As a CEO, How I Justify a Tech Purchase

Everyone’s talking about ROI these days when it comes to making technology purchases. ROI has always been important, but in today’s state of affairs, where we’re all looking for opportunities to reduce costs, tech purchases are being scrutinized as never before.

So it’s no surprise I was asked recently what I look for to justify the tech purchases we make at Demandbase. Here’s how I look at it. (Need the TL;DR version? Check out the 1-minute video clip.)

At Demandbase, there are three tests our tech purchases need to pass, and the first is the most important by far.

Test 1: Do the tech purchases help us achieve our KPIs?

Our exec team and I put a lot of thought and effort into developing our KPIs. After all, they’re the guiding stars that keep us focused on our mission. I work hard to drive alignment and consensus around them. Once in place, I trust our leadership team to deliver on them.

With KPIs being at the top of my priority list, it only makes sense that I would consider first and foremost how a tech investment helps drive our KPIs forward. If it doesn’t align with at least one KPI, you’re going to have to build a really strong case for it otherwise. Which leads to the other two things I consider.

Test 2: Does it save time?

Our people are our most precious resource. And they’re smart! If we can save them time…help them do routine things more quickly…that frees them up to work on higher gain activities that only they can do. That’s worth a lot. So I consider whose time we can save and how much time.

Test 3: Can we do the same thing for less money?

In other words, is this the most cost effective way to achieve the desired result? Is there a process change we could make that would accomplish the same thing for less? Are there other tech purchases that will work just as well, for less? Is this really the most efficient path to the goal?

Mind you, this doesn’t necessarily mean we choose the cheapest solution. It’s about carefully evaluating what we gain for the cost, and if all things are equal, we will go with the lowest cost solution.

Underlying all this is my deep trust of our leaders. I respect each one and trust they will only make smart recommendations, having considered these three things. By the time they bring something to me to approve, chances are I’ll say yes.

If you’re a CEO reading this, you’ll understand. Our most important job is to choose the right people to lead our teams and to set the course through our KPIs. Then approving your leaders’ recommendations is a piece of cake.

Not a CEO? Be prepared to pass these “tests” when seeking approval for your next tech purchases or renewals. You’ll save yourself a lot of heartache and gain your CEO’s approval and respect.

Anything I missed that you consider when evaluating your tech purchases? I’d love to hear. Please send your thoughts to gabeGTM@demandbase.com.