The Value Realization Imperative: Optimizing the Value of SaaS Investments
Understanding the value realized from investments in SaaS platform solutions is a strategic imperative in today’s economy. Many organizations, however, find it challenging to accurately determine the strategic, operational, and financial benefits of these solutions. Justifying the initial financial commitment is hard enough; being able to prove that you’ve made the right decision down the road is quite another.
In the past world of on-premise tools, many factors came into play to exacerbate this problem: uncertainty whether the solution you’ve implemented is the one you bought; impaired visibility into what’s causing what; implementations gone awry; and unenthusiastic adoption by the user community.
To be successful, your supply chain partner should put customer success first and work with you to:
- Understand how your organization defines value;
- Implement a mechanism to continually measure that value; and
- Ensure their solutions deliver that value for you.
Your supply chain partner should work with your organization, from executive leadership to the front-line staff, to comprehensively understand what’s important from your perspective. Your value focus may differ from your competitor’s. What we think is important, or what industry influencers think is important, may not be fully compatible with your priorities.
Standard metrics and KPIs like OTIF, forecast accuracy, and cost per shipment are usually the “quick hits” included in supply chain dashboards. But there are likely as many definitions of each metric as there are practitioners. Your supply chain partner should work with you to pin down common definitions.
And, since these operational metrics may not be the full picture, your supply chain partner needs to recognize that especially since many high-performing customers will value concepts—like visibility, risk avoidance, velocity, and reliability—that are more challenging to quantify. That’s why value definition means understanding how tactical and operational metrics link to, and support, your organization’s strategic goals.
Optimizing value in SaaS solutions is not a one-time, upfront ROI projection. It’s a long-term, ongoing process to determine how that value is being realized. This is accomplished by establishing a robust mechanism to measure, analyze, and proactively respond to both static performance information and dynamic patterns.
When seeking a supply chain partner, ask yourself does this company offer a full suite of scalable analysis methodologies that can be tailored to your organization’s unique requirements? In addition to standard permutations of valuation metrics such as ROI, NPV, and EVA, does your range of tools also include heuristics, probabilistic modeling, and scenario modeling?
The solution you jointly create with your supply chain partner can solve the “black hole” problem encountered in the past: not knowing whether or not you made the right decision. When onboarding, they should first help you create a validated baseline from which to gauge future performance. Second, by monitoring the entire set of value drivers, they should provide your organization with the advanced knowledge required to predict deviations from your performance targets and take appropriate preemptive action.
A key takeaway is that the methodology they build with you shouldn’t sit on a shelf to collect dust—it’s in-flight continuously throughout the lifecycle of our relationship. Teaming up with you early in the commercial process will optimally position the solutions you have chosen to align according to your organization’s strategic goals. In the value realization phase, ask does this supply chain partner enable your organization to overcome intractable problems that, in the past, made the effort fruitless? These problems include cognitive bias in the measurement process, cultural and individual resistance to being “measured,” and hidden circumventions of the solutions by relying on archaic tools.
Your supply chain partner should give you the confidence that you made the right decision and that the platform/solutions are a significant contributor to your organization’s success.