It was Benjamin Franklin who once famously said, “The bitterness of poor quality remains long after the sweetness of low price is forgotten.”

In today’s technology-fueled world, three hundred years beyond the one in which Franklin lived, that quote still rings true. As both consumers and business professionals, we’re constantly searching for the best product at the best price. This article will dive a little deeper into this idea, with a focus on the software industry.

Historically, the value of a technology investment has been articulated in terms of quantifying the cost savings associated with acquiring a new system, and the operational efficiencies of doing more with the same or fewer resources. Businesses have traditionally put most of their focus on up-front costs when acquiring a new software solution—very much like purchasing a brand-new car. You pay, you receive the goods, the product is yours.

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Times have changed. In today’s service-driven economy, cloud computing has altered the way organisations pay for and consume IT. The focus has shifted from an up-front cost to a more holistic lifecycle cost where the variable dimensions of quality play increasingly significant roles. For software, these dimensions include the ease with which it can be deployed and adopted, as well as the overall user experience.

But that doesn’t go far enough. Today, customers should expect to be able to also measure value by how well a system can enable strategic business objectives and outcomes. Simply put, customers should consider how a core business system can:

• Help with both organic and inorganic growth
• Guide them towards insights into how money is spent across the organisation
• Provide advice on how they compare to other organisations of similar size or in the same industry
• Help them find the best talent and ensure a great recruitment experience for job candidates

The secret to redefining the value delivered by software comes from understanding the entirety of the ownership experience, including the business case, purchase, deployment, use, and ongoing value. Technology companies need to place a focus on delivering ongoing value for the long-term—not just a snapshot at the start of the relationship.

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Measuring software value by the numbers

Customers need to understand the value in pragmatic terms, not just definitions from traditional industry benchmarks. Tangible customer stories which use data as proof points are key in this process.

When talking with customers about how they measure value, three themes typically emerge:

Total Cost of Ownership (TCO): These are costs that can be eliminated or optimised via a new solution, not just in terms of up-front subscription and deployment costs, but the ongoing expenses of living with and managing the solution.

Efficiency and Productivity Improvements: Business value can also be measured by its impact on improving the efficiency of key functions, such as finance, HR, and IT, by providing a single system through which leaders can get fast, accurate real-time data and insights to better inform decision making.

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Business Effectiveness: Never has there been a more opportune time for CFOs and CHROs to have an impact, with CEOs increasingly looking to them to help shape business direction and strategy. Once considered a numbers-only role, the CFO is now balancing traditional responsibilities with growing demand for data-driven analysis and insights that support growth and strategy. This means fundamental changes in the way finance professionals approach activities, such as planning, budgeting, and forecasting, as well as the processing and analysis of non-financial data.

Similarly, the CHRO’s role has evolved significantly. If talent is a company’s most important resource, it makes sense that the person responsible for finding and keeping talent is vital to a company’s survival. After all, getting the best people for your business is far from a sure thing.

>See also: How CIOs can act as a service broker to the line of business

Having the right data to predict outcomes, diagnose problems, and prescribe actions on the people side will add value to the business, and is where Finance & HR leaders can demonstrate their importance in a very concrete way. The CHRO is the executive responsible for the strategy of how the company uses people to achieve business results and a dynamic talent allocation strategy, hiring and promoting for a more inclusive workplace, and a strong company culture all improve those results.

Measuring business value, particularly in today’s cloud computing world, is not overly complex. It simply requires a more contextual way of looking at the subject. To avoid the bitter taste of Franklin’s ‘low price, poor quality’ quote, businesses need to think about how the product will not just enable a move to the cloud but also deliver continuous value realisation into the future, way beyond the sticker price on the initial purchase.

Sourced by Sridhar Parameshwaran, Group Director, Value Management EMEA at Workday