes and organizational setup. Thus, we ensure that investment decisions you make support your strategy and foster the innovative power of your company.
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Who is hpo?
hpo makes companies more successful and more innovative. The strategy consultancy for enterprise design boasts more than 25 years of experience in the creation of strategies and organisations spanning many different industries. The management consultants at hpo specialise in the meticulous development of strategies, processes, business models, innovation and culture, and in accompanying the transformation.
The hpo design approach enables companies to better cope with strategic and organisational challenges and to realise substantial competitive advantages. The basis of the industry-spanning design approach is an academically grounded methodology with which high performance organisations are shaped and which is continually further developed with the latest findings from research and practice.
The management consultants at hpo come from a commercial or technology background and stand out with their high level of analytical and emotional intelligence. They are passionate in their dedication to the client’s concerns and enjoy working in a team.
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