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Technology Project First Step – LEAN Project & ROI Analysis

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There is a continual theme I see when companies want to understand if they can justify new technology (software, data collection, material handling) where an organization will execute a complete software evaluation process, including Request For Proposal (RFP), demonstration scripts, and final vendor pricing all BEFORE they have appropriated funds for this engagement. For most organizations executing this on their own, I can understand that this process (which can take six to nine months to complete) is a valuable education on the industry, vendor functionality and stability, and budgetary pricing for these solutions.

The challenge with implementing these “steps to project validation” is that if your project is NOT approved or delayed until a later time, you have invested a lot of time both internally and externally with vendors without the promise of a technology sale or the opportunity to save money without your company sooner than later. While your organization will rebound and move forward with the next high priority initiative, the vendors will be licking some wounds and may start to become weary of a company that is developing a reputation for “kicking tires” then actually executing.

There is an alternative to consider: execute a Lean Project and Return on Investment Analysis. When we engage with companies to help them select new technology, the first phase of our engagement is the Lean Project and ROI Analysis. This phase can typically be executed in four (4) weeks and focuses on the organizations’ needs as opposed to what the vendor’s can provide; thus, it is typically void of any vendor involvement.

How can this type of process be executed so quickly, yet still provide the type of information that an organization can use to justify their project? Simple. Partner with an organization that can provide the following credentials and experience:

  1. Executes a significant number of assessments and evaluations (12+) each year – this will allow the partner to be able to provide RECENT trends in technology functionality and pricing for the solution you are considering.
  2. Has access to return on investment modeling tools that can quickly calculate your organization’s conservative AND aggressive savings potential using your organization’s dynamic data and metrics. This data should come from not only what industry organization’s publish, but also the partner’s experience and actual results.
  3. Has practical implementation experience with the requested technology. This will allow your organization to benchmark the costs for hardware, implementation services, potential enhancements, integration costs, and expenses, all in addition to the technology capital expenditure.

I completed this type of analysis late last year for a multi-billion dollar food service provider with a 30+ warehouse network in just over four weeks and the information allowed them to educate their executive steering committee on the investment timing compared to expected return. While their project was delayed almost six months and finally approved in Q1 of 2009, laregely supported by Economic Stimulus Incentives (see my previous blog posting for more information on this topic), they invested minimal time and cost internally AND were able to focus on other low cost/high impact savings opportunities that this analysis also identified.

So the next time your organization is considering a technology investment of any kind, consider the value of a Lean Project and ROI Analysis and who to partner with if you don’t have this type of expertise in house.

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