Identifying Bias in Marketing SaaS Business Cases

Identifying bias is one of the biggest problems facing Indirect Procurement today in many organisations, and so I decided to create this blog to support Indirect Marketing Procurement specialists make informed, robust technology decisions that meet the needs of the business for both today and tomorrow.

Many of you helped us to create it, based on the open and transparent conversations that we at Purple Square have been able to have already at conferences, events and in commentary either directly or in response to our thought leadership.

I hope it is useful and look forward to hearing what you think.

Part 1 – Identification

At the recent ProcureCon Marketing 2024 event, I found myself having the same conversation over and over with procurement professionals, concerning endlessly rising Software vendor costs in the region of 10-20% per year, and concern over which software they are being asked to purchase, year after year.

I know from looking at my own personal finances that SaaS subscriptions (in the form of Netflix, Disney, Audible etc) are the death of a thousand cuts for profitability, and when you scale that up to enterprise level companies, the analogy goes from figurative to very literal indeed.

I spoke to Procurement people from every country in Europe, and the story was the same everywhere, that the internal business cases to justify the purchases and renewals of software that fulfilled similar functions made it very difficult to distinguish when a renewal was in the best interests of the company as a whole.

As I found it an interesting subject, I’ve been doing some research and follow up conversations to define what marketing procurement should look out for to identify bias in software business cases created by internal stakeholders, who may be looking to protect their own interests rather than the wider company.

Based on my research then, let’s start with how you identify bias in SaaS business cases from external stakeholders, which can be grouped into six key areas:

1. Overly optimistic financial projections

This is a classic. This new revolutionary software is going to have 1,000,000% ROI. Really? Nucleus Research, the world-renowned ROI Analytics firm found that, on average, for every dollar spent on ROI (American research company, not my fault), the incremental return is $4.44. That is a 444% ROI. Even that sounds rather ambitious to me (and I’m not what you would call risk averse). (https://nucleusresearch.com/research/single/marketing-automation-returns-5-44-for-every-dollar-spent/)

So, watch out for unrealistic revenue forecasts or cost savings estimates that seem exaggerated to make the case look more appealing. Anything over 444% would seem like a good place to start asking questions, or to be more conservative, I would consider 300% as a good starting position.

2. Selective data presentation

Another form of SaaS Bias that can make its way into business cases is that of selective data presentation. An easy thing to look for here is no downside in the supplied metrics, which might show that the provided KPIs might have been cherry picked from a wider set to show only positive benefits.

Remember the adage, if it looks too good to be true, it often is. I would go furthermore and say that it very rarely isn’t, based on my quarter of a century in this world.

There is always a downside, whether it’s a short dip while colleagues get trained up or experienced on a new brand, or even if we’re talking AI, any touch point where the AI interacts with your customers is a risk to the brand.

3. Vague implementation plans

It will be particularly important that you look out for a lack of specificity in rollout timelines, resource requirements, or integration details. This could indicate the propose either hasn’t fully thought through the operational implications or is glossing over a known complication.

If there’s an incumbent technology this is replacing, how does the renewal date align with the implementation dates? Has termination notice already been issued to the incumbent?

It’s not unusual for these projects to run over, especially if there are critical dependencies such as internal API development or email ramp up, and if you’re not careful there will be a renewal request for the incumbent that hasn’t been budgeted for.

4. Minimal consideration of alternatives

A balanced business case should objectively evaluate multiple workable options to solve the problem. The preferred solution will almost certainly be very clearly labelled, but compare the alternatives, are they credible and comparable, in terms of features, functionality (especially required third party integrations), organisational culture, business priorities and growth plans / roadmap.

Check the Gartner ‘Magic Quadrant’ and Forrester ‘Wave’ reports for the specific SaaS area you are exploring, if the alternatives aren’t listed on the report at all, then there is a good chance that all the best options haven’t been considered during the exercise.

Keep in mind these reports aren’t conclusive and suffer from as much bias as your average business case, but by and large, the major credible players are all featured, even if the ranking is occasionally highly suspect.

5. Downplayed risks and challenges

It can often be the case that the risks and challenges listed during a business case for software are underestimated or even unstated. A total lack, or small number of listed risks can indicate that this has not been deeply considered, or there may be other risks still to be uncovered.

The most common risks in a SaaS deployment are lack of user uptake by uncertain staff, implementation delays that could cause you to have to double pay for your old and new technology, and requirement for added modular spend e.g. to support third party integrations.

Another risk to look out for, of the absence of is that of expected market changes such as seasonal peaks and troughs (in the case of commerce companies) of the business over time are adequately addressed.

6. Emphasis on a narrow frame of benefits

This tends to be one of the easier biases to find, as it happens. If the stated benefits disproportionately help the stakeholder’s individual department, or event their role, rather than providing broader organizational value, that’s a strong indicator that the desired outcome is not in the best interests of the business.

Taking on a new SaaS provider as highlighted earlier is a tremendous responsibility. The price may be affordable right now, but have you ever heard of a renewal price going down? Of course you haven’t. It’s a simple matter in Excel to work out the compounded price of the software over the next five years, assuming about price increases, has that been scored into the business case? Most likely not.

I’ve occasionally highlighted how some MarTech business cases may be crafted with a focus on advancing the stakeholder’s career rather than fully benefiting the organisation. While this can be a sensitive topic, it’s important to frame it as an opportunity to ensure that the investment delivers meaningful value to the entire business. (Sins of the Father: how to learn from the past and clear up MarTech messes – Purple Square)

Part 2 – Mitigation

Now we have an idea on how to identify the bias in SaaS business cases, what can you do to mitigate the issue? As always, the best approach is multi-layered.

1. Standardized Evaluation Criteria

Create a consistent framework across the business for assessing all proposals, including KPIs such as financial metrics, risk assessments, and alignment with company goals.

This will help to ensure a level playing field and allow for fair comparisons across different business cases originating from across the entire business.

2. Capability Comparison

Consider which of your existing indirect suppliers already offer this newly requested capability to another part of the business. There are almost always economies of scale when it comes down to MarTech SaaS capabilities, particularly those that are measured and billed on per interaction / cost per thousand style models.

Individual departments will factor in the costs of software into their profitability KPIs of course, but with multiple departments across a group fulfilling similar functions across B2B, B2C and even B2B2C, exploring capabilities at a groupwide holistic level will yield significant advantages.

3. Require input from multiple inter department stakeholders

By mandating that business cases must involve perspectives from various departments (e.g., IT, Finance, Operations, Marketing, Legal) will provide a more balanced view of overall business benefits.

This will significantly reduce the potential of individual bias from affecting product and service recommendations.

4. Independent review processes

They say information can be grouped into three categories: (1) What you know, (2) what you don’t know, and (3) what you don’t know you don’t know. The third of these, what you don’t know you don’t know is terrifying, and where almost all risk originates.

By setting up a cross-functional review board with oversight across all business cases or engage an external consultancy with a deep specialisation in this area (hint hint) to objectively evaluate proposals for true benefits and opportunities, challenging assumptions and uncovering potential risks and biases.

5. Data-driven decision making

Building on the subject of information, the most important thing to bringing into the decision-making process to avoid bias is data. It would be naive to suggest that data doesn’t lie, but by employing some standard practices you can force it to be a little more honest.

The most important data that can support a well-researched business case is (a) quantitative and (b) historical data to support claims. Quantitative data is numbers-based, and firmly measurable, you know where you are with quantitative data. Qualitative data, by its subjective, interpretative nature is the enemy of a good business case.

All numbers or statistics supplied must have substantiated sources, either quantitative from an internal or external source, or historical, based on the past performance of the business or department, preferably when something similar was previously attempted.

When benchmarking against external sources such as industry standards or similar implementations in other companies, consider the origin of these sources, and the bias that might be inherent within them. A System Integrator that has a known vendor partnership, for example, is predisposed to promote that vendor with overwhelmingly positive statistics, and therefore wouldn’t be considered an independent source of benchmarking.

6. Implement a post-implementation review

Regularly assess the actual outcomes of implemented solutions against their initial business cases. Use these insights to refine the evaluation process and hold stakeholders accountable.

Also, knowing that there will be a post implementation review might help to deter some of the biases that could be feeding into the selection process.

7. Bias Awareness

Some organisations of our acquaintance have found benefit in offering education on common cognitive biases and decision-making pitfalls to help stakeholders recognize and mitigate their own biases when creating business cases.

How we help?

As saintly as we are at Purple Square, I didn’t create this blog because we are a charity. We know our world of CX and Marketing Automation with the same level of intuitive understanding as a detective wandering onto a crime scene.

We can help create RFPs with a level of technical understanding your business analysts could only achieve if they spent their careers working on MarTech the way we have. We can mark responded RFPs with an accuracy equal to the strictest teacher you ever had at school.

We can implement Marketing Technology with a level of efficiency and precision that the Big Four can only dream of, though it doesn’t stop them for a minute claiming to have our capabilities. But in every single area of sophisticated ideation and problem solving needed to be a successful implementor, the specialist beats the generalist ten times out of ten.

Despite our commitment to maintaining exacting standards and ethics, we sometimes face challenges competing with system integrators who may overpromise to win engagements. However, we believe in the value of delivering transparent, reliable solutions.

Choose Purple Square as your MarTech Indirect Procurement partner and save your companies millions of pounds worth of troubled, flawed MarTech SaaS implementations, while dramatically increasing the pace of progress towards ROI and beyond.

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