Tracking your return-on-investment is among the most important aspects of making any major decision in the context of a medium or large company and organization. Before pulling the trigger, you need to understand the benefits associated with implementing any change in numerical and qualitative terms.
No stakeholder can deny the inertia associated with making operational changes aimed at long-term gains in profitability and efficiency, and upgrading your Corporate Performance Management platform is no exception.
As a financial planning and analysis leader, you may be familiar with the typical challenges associated with a legacy CPM. However, user familiarity, entrenched data systems, and perceived upfront costs of migration to a unified CPM like OneStream can cause even the most forward-thinking leaders to hesitate and postpone the pivot to a modern CPM platform.
With this in mind, calculating the tangible and intangible ROI of migrating to a unified CPM platform will illustrate exactly how this transition can improve your bottom line and operational capacity. Migrating to OneStream can set your company up for long term success in a business environment that increasingly demands leveraging the best technological solutions for financial planning, forecasting, and analysis to drive real-time data driven decision making.
In this article, we walk you through the steps needed to calculate the ROI of a OneStream CPM migration.
Identify the Costs of Maintaining the Legacy Systems
Your first step for calculating the ROI numbers for migrating to a unified CPM platform is fully understanding the maintenance cost of your current legacy CPM. Some of the most common CPM expenses include the following:
CPM Maintenance Fees & Licensing Costs
The ongoing cost of maintenance for your legacy CPM includes maintaining your application server infrastructure, remediating security vulnerabilities caused by out of support vendor software, and retaining internal support resources familiar with older technologies. You are also likely paying recurring software maintenance fees that could be better served implementing and supporting more modern and supported solutions.
Training & Support Expenses
You need to ensure new users are up-to-date with your legacy CPM platform and also continually update existing users on any ongoing changes or features they need to be aware of. Furthermore, you will need to pay expert support staff, either in-house or through another vendor, to troubleshoot any issues that arise. Both of these result in ongoing costs associated with your current CPM.
Hardware & Software Upgrades
Assuming your legacy CPM provides ongoing software updates, you will pay additional costs to implement and roll out these new updates. This can also entail upgrading your application server infrastructure, upgrading dependent systems and services (databases, desktop software, etc) for compatibility and other factors.
Note that you will incur most of these ongoing costs categories with any CPM. However, unified cloud-based CPM systems like OneStream typically eliminate or significantly reduce these ongoing costs. To compare apples-to-apples, you must complete full accounting of your current CPM expenses.
Determine the Costs of Migrating to OneStream CPM
The next step is gaining a complete understanding of the costs of switching to OneStream’s unified CPM.
These cost categories include the aforementioned areas such as licensing, maintenance, and training. You will also need to account for the cost of data migration, training expenses for the new platform, and any necessary technology configurations needed to to implement OneStream.
Given that you need to import your existing data into OneStream, estimating the data import costs is important as well. Be sure to include the cost of ‘data hygiene’ in this migration, as it’s vital that you import quality data. The migration process is a good time to examine your existing data and scrub outdated or otherwise stale information to ensure the accuracy of your OneStream planning and reporting.
Be as thorough as possible when examining these costs to avoid any curveballs when it comes time for the migration. The firm you use to manage and implement your OneStream implementation will provide a framework for estimating these costs, but you need a full accounting of your existing data and CPM needs to get an accurate estimate.
Analyze the Benefits of Migrating to OneStream CPM
With a complete understanding of your existing CPM needs, you'll be able to determine the quantitative and qualitative benefits of migrating to OneStream.
Quantitative Benefits
The quantitative benefits encompass the hard numbers in cost savings that will occur with a CPM implementation. As a platform, OneStream excels at automating and streamlining aspects of financial planning and consolidation that traditionally consume your financial team’s time and resources, resulting in delayed decision making. These areas include collecting and modeling data, including your organization’s internal data as well as data on the external market conditions.
Through effective data governance, OneStream integrates and analyzes multiple data streams, then provides an array of models and forecasts that your team can use when making decisions.
Overall, this not only reduces the time spent preparing, consolidating, and modeling data, but also increases the accuracy, speed, and agility of your financial planning and analysis, allowing you to respond proactively to business and market conditions when making decisions.
You can quantitatively estimate the time your team spends consolidating and preparing reports to estimate the cost savings of eliminating those steps entirely. However, you will also need to get a decent estimate of the savings associated with improved financial planning and analysis decision making, independent of the time saved. Consider looking back at any wasted time or money spent taking action on poorly-informed forecasts as a way to put a number on the potential savings from improving this process.
Qualitative Benefits
While everything ultimately comes down to improving your bottom line, some benefits of a OneStream migration are difficult to quantify ahead of time. We dub these the ‘qualitative benefits’ of migrating.
For example, improving your financial planning can mean more future scalability for your organization, especially when coupled with the cost savings in the forecasting process. Streamlining these key processes within your operational workflow increases your flexibility, adaptability, and growth potential under a variety of uncertain future market conditions.
Consider these qualitative, strategic value-adds as part of your ROI from moving to OneStream, even if you cannot directly quantify them today.
Assess the Risks and Drawbacks of Maintaining Legacy Systems
Aside from the direct maintenance cost comparison, consider the future risks of maintaining your legacy system. For example, limitations in functionality can hinder your organization over time, especially if you need to cobble-together additional systems or ad hoc processes to accomplish your financial analysis.
Additionally, any lack of support and ongoing updates that leads to errors further wastes time and hampers growth potential. This can have a serious negative compounding effect on your organization long-term. A lack of updates can also mean potentially security and compliance issues down-the-line for your financial team.
Finally, paying and maintaining staff on outdated technology is ultimately a sunk-cost for any organization with an eye towards long-term growth.
Calculate the ROI
Once you have the hard numbers for costs and have fully weighed the benefits, risks, and drawbacks of your CPM migration, you can calculate the ROI.
The basic formula for ROI is:
ROI = (Net Benefits / Cost of Investment) x 100
Net Benefits = Total Benefits - Total Costs
You can use the ROI as a metric to determine how long it will take to pay back the cost of your migration, which is a good number to use for the baseline discussion among stakeholders within your company regarding whether it makes sense to move forward with the OneStream migration.
Bear in mind that the sooner you initiate your migration, the sooner the qualitative benefits kick in as well. These benefits are not necessarily accounted for within the ROI calculation, but can drastically shift the numbers in a positive direction as they begin to materialize.
For assistance in determining your organization’s ROI on migrating to OneStream and learning how the OneStream unified CPM platform can improve your organization’s bottom line, contact CompIntelligence today.
