A Business Plan for Investingin Supply Chain Technology

Despite the number of supply chain-planning (SCP) software options that can help organizations grow and improve agility, many still use basic spreadsheet software, according to Gartner. So, the Stamford, Connecticut-based global research and advisory firm has come up with three steps to develop a business case for investing in the new technology.

“Reducing costs and enhancing decision-making are the top factors motivating organizations to invest in supply chain technology,” Alex Pradhan, senior principal analyst at Gartner, said in a press release. “An investment in SCP software can support the needs organizations are looking for. However, we see that business cases for SCP software have a high risk of failure when there is a lack of clear communication of the business value to senior leadership.”

The steps:

1) Define the problem or opportunity. Explain the impact to the overall business to illustrate why the investment is needed. This step is often overlooked, Pradhan said, and is important for stakeholder buy-in. “Engaging with key stakeholders early in the process makes it easier for them to understand how the initiative supports the overall business as well as the impact to their specific areas,” she said.

2) Align the SCP technology with the business strategy and maturity. Just because a technology has the most advanced capabilities and features doesn’t mean it’s the best fit. Instead, it’s important to choose technology that aligns with the business process maturity level, Pradhan said.

3) Determine benefits, risks and costs. Financial outcomes and metrics to track relevant business benefits should be included in the business case — and risks and costs should be evaluated and communicated to stakeholders. “To determine the impact of the technology, consider running a pilot,” Pradhan said. “Many SCP vendors offer a variety of evaluation programs, that can help validate the financial analysis, determine the financial benefits and translate the improvement potential into financial impact, evaluate systems capabilities and track key performance indicators.”