January 15 by Kamal Ahluwalia
Bottom Line: The paradox of measuring enterprise software’s true contribution is that the most valuable metrics are often ignored, replaced with headcount reductions, layoffs and other brute force financials instead.
Throughout 2013 and looking forward into 2014, it’s very clear that enterprises need to move beyond ROI and look to measure what really matters. Measuring the real value of enterprise software needs to be galvanized around customers and their needs first.
Get Beyond ROI To Measure The Real Value Of Enterprise Software
In my last post I discussed the rise of the user in enterprise software system success. The interaction of Customers, employees, suppliers, and stakeholders in and outside the company all contribute daily to the financial performance of a business. This most valuable aspect of enterprise software performance is rarely measured however it is this interaction that is so critical to greater customer confidence trust, loyalty and ultimately revenue.
- The Return on Investment (ROI) models used for decades to support and rationalize spending on monolithic, legacy systems aren’t capturing what’s most important today. Andrew Bartels, Vice President and Principal Analyst at Forrester’s excellent post Old ROI Methods Are Holding Back The Adoption Of New Technology provides insightful analysis of this, showing how a reliance purely on ROI misses many of the most important aspects of how enterprise software contributes to an organization. Greater synchronization of department processes, systems and people, when aligned to customers’ needs and preferences, deliver far greater value than any layoff or cost reduction strategy.
- Relying on layoffs, headcount reductions and other measures of brute-force cost reductions, many enterprises focus on a hard-numbered ROI and miss the analytics that are the most important. Customer satisfaction, loyalty, customer lifetime value (CLV), responsiveness and many other analytics that aren’t easily quantifiable as ROI, but they are just as critical. Enterprise applications that have consistent and intuitive interfaces are more readily adopted. This ease of use makes it possible for pre-sales, sales and post-sales teams to better serve customers and increase company performance on all these key measures of performance. Having these applications engrained into processes designed to strengthen, serve and support customer relationships deliver far greater value than any cost reduction strategy.
As Andy Grove has often said, what gets measured gets better, and a corollary to that is what gets measured gets the most attention. Concentrating on what matters most – the quality of your service and the confidence and trust nurtured with customers – needs to pervade how enterprise software investments are evaluated and implemented. Only then will they become a strong catalyst of customer-centric, profitable growth.