Kris Honkola is a result-oriented business and solution consultant at Espeo Software, in addition to also working as a Project Manager for our Finnish customers. He specializes in solution consulting, business analysis, and digitalization brainstorming, focusing on the business impact of digital solutions. Kris has more than 30 years of experience in the IT industry, significant hands-on knowledge of developing commercial systems and managing the entire lifecycle process of IT product development. Kris contributes to our blog with detailed articles, covering topics such as increasing the value of your business. In his latest article, he discusses how businesses can invest wisely and thoughtfully in software development:
- General starting points and challenges
- Help with the results of the Business Value Assessment process
- Return on investment
As the company grows rapidly, the ability to function profitably is impacted by the capacity to serve the customers. Growth may have been pursued for several years now, but when it finally happens, the company may not be ready for it. How can a company avoid such a scenario?
We also recommend reading our other articles in the consultation series:
- Identifying the best digital investments: Use Cases [Part 2]
- How to use business value to your company’s advantage [Part 3]
- Ideation. Gaining advantage with the ideas of the Espeo Consulting team [Part 4]
General starting points and challenges
The company may already understand the need to invest in better systems to ensure effective growth. There may be a variety of needs, such as a more efficient inventory management system, a better marketplace to provide a better customer experience, or on the other hand, an upgrade to the company’s internal systems.
However, time and money are almost always the threshold questions for updating everything at the same time. This is why I am often asked where to start. How to make smart, growth-friendly investment decisions in software development to enable the best return? If you are currently wondering the same, you are one step closer to finding a solution to profitable software development.
See also: Identifying the best digital investments: Use Cases
Help with the results of the Business Value Assessment (BVA) process
Espeo Software BVA is process-based consulting. It allows us to estimate the returns on different technology investment options according to your company’s goals. The business value of the different investment options is primarily determined by models that allow us to predict the impact of technology upgrades on the outcome.
For example, consider the renewal of an inventory management system. With the new inventory management system, the company hopes to reduce both the extra work and the number of erroneous orders. By calculating how much work can be reduced and how many incorrect orders can be counted, we get an estimate of the financial benefits of upgrading the system.
By calculating the return on investment for the various options, the company’s management can make informed decisions about the investment targets and what kind of results can be expected from the new software investment.
In the following blog post, we’ll elaborate on how different models work in business evaluation.
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Let’s take an inventory management system as an example. With the new inventory management system, the company is hoping to reduce extra work as well as incorrect orders. By calculating how much of the work can be reduced and how the number of incorrect orders can be lowered, the direct benefit for the company is estimated. Calculating the Return of investment of different options allows the management to make educated decisions on where to invest, and what to expect when the investment is completed.
In our next blog post, we look at how the use cases work.