Are you trying to get a CapEx project off the ground but receiving pushback from executives and stakeholders who are reluctant to sign off the budget needed to implement capital expenditure software? Their reluctance is not uncommon and may be the result of either a) existing habits and behaviours, or b) fear of change.
Over the years, we’ve heard many objections. Fortunately, we usually have an answer that reassure buyers seeking to purchase CapEx planning software. In this blog, we’ve compiled a list of the common objections to capital expenditure approval software implementation we’ve heard in the boardroom alongside some tips on how ‘process champions’ can alleviate the concerns of senior executives.
Quick links
#1 We have no budget to purchase capital expenditure software#2 We want to retain existing working practices
#3 We think our existing finance software can manage CapEx approvals
#4 We lack the pre-requisite skills
#5 We have lots of legacy systems
#1 We have no budget to purchase capital expenditure software
Undoubtedly the most common objection in any negotiation is price. However, has the board considered how much will it cost them to do nothing about their manual CapEx process?
If you retain existing working habits, the consumption of paper and spreadsheets will continue to increase with storage costing money.
CapEx projects may get delayed as people are “put off” by the long manual process and extended delays in getting all the right people to approve a request. The impact on the business is spending does not happen quickly enough which may harm profitability.
Adherence to capital expenditure policy and governance procedures will continue to be ‘hit-and-miss’. Accounting inaccuracies and auditing problems because of incorrect information in a request may persist. And executives will still lack visibility over the approval process. The list goes on…
According to McKinsey, a leading industry analyst, achieving world-class CapEx management can reduce overall CapEx spending by 15 to 25 per cent. Organisations can achieve best-practice CapEx management by automating their capital expenditure approval process.
If budget is an issue, a cloud-based deployment option offers minimal capital expenditure and predictable ongoing overhead costs. Plus, you do not need to worry about any aspect of managing or hosting the capital expenditure approval and tracking software as your vendor will manage licences, support, infrastructure, upgrades, security, uptime etc.
The common misconception is cloud deployments are expensive – they are not. You will not be locked into a long-term contract, and only pay for the initial set-up and monthly subscription for your users.
#2 We want to retain existing working practices
A common refrain we hear is “we’ve always done it this way” or “it ain’t broke, so why fix it?”
At this point, we simply point out that the organisation would not have invited us (and presumably other suppliers) to demo our product without knowing deep down that their existing processes were far from ideal!
That’s not to sound arrogant. We understand that adopting software means letting go of ‘trusted habits’ and relying on something new and not as familiar. And it may be comforting to stick with what you know and how you currently work.
That desire to maintain the ‘status quo’ is understandable yet automating CapEx approval processes can deliver significant business benefits and can provide near-immediate process efficiencies and return on investment.
A good antidote to this objection is to ask your vendor to deliver a proof-of-concept as it reduces your risk and cost. This not only delivers a quicker win for the board to review but also allows for a more agile approach during the early stages of adoption.
#3 We think our existing finance software can manage CapEx approvals
Sometimes we are told an existing finance system can manage the CapEx approvals for an entire organisation. Yes, finance software may support setting project budgets and cash flow management, but they do not have the right workflow capabilities to manage approvals.
The best CapEx management software provides support for the end-to-end CapEx process:
- CapEx planning – to identify the most attractive projects for capital investment
- CapEx budgets – to set up period budgets in the system to track spending e.g., planned vs. actual
- CapEx requests – to create, submit, and route submissions and monitor progress
- CapEx post-investment – to evaluate the project and demonstrate ROI
In our opinion, it is better to procure dedicated capital expenditure software and connect with third-party financial systems via direct integration, web services and REST calls where necessary.
#4 We lack the pre-requisite skills
A lack of skills or internal resources is often cited. However, if your team is achieving its tasks, it is probably using some form of workflow. It may not be with CapEx management software, but there is some routing and decision-making that follows a prescribed order.
The point is you already have the people and skills within your organisation to plan how your workflow needs to work and the data it needs to collect. As long as you choose a good vendor, they will be able to handle the technical aspects of building and configuring the system, allowing you to sit back and await a delivered, turn-key CapEx solution.
Moreover, modern capital expenditure management software allows you to build forms and workflows with graphical, drag-and-drop tools, so it may even be easier to participate in the build process than you think – if you desire.
#5 We have lots of legacy systems
Another common objection or barrier to CapEx software adoption is working with internal legacy systems.
Despite the huge investment, legacy IT systems are inefficient, inflexible and require constant support to prevent security breaches or cyber-attacks. However, many companies we speak to are reluctant to replace existing systems due to the cost, complexity and risk associated with the project.
The counterargument is modern workflow software (on which CapEx systems are based) is scalable, reliable, and secure applications that accommodate and extend your legacy IT systems.
Workflow software includes APIs to enable enterprise systems and in-house applications to exchange information with each other for a better view of organisational data, so it is not always a case of having to replace entire legacy systems, but a case of identifying what data needs to flow between them.
Get buy-in from senior executives
If you overcome the obstacles above, you stand a good chance of achieving executive buy-in. This support is vital. You will struggle to get the project off the ground without senior management recognising the long-term benefits and actively championing (and sponsoring) the project.
To achieve buy-in from key stakeholders, we recommend you:
- Highlight the current (‘As is’) situation with its challenges and what it will look like after the system is implemented (‘Future state’)
- Perform a cost/benefit analysis to show financial savings
- Emphasise the impact of not commissioning the initiative, such as continuing to handle processes manually and the limited analysis on the efficiency of CapEx spend
- Focus on the benefits such as regulatory compliance and adherence to corporate governance procedures
- Demonstrate proof of concept with a prototype
- Build a wide consensus behind your project with colleagues from finance, IT, and operations
Once you have the above information, you’re ready to meet with stakeholders to champion your case. These C-Suite executives are busy people with lots of competing demands on their time.
At this stage, you may already have a preferred vendor. If so, you could ask them to come along to part of the meeting as they will be able to instantly answer any questions that may come up and provide real-world examples, with invaluable product demonstrations.
Conclusion
We hope this article has given you some helpful advice if working to get a CapEx initiative off the ground. To plan a better solution and purchase the best CapEx management software for your organisation, we recommend engaging with vendors early. Early engagement can help you:
- map out the current “As Is” process and what your “To Be” or “Future” desired state looks like
- plan better user stories (“As a user, I need…)
- understand user needs
- understand the technical solutions available
- identify and mitigate any potential pitfalls sooner
- assess how much the work could cost
- understand how long the work could take
- write a detailed scope or statement of work
- identify critical success factors
Are you looking to automate CapEx approval processes? You can schedule your CapEx system demonstration or call 03300 100 000 to discuss your requirements.