Build the Case for an Enterprise Inventory and Cost Management Platform
The benefits of implementing a centralized enterprise inventory system are clear, particularly to those closest to the information and related services procurement process.
But as with any ‘enterprise’ project, securing budget and selling the concept internally can often prove difficult. There are steps that can be taken, however, to secure buy-in from senior management and other influencers.
Step 1: Identify Stakeholders
To begin with, it’s crucial to identify the key stakeholders and decision makers, and then understand their motivations, goals and challenges. It then becomes possible to explain how a market data inventory platform can help them achieve their goals and address their challenges.
Many enterprise projects involve the chief operating officer or equivalent. A key concern of the operations department is how to scale operations while managing costs. In this instance, it’s important to demonstrate how a platform that can centralize all the information about your third-party services spend and contractual obligations will save significant time and money, but also give them a strong foundation to support growth going forwards.
It may also be useful to demonstrate how to manage a variety of costs across other divisions under the COO’s remit – market data, index licensing, software, hardware, research, subscriptions and so on – from a single centralized platform so the COO can see potential to address broader enterprise challenges.
Step 2: Explain the Benefits
Even for those senior managers who see the operational benefits of such a system, it’s important to explain the costs involved and to identify the potential ROI so they can see the impact on the bottom line. Also, it’s essential be clear about how an implementation or migration project would be managed and the timescales involved. Once these have been decided, it’s important to establish and maintain a clear communications program with your target decision- makers and influencers to discuss your proposition.
Listen carefully to their feedback and objections and then work with your internal supporters and suppliers to address those objections, which may take a number of forms.
Step 3: Demonstrate ROI
Understanding and communicating ROI is key to justifying the expense of a project of this scale. The first step here is to assess how invoices are currently being managed to ensure compliance with contractual terms and identify redundant services to save costs.
Concerns about expense can be addressed by assessing how much resource existing manual and / or spreadsheet-based processes require. Monitoring how many man-hours are spent each month inputting data, reconciling invoices, and gathering data to understand usage and relevance of services, can be used to calculate the true cost of existing processes, which can be used as a basis for calculating potential ROI.
It’s also possible to assess the benefits of implementing a market data inventory platform in terms of time saved. Automation reduces the need for manual intervention by requiring staff only to address exceptions, allowing them to focus on those issues that require their attention. Centralizing contract and spend information can also save valuable management time by providing transparency into costs, and a fast and easy way to find information.
The result is that your team can be freed up to focus on higher value work. This can be difficult to measure, but more tangible are the cost savings in terms of reductions in information services spend. Here, firms that use an inventory platform often see annual savings of between 10% and 30% of their information services spend, which more than covers the typical cost of the platform.
Step 4: Determine Build vs. Buy
The decision to buy or build can be complex. The usual argument centers on the fact that buying is typically faster and cheaper than building and you leverage external expertise that is hopefully being continually invested in ongoing product development. But building gives you much greater control and flexibility to create a product that suits your needs perfectly.
Issues with building your own product can arise with scope creep, or when your original developers leave, resources and budgets are constrained leading to frustration in users who need additional features or development, or manual workarounds are developed as a short cut.
Step 5: Conduct Cost-Benefit Analysis
With market data inventory and enterprise cost management platforms, the supplier market is a mature one, where the products have been developed over many years to cater for a wide range of needs and to deliver a high level of flexibility.
With a critical mass in the world’s largest investment banks and asset management firms, and benefiting for the ongoing feedback from their very large user communities, the level of sophistication of the services is usually considered far greater and more cost effective than building from scratch.
It’s worth conducting a cost benefit analysis (with enough margin for the inevitable scope creep) of your own development with the overall cost of buying an external platform to see what you think will get you the better return.
Step 6: Secure the Budget
Building the business case and securing budget for any enterprise project takes time, but it’s possible to add a sense of urgency to proceedings. It’s worth considering the opportunity cost of not moving.
How much does it cost to manage your information and services spend? Where are the inefficiencies? What capabilities would help you improve cost management? Focusing on current costs, inefficiencies and the risk of non-compliance with supplier contracts, is useful to securing sign off for additional budget to support your business case for a market data inventory platform.
Step 7: Perform Due Diligence
Enterprise projects are often complex, and people are wary of embarking on long drawn-out projects that require significant internal resource. To address this, it’s useful to secure client testimonies from any suppliers involved, to ensure that they have the technical and management capabilities required to deliver a smooth transition process.
This is of course in addition to your own due diligence on any supplier and their systems. It’s crucial to test their knowledge of invoice management processes, reconciliations and analytics. The decision-making process should involve a walk-through of prior implementations or migrations to explain the process, internal resource requirements and timelines.
For a system of this type, implementation shouldn’t take much more than a couple of weeks. The supplier should be able to handle most of the heavy-lifting, and will train internal teams to handle day-to-day operation and administration of the system.