The average CFO in an organization today is likely to be the recipient of 100+ internal “proposals” in any given year asking him/her to approve spending on the next great idea to improve the operations or to deliver better patient care. The question becomes: how does the CFO decide which are worthy of approval and which aren’t? This gets more complicated when you consider that it’s likely that only a small portion of the proposed expenditures actually get approved and funded.
While ROI (return on investment) alone isn’t enough to get a project funded – it sure is better than not having one. The mistake many of our client sponsors make is that they fail to quantify the value of the proposed investment. Oh, they’ll identify the “categories” of value – improve turnaround time, reduce complexity, better serve our customers, etc. – but without a stake in the ground on actual targeted value (or pain) associated with the proposed initiative, in the mind of the CFO this becomes a “nice to have,” not a “must have.”
What’s the best way to quantify the value? You can start by asking the prospect if they have already determined their baseline cost or baseline performance and any targets for improvement they have defined. If they have these, great. If they don’t, it’s our job to help them do so. This may be a formal part of your sales process or a rough cut at the current and targeted measurements of performance. Our role in this regard isn’t accomplished until we have helped the client truly quantify the dollar value benefit the client can expect to achieve. It may come in the form of reduced costs, or increased revenues, or even improved profitability through margin enhancement. Whatever form it takes, the likelihood of gaining executive approval is often dependent on whether they see the actual value – not the “soft” benefits.
Without quantifying the value you can hope they’ll buy, but “hope” is usually not a great strategy.