hpo Practical Case Industrie
How a Business Case helps to decide about IT investments
Whether it's a new ERP solution, a modern manufacturing execution system or a company-wide office solution, manufacturing companies would do well to regularly invest in future-proof IT solutions to gain or maintain an edge over the competition. In addition to the immediate benefits for the business, such systems are essential to enable efficient and standardised end-to-end business processes.
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Avoid costly IT misinvestments
Necessary investment decisions are complex and often not all the necessary data is available, but wrong decisions can have a very negative impact. When competing for money and time with other promising investments, choosing an inferior option can cripple a company's success and innovative spirit.
As part of Digital Core Design, hpo evaluates large IT investments with a systematic business case approach to decision-making that gains robustness as the data foundation evolves.
Project goal
In a specific case, hpo was commissioned by a multinational company to evaluate the cost, benefits and expected return on investment of a planned groupwide IT solution which represented one level of the firm’s automation pyramid (see fig.1). This would serve as the fundament of an informed investment decision in line with the strategy and innovation plan of the company.
Fig. 1: Automation pyramide
Approach
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.
Result
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.
Why hpo?
With in-depth expertise in the manufacturing industry and with IT solutions, hpo is the partner for the digital core design of your company. Our holistic approach optimally aligns essential IT decisions with the corresponding business processes and organisational set-up. In this way, we ensure that the investment decisions you make support your strategy and promote the innovative power of your company.
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Who is hpo management consulting?
hpo stands for High Performance Organisations. As experts for strategy, business processes, organisation and transformation, we have been supporting nationally and globally active clients since 1995 in releasing performance potential and transforming strategies into measurable results. With our holistic and partnership-based enterprise desing approach, we reliably lead them to their goal: a consistently designed and sustainably effective High Performance Organisation - fit for the future and with a clear competitive advantage.
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