Building a Business Case for Application Management Services

A Strategic Guide for All Industries

For many organisations the continuous operation of marketing and client communication systems is a business critical asset. Disruptions in these areas can lead to substantial financial and non-financial consequences. This strategic guide provides insights into quantifying these impacts and articulates a compelling business case for investing in application management services, exemplified by solutions provided by Purple Square CX.

Quantifying the Impact of Communication Disruptions

Financial Consequences

When businesses lose the capability to engage in proactive marketing and communication, even briefly, the financial repercussions can be significant:

• Revenue Loss: For many businesses, daily interactions with clients directly influence revenue. A disruption can lead to immediate and noticeable financial loss.
• Efficiency of Marketing Spend: Investments in marketing campaigns that rely on timely communication may see a decreased ROI if disruptions occur.
• Customer Acquisition Costs (CAC): The inefficiency of communication can escalate the costs associated with acquiring new customers as opportunities for engagement are missed.

Non-Financial Consequences

Beyond the immediate financial metrics, several non-financial factors are critically impacted:

• Customer Satisfaction and Trust: The inability to communicate can quickly erode customer satisfaction and trust, particularly in sectors where real-time communication is expected.
• Brand Reputation: Any perceived instability in communication can negatively affect a brand’s reputation, potentially leading to long-term detriments.
• Employee Morale: Disruptions not only affect external stakeholders but can also have a significant impact on internal operations and employee morale.

Mitigating Risks with Application Management Services

Investing in application management services offers a proactive approach to mitigating the risks associated with potential disruptions. Here’s how:

• System Reliability: Ensuring that marketing and communication platforms are consistently operational, prevents revenue loss and preserves marketing ROI.
• Data Management and Integration: Proper management and integration of customer data facilitate seamless communication efforts, even amidst potential technical issues.
• Cost Savings: Preventing downtime not only saves on potential lost revenue but also protects investments in marketing and customer acquisition.
• Customer Experience: Continuous communication capability enhances the customer experience, fostering loyalty and potentially driving new business through positive word-of-mouth.

Since 2016, Purple Square’s Application Management service has empowered large enterprise organisations to enhance operational reliability, optimise marketing ROI, and improve customer engagement through dependable system management and seamless data integration, safeguarding revenue and brand reputation.

Building the Business Case

Step 1: Identify and Quantify Key Metrics

Determine the direct and indirect metrics that will be affected by communication disruptions, such as daily revenue, customer acquisition costs, and customer lifetime value. Also, consider the less tangible aspects like customer satisfaction and brand reputation.

Step 2: Calculate Financial Impacts

Assess the financial impact by estimating the potential loss in daily revenue and increased costs in customer acquisition. This should include analysing the efficiency loss in marketing investments due to the inability to communicate.

Step 3: Estimate Non-Financial Impacts

Though challenging to quantify, it’s important to gauge the potential damage to customer trust and brand reputation through market research or historical data analysis.

Step 4: Assess the Investment in Application Management Services

Detail the costs associated with implementing and maintaining an application management solution, including both initial and ongoing expenses.

Step 5: Calculate the ROI

Using the formula for ROI, compare the net benefits (including cost savings and revenue retained) against the investment in application management services to demonstrate the financial viability of the solution.

Step 6: Perform Sensitivity Analysis

Conduct sensitivity analysis to understand how variations in assumptions, such as the scale of brand damage or solution effectiveness, could affect the ROI.

Step 7: Document Assumptions and Constraints

Transparently document all assumptions made during your analysis and acknowledge any limitations, enhancing the credibility of your business case.

Step 8: Regular Review and Adjustment

Regularly review and adjust your business case as more data becomes available or as business conditions evolve, ensuring that your investment continues to meet business needs efficiently.

Summary

The business case for application management services is clear. By proactively addressing the risks associated with communication disruptions, businesses can not only protect their financial bottom line but also enhance customer satisfaction, preserve brand reputation, and maintain high employee morale. This guide provides a framework for quantifying the impacts and benefits, helping decision-makers across industries make informed investments in their digital infrastructure, but if you would like more information or support, don’t hesitate to contact us.