How to Structure a Technology Cost-Benefit Analysis

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Having worked with many wealth management firms on transformation initiatives and implementing technology solutions, my experience has been that their evaluation criteria focus too much on the cost of the initiative.

Growth-oriented firms and their leadership take a more data-informed approach in their evaluation. While costs are important, they view them in the context of the benefits and are likely to refer to them as investments.

I recently worked with a large firm on a client onboarding transformation where my firm collaborated on a cost/benefit analysis (CBA). The CBA showed that for every dollar they invested, the initiative would return five dollars in benefits back to them almost immediately. We worked directly with this firm’s business and finance teams to ensure that the benefits articulated in the CBA could be supported with data. In other words, the benefits were not fuzzy. The projected benefits were in the millions of dollars and continued to accrue as the firm continued to grow, and the financial metrics (NPV and IRR) the finance team used were overwhelmingly positive. When it came time for its executive committee to review and approve the initiative, it was less a question of,“Should we do this?” and more, “How quickly can we do this?” Given the efficiencies and scale this transformation was projected to deliver, this initiative quickly moved to the top of the priorities for this firm to execute.