How to Build a Business Case for an Internal Software Project

Are you ready to upgrade your internal-facing software? Are you worried about getting management approval?

And the big question: How can you convince decision makers to loosen the purse strings for a software investment?

Getting management approval for new software that doesn’t touch customers can be like waiting for the ice cream truck when you’re a kid. When it’s right before dinner. In January. And your mom is on a no-sugar kick.

In other worlds, it seems impossible.

But what if you could convince your mom that not only is ice cream in January a good idea, but it’s also healthy, cheap, not too close to dinner time, and that it will actually help you get a better grade on your next math test?

Well, now we can have a conversation.

Convincing management to write the check for new software can be difficult, especially if you haven’t demonstrated a pressing need. But the right justification strategy can overcome obstacles to change.

Here’s how to make your case.

Document Your Current Capabilities and Challenges

Before you can make a strong business case for new software, you need to know the state of your current system. What IT resources do you already have in place to perform the needed functions? What are your established business processes, and where are they documented? What capabilities does your current software bring to the table? Do they match your real-world business processes? Do you actually have a software solution or are you still using manual processes or a multitude of spreadsheets?

Once you have answered these questions, you can get into the meat of the issue: problems and pain points. Ask questions like:
* What problems do you encounter now?
* How do current processes impede productivity? How many man-hours does that cost you a week, and what are those man-hours worth to your company?
* How are your competitors already outperforming you, and can new software close that gap?
* What efficiency challenges do you encounter as a result of software hang-ups?
* What pain points could be resolved with a better software solution?

Talk to employees that use the current software or other processes to get their jobs done. Their insight can carry significant weight with management, especially if you demonstrate an impact to the bottom line based on lost productivity.

Be prepared to overcome misperceptions about the reasons for these challenges. For example, management may be operating under the assumption that if employees were more knowledgeable about their jobs, they could improve productivity organically without a software intervention. But the problem often is not the employees—it’s the systems they have to wrestle on a daily basis just to do their jobs.

Define Your Ideal Destination

The next step is demonstrating how the new business application would benefit the company. Your goal here is to go after first-level benefits—those that directly affect the company’s profitability by delivering ROI. You’ll want to demonstrate what capabilities the new software should bring to the table across these four categories:


Who will benefit from the change? Will the new resources affect the organization as a whole or only specific departments or locations? What positive changes will employees experience in their job functions? How much time will these employees save, or how much more work will they be able to do?


How can the new software standardize processes and increase efficiency across the organization? Which processes need to be revamped and which ones are functioning well in their current state? Where can you identify wasted time and duplicate processes like data entry that impede productivity?


How can you redesign IT architecture to support advances in technology? What technology requirements can you identify to improve efficiency, compliance, productivity, revenue potential, and other business objectives? Is the current software solution hampering performance? Do your current security measures provide enough protection for sensitive data? Can your legacy software work with new technology or applications to keep your organization competitive, or are you in danger of falling out of date? Do you have any resource restrictions (hardware, training, maintenance)?


Where can you increase data integration to facilitate better reporting or analysis? Do you have access to the data you need for effective decision-making?

Make the Case for Change

Working through these two exercises—understanding current capabilities and defining goals—will give you all the information you need to make a strong business case for change.

Financial Justification

The most common way to justify a software purchase is to demonstrate that it will deliver cost savings and/or increased revenue over time. At Worthwhile, we typically recommend that clients do this on a three-year basis.

You should address each of the following areas in your financial justification:

Cost Concerns—How much will the software cost? Analyze total cost of ownership, including the initial investment, ongoing maintenance needs, future upgrades, and training costs.

Cost Savings—Demonstrate how the new software will save money over both the short-term and long-term. Some examples include:
* Switching from manual to automated processes
* Eliminating underused applications
* Reducing cycle times
* Increasing process efficiency
* Eliminating duplicate processes
* Strengthening data integrity
* Reducing ongoing maintenance needs

Return on Investment—How long will it take the new system to pay for itself? Where will the organization see an increase in productivity or revenue as a result of the new system and how will that affect overall profitability? Where can the new system unlock new revenue opportunities?

Business Justification

As you focus your attention on creating a thorough financial justification, don’t forget to make a strong case for business need as well. How will the software specifically benefit your business processes? How will it deliver competitive advantage? Consider these areas that carry weight with management:

SWOT Analysis—Assess the strengths, weaknesses, opportunities, and threats that result both from upgrading and from maintaining the status quo. Discuss the different available options and how each one would affect the organization as a whole.

Organizational Goals—List ways that the new software will bring your processes more in line with both short-term and long-term business objectives like increased productivity, better customer service, and your company’s mission and vision.

Cost/Benefit Analysis—No decision is made in isolation. There will always be costs and benefits to any course of action—whether that means making a change or sticking with the status quo. Use your cost/benefit analysis to demonstrate that the benefits of changing outweigh the costs, and that those benefits are greater than the benefits of not changing.

Risk Analysis—Identify risks associated with new software development and implementation as well as those you may encounter with legacy software.

Constraints—List project constraints that will affect implementation. These may include scheduling, resources, budget, technical, IT staff, hardware, etc.

Competitive Analysis—What technology resources do your competitors use that may give them an edge in the marketplace? Where could your company improve processes and technology to give you a competitive edge?

In Conclusion

Justifying the cost of new software isn’t just about examining lots of bells and whistles and convincing management to write the check for them. There may be times when replacing your legacy system isn’t warranted. You may be able to achieve your objectives with a new portal or a version upgrade—thankfully, the diligence explained above will help you identify those cases.

The better approach is to evaluate your current opportunities and pain points, and then decide which solution best meets those challenges.

As a kid, Mom always infuriatingly made her decisions about ice cream based on her expanded knowledge of the situation (When is dinner time? How much sugar did you have already today? Is this the best use of money at this time?) rather than your carefully prepared arguments (But Mom, I NEED it!). But the good thing was that, if your request fell in line with her objectives, she was more likely to give you the go ahead, right?

The same is true with your business case. When you consider the overall objectives and business needs of the company and present your proposal from that perspective, you’re more likely to receive management approval to move forward.

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