Insights

How to build a business case for an IT investment

Payback period, total cost of ownership and cash-flow effect. Three measures that turn IT decisions into business decisions.

IT investments are often decided on technical gut feeling. A simple business case makes the decision comparable with other investments and makes it possible to follow up whether the solution delivered.

Start with what the problem costs

Count working time, cost of errors, tied-up capital and lost business. If a manual process takes 20 hours a week at an hourly cost of SEK 500, it costs around SEK 500,000 a year.

Total cost of ownership

Development is only part of the cost. Add licences, operations, support, security and the internal time needed to introduce the solution, and calculate several years ahead.

Payback period

Payback period = investment ÷ annual net saving. A solution that costs SEK 300,000 and saves SEK 200,000 a year after running costs pays for itself in a year and a half.

Cash-flow effect

Some solutions don’t save time but free up capital, for example through lower stock or faster invoicing. That shows in cash flow rather than the income statement and matters just as much.

  • What does the problem cost today?
  • What does the solution cost over three to five years?
  • When is the investment paid back?
  • How is cash flow affected?
  • How do we follow up whether the effect is achieved?

Book a first meeting

Call Armin or book a time in the calendar. In the meeting we go through your problem, and then we put together the right expertise for the engagement.

Armin Beiragh

Armin BeiraghCEO and your contact for a first meeting+46 73 333 76 74