Tools to help make an ROI case for a new collections database
Being able to see the benefits of a collections management system, and articulating that value to decision makers, are often two very different skills. Here are some strategies you can employ to help demonstrate the benefits of collections management software to management and leadership to secure buy-in.
Understand that they have a different role and a different perspective
It’s understandable that getting sign off for projects can be a long and sometimes frustrating process. From your perspective, the benefits of a collections management system are obvious, but management often have different priorities and different expertise.
Leadership routinely walks a difficult line between achieving the objectives of the organisation while ensuring the best possible use of limited resources. They don’t always have the time to look in depth at every request that is made for additional time or budget. They also are less likely to be in day to day contact with the system or it’s users than you are, so it can seem less tangible to them.
Recognising and appreciating that their perspective is valid is important, and framing your requests in a way that makes sense to them is key to your success. Help out the management team or board by giving some context to your vision with quantifiable numbers that relate to their goals.
Build a case for cost savings
One of the biggest ROI cases for investing in a central database is the saving of future staff time. Inefficient processes eat large amounts of staff time: for example, searching multiple sources for information, compiling reports by hand, and manipulating data manually. Depending on the state of your current processes, staff could be wasting hours every week completing work that could be managed automatically by a professional system.
Aside from the fact that staff may find this frustrating, allocation of staff hours on inefficient tasks has a huge financial impact. If your core driver for investing in a collections management system is to reduce wasted staff time, some simple calculations will help you prove how data a collections database could ultimately save more than it costs. To help assess whether you will spend less than you get back, use the formula below:
(How many hours saved per year overall x Total Cost Per Hour of Staff Time to Company)
– Cost or cost of time investment of the project
Demonstrate long-term value
If your driver is to invest time and energy now to reap long term benefits for the organisation, it is important to be able to quantify exactly what you mean by long term. The management team needs to know that projects they are investing in are quantifiable, robust and well thought out. To help demonstrate long term value, calculate how long it will take to see a return for the investment:
(Hours saved per year overall x Cost Per Hour of Staff Time) ÷ Cost or cost of time investment of the project = How many years to see a return
Calculate the estimated total results for the project 5, 10, 15 or 20 years:
Year 1 (Savings – Investment) – usually higher due to any initial outlay
+ Year 2 (Savings – Investment)
+ Year 3 (Savings – Investment)
+ Year 4 (Savings – Investment)
+ Year 5 (Savings – Investment)
= TOTAL 5 YEAR FINANCIAL BENEFIT
The above estimates are useful for making the benefits of your project more tangible, but in reality time savings will not actually impact the budget earmarked for staff time costs unless the number of staff is reduced (not the goal here!). Management may counter your figures with feedback that staff salaries are already identified and funds for new systems are considered an addition to established budgets. This viewpoint can be addressed by providing concrete examples of how staff time savings in one area (i.e. dealing with decentralised data and information) can be reallocated to tasks of higher value.
It’s important that you are clear about what could be achieved with this time instead. If you invested that time back into more mission critical activities, could you increase access to digital assets? Perform condition assessments and save money on potential conservation fees? Apply for additional funding for public engagement? Improve services for the organisation?
Need some inspiration? Read our blog for some tactics to unleash the power of collections systems data.
Express results as key performance indicators
Collections management systems aren’t just time savers, they’re also enablers. The new technology could make it possible to take on projects that wouldn’t be possible before. Such as enabling the institutions to share your collections online, or increasing the rate of digitisation. It’s just as important to demonstrate what you’ll now be able to achieve, rather than just the time you’ll save.
Leadership regularly have to report on KPIs (Key Performance Indicator) and key metrics, and these numbers are tied to their understanding of what makes the institution successful. When you speak about benefits, try and assign a projected KPI such as an increase in customer engagement or a related financial figure. For example:
- We currently have XX people engaging with our collections each month
- If we published our collections online, we could likely deliver a XX% increase in our reach
Benefits aren’t always financial, especially in charitable organisations. Sometimes it isn’t necessary to demonstrate a financial return on investment, but rather highlight a good use of spend. Think about the core metrics that your organisation uses to track its success. Can you honestly say that your projects will likely increase one or more of those metrics? If so, by how much? Are you able to assign a number or percentage value? Once you are able to answer these questions, all you need to do is benchmark your approach against another method to demonstrate the value. For example:
- If we spend £3000 in staff time improving the quality of the collections data now, we will be able to digitise an additional 1000 records by the end of the year.
- If we were to pay a digitisation company to do this work, it would cost £5000.
Using practical scenarios to quantify your requests helps management to frame software investment against other competing interests that may not yield comparable results. It also establishes baseline expectations on the expected return on investment of the technology.
Prove Reduced Risk
Investing in a system isn’t always about striving for gains. Sometimes it is about mitigating future risk. In an industry so focused on future preservation, this is a key factor in management decision making.
Ask yourself these questions: What will happen if we don’t invest in our collections processes? What would happen to our collections in the future? Are we able to determine a quantifiable measure for the risks of not moving forward? Is there a % drop in a key performance indicator or metric? Are there financial ramifications?
Could risks have high value implications? Will statistics better support your case for additional grants or funding? If so, help management quantify how a database supports data-based decision making.
Preparing answers to these questions about minimising risk brings you one step closer to organisational support by presenting resolutions alongside any institutional concerns.
Position database as a decision tool
Your database represents a wealth of valuable information for your audience, for your department, for your organisation and your funders. Getting your database in order will make accessing, analysing and reporting on your collections significantly easier and more accurate. With increased understanding and confidence in your metrics, you can make significantly better informed decisions.
Management teams are always facing tough decisions with limited access to information. If your new software could improve company-wide access to reliable statistics, there is a strong business case to invest. Would a more accurate analysis of your collections inform your acquisitions strategy or identify new opportunities for loans? Could this information be used to lower insurance premiums or avoid missing conservation works which could have high value implications? Will statistics better support your case for additional grants or funding? If so, help management quantify how a database supports data-based decision making.
Understand the true cost of “build your own”
Decision makers often heavily underestimate the complexities on collections management software and suggest that some simple solutions can be put in place by your current IT team. The reality is that building your own solution is often significantly more expensive. It’s useful to understand why and come prepared with your case in case this question arises.
You can read more on evaluating the comparative cost of “build your own” here.
Need some quotes to work with?
If it’s our software you’re thinking of investing in, we can help by providing you with projected costs. Request a quote and we will find you a solution that fits your requirements.