Opportunity

Standard Financial Analysis Tool

Rapid Financial Business Case

Project Name Here

Background
This modeling tool has been developed to help you generate a financial business case for a technology decision. It is
designed to help you assess the actual impact the project will have to the bottom line. Calculations such as return
on investment (ROI), total cost of ownership (TCO), payback period, and net present value (NPV) are calculated and
may be used to either select the best solution or negotiate better terms for a desired solution that may have the
wrong cost structure.

Nucleus Research is a global provider of investigative, case-based technology research and advisory services that
provide real-world insight into maximizing technology value. For more information, visit NucleusResearch.com.

Nucleus Research is registered with the National Association of State Boards of Accountancy. Registration number:
108024

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Copyright 2015 Nucleus Research Inc.
National Association of State Boards of Accountancy registration: 108024

Page 2 of 15
Copyright 2015 Nucleus Research Inc.
National Association of State Boards of Accountancy registration: 108024

Benefts

Increased employee productivity

Increased worker productivity is the most common benefit realized from a technology investment.
IT productivity
How many IT employees will use the new solution?
What is the average annual fully loaded cost of an IT employee?
What percentage of their time can they save with the new solution?

0 IT employees
0
25.0%

Annual beneft from increased technologist productivity:

Manager productivity
How many managers will use the new solution?
What is the average annual fully loaded cost of a manager?
What percentage of their time can they save with the new solution?

0 managers
0
33.5%

Annual beneft from increased manager productivity:

Employee productivity
How many employees will use the new solution?
What is the average annual fully loaded cost of an employee?
What percentage of their time can they save with the new solution?

0 employees
0
50.0%

Annual beneft from increased employee productivity:

Reduced customer churn

Increasing customer satisfaction can have a direct impact by reducing customer churn, reducing the cost to acquire new customers.
How many customers do you have?
How much does it cost to acquire a new customer?
What is your current annual churn rate?
By what percentage can you decrease this churn rate using the new solution?

0 customers
0
0.0%
20%

Annual beneft from reduced customer churn:

Reduced hardware and software cost

Many new technologies replace existing solutions, providing a benefit by eliminating the cost to maintain and upgrade an outdated solution or
avoiding future purchases to support that solution.
What is the annual maintenance cost on hardware you plan to eliminate?
What is your annual spend on new hardware for the solution you are eliminating?
Annual beneft from reduced hardware cost:
What is the annual maintenance cost on software you plan to eliminate?
What is your annual spend on new software for the solution you are eliminating?
Annual beneft from reduced software cost:
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Copyright 2015 Nucleus Research Inc.
National Association of State Boards of Accountancy registration: 108024

0
0
0
0
0
0

Page 4 of 15
Copyright 2015 Nucleus Research Inc.
National Association of State Boards of Accountancy registration: 108024

Benefts

Reduced accounting and audit costs

Organizations using an outside firm or auditor to audit their books often find they are able to reduce audit costs when implementing technology to
manage assets or automate processes.
What is your annual audit cost?
By what percentage can you reduce this cost?

0
10.0%
Annual beneft from reduced audit costs:

Reduced inventory
In many cases solutions such as ERP and CRM can streamline the tracking of purchase orders and link the supply process from inventory received
through product shipped and billed. Ultimately that solution can help reduce overall inventory and inventory carrying costs.
What is your average inventory value?
What is your cost of capital?
By what percentage can you reduce your current inventory?

0
8.0%
10.0%
Annual beneft from reduced inventory:

Reduction in working capital

Accelerating billings and reducing accounts receivable days outstanding are two ways that technology can help to reduce an organizations overall
working capital requirements.
What is your current working capital requirements?
What is your cost of capital?
By what percentage can you reduce working capital?

0
8.0%
25.0%
Annual beneft from reduced working capital:

Increased profts
Many companies are able to increase profits by either increasing sales or identifying areas where automation can reduce the bottom line costs.
What are your total annual sales?
What is your profit margin?
By what percentage can you increase sales using the solution?

0
20.0%
10.0%
Annual beneft from increased profts:

Other benefts
Other benefits could include improved partner management, improved visibility, and reduced administrative overhead.
Other annual direct or hard benefits not included above:
Other annual indirect or soft benefits not included above:

0
0
Total of all other benefts:

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Copyright 2015 Nucleus Research Inc.
National Association of State Boards of Accountancy registration: 108024

Page 6 of 15
Copyright 2015 Nucleus Research Inc.
National Association of State Boards of Accountancy registration: 108024

Costs

Software
The software costs for a project include the initial license fees and the ongoing annual costs for a subscription license and maintenance fees.
Other costs may include operating system, support software, or other desktop upgrades and network software changes.
If you are purchasing the solution, what is the initial cost of software licenses?
Check here if this is a capital expense (CAPEX) that should be

0
depreciated.
For a cloud solution, what is the annual subscription cost?
How would you like to account for the cloud subscription payments?
Allocate the payments at the beginning of the period (initial year, year 1, and year 2).
Allocate the payments within the period (year 1, year 2, and year 3).
What is the annual maintenance cost for the software?

1
0

Hardware
Hardware costs include servers purchased to support the application and any additional networking or security hardware required as part of the
deployment. Additional hardware may be needed to support networking, integration, and wireless and mobile devices.
What is the total initial cost of hardware purchased for the project?
Check here if this is a capital expense (CAPEX) that should be

0
depreciated.
What is the maintenance cost for this hardware?
What is the average cost for power and cooling per year for these devices?

0
0
0

Internal Staf
The personnel costs for a project include the initial time devoted to the management and deployment of the solution. On an ongoing basis, the
time devoted to managing the solution should be included in the project costs.

Initial deployment
How many total hours will internal technology staff spend on the initial deployment?
What is the average fully loaded annual cost of an IT person?

hours
0

How many total hours will management spend on the initial deployment?
What is the average fully loaded annual cost of a manager?

hours
0

Ongoing Support
How many technology staff will be assigned to ongoing system maintenance?

0.0 employees

External Consulting and Professional Services

Consulting and professional services are typically used for initial deployment, custom development, integration, and training.
What is the total initial cost of consulting and professional services for the project?

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Copyright 2015 Nucleus Research Inc.
National Association of State Boards of Accountancy registration: 108024

Financial Analysis

Financial Results
Payback Period

3+ years

Annual ROI

N/A

Net Present Value

Internal Rate of Return (IRR)
Average Annual Net Benefit

Cumulative Net Beneft

0
N/A
0

Types of Benefts

Year 1

Year 2

Year 3

Cost : Beneft
Ratio

Total Benefts
Direct
Indirect

Up Front
0
0

Year 1
0
0

Year 2
0
0

Year 3
0
0

Net Cash Flows

Total
0
0

Total Costs
CAPEX
OPEX
Net Cash Flows
Cumulative Net Benefit

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
Initial

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Copyright 2015 Nucleus Research Inc.
National Association of State Boards of Accountancy registration: 108024

0
Year 1

0
Year 2

0
Year 3

Related Research

Business Case Development

Infographic: Building the financial business case

Maximizing the potential return on investment

NucleusResearch.com
Indirect benefits: The invisible ROI drivers

Quantifying the value of increased productivity

Nucleus Research is the leading provider of investigative

technology research. and is registered with the National
Association of State Boards of Accountancy. NASBA
registration number: 108024

Understanding the metrics: NPV versus ROI

The strengths and weaknesses of TCO

Nucleus Research Inc.

100 State Street
Boston MA 02109
1-617-720-2000

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Copyright 2015 Nucleus Research Inc.
National Association of State Boards of Accountancy registration: 108024

Copyright 2015 Nucleus Research, Inc.

Page 10 of 15
Copyright 2015 Nucleus Research Inc.
National Association of State Boards of Accountancy registration: 108024

FINANCIAL ASSUMPTIONS
Tax rate:
Cost of capital:
Depreciation method:

45%
7.0%
5-year straight-line

Cost Calculations
SOFTWARE - EXPENSED
Product license charges
Subscription cost
Other
Other
Other
Maintenance fees
TOTAL SOFTWARE - EXPENSED

Pre-start
0
0
0
0
0
0
0

Year 1
0
0
0
0
0
0
0

Year 2
0
0
0
0
0
0
0

Year 3
0
0
0
0
0
0
0

Totals
0
0
0
0
0
0
0

SOFTWARE - CAPITALIZED
Product license
Capital purchases - Initial year
Capital purchases - First year
Capital purchases - Second year
Capital purchases - Third year
TOTAL SOFTWARE - DEPRECIATED

Pre-start
0
0

Year 1
0
0
0

Year 2
0
0
0
0

Year 3
0
0
0
0
0
0

Book
0
0
0
0
0
0

HARDWARE - EXPENSED
Server hardware costs
Power and cooling costs
Other
Other
Maintenance fees
TOTAL HARDWARE - EXPENSED

Pre-start
0
0
0
0
0
0

Year 1
0
0
0
0
0
0

Year 2
0
0
0
0
0
0

Year 3
0
0
0
0
0
0

Totals
0
0
0
0
0
0

HARDWARE - CAPITALIZED
Capital purchases - from above
Capital purchases - Initial year
Capital purchases - First year
Capital purchases - Second year
Capital purchases - Third year
TOTAL HARDWARE - DEPRECIATED

Pre-start
0
0

Year 1
0
0
0

Year 2
0
0
0
0

Year 3
0
0
0
0
0
0

Book
0
0
0
0
0
0

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CONSULTING - EXPENSED
Third-party consulting
Deployment and upgrade consulting
Integration
Future project based
Other
TOTAL CONSULTING

Pre-start
0
0
0
0
0
0

Year 1
0
0
0
0
0
0

Year 2
0
0
0
0
0
0

Year 3
0
0
0
0
0
0

Totals
0
0
0
0
0
0

CONSULTING - CAPITALIZED
Capital cost - Initial year
Capital cost - First year
Capital cost - Second year
Capital cost - Third year
TOTAL CONSULTING - DEPRECIATED

Pre-start
0

Year 1
0
0

Year 2
0
0
0

Year 3
0
0
0
0
0

Book
0
0
0
0
0

PERSONNEL
Initial
Management
Information technology
Other staff
Ongoing
Management
Administrators
Information technology
Other
TOTAL PERSONNEL

Pre-start

Year 1

Year 2

Year 3

Totals

0
0
0

0
0
0

0
0
0

0
0
0

0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

PERSONNEL - CAPITALIZED
Capital cost - Initial year
Capital cost - First year
Capital cost - Second year
Capital cost - Third year
TOTAL PERSONNEL - DEPRECIATED

Pre-start
0

Year 1
0
0

Year 2
0
0
0

Year 3
0
0
0
0
0

Book
0
0
0
0
0

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TRAINING
Employee time
Trainer cost
Outside location costs
Other
TOTAL TRAINING

Pre-start
0
0
0
0
0

Year 1
0
0
0
0
0

Year 2
0
0
0
0
0

Year 3
0
0
0
0
0

Totals
0
0
0
0
0

OTHER
Telemarketing
Direct mail and Webcast
Airfare
Other
OTHER

Pre-start
0
0
0
0
0

Year 1
0
0
0
0
0

Year 2
0
0
0
0
0

Year 3
0
0
0
0
0

Totals
0
0
0
0
0

Other
Other
TOTAL - DIRECT

Pre-start
0
0
0
0
0
0
0
0
0

Year 1
0
0
0
0
0
0
0
0
0

Year 2
0
0
0
0
0
0
0
0
0

Year 3
0
0
0
0
0
0
0
0
0

Totals
0
0
0
0
0
0
0
0
0

INDIRECT
IT productivity
Manager productivity
Employee productivity
Reduced customer churn
Increased profits
Other benefits

Pre-start
0
0
0
0
0
0

Year 1
0
0
0
0
0
0

Year 2
0
0
0
0
0
0

Year 3
0
0
0
0
0
0

Totals
0
0
0
0
0
0

0
0
0

0
0
0

0
0
0

0
0
0

0
0
0

Benefit Calculations
DIRECT
Reduced hardware and software cost
Reduced accounting and audit costs
Reduced inventory
Reduction in working capital
Other benefits

Other
Other
TOTAL - INDIRECT

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FINANCIAL ANALYSIS

Project Name Here

N/A
3+ years

ANNUAL BENEFITS

Pre-start

Year 1

Year 2

Year 3

Direct

Indirect

Total per period

CAPITALIZED ASSETS

Pre-start

Year 1

Year 2

Year 3

Software

Hardware

Project consulting and personnel

Total per period

DEPRECIATION SCHEDULE

Pre-start

Year 1

Year 2

Year 3

Software

Hardware

Project consulting and personnel

Total per period

EXPENSED COSTS

Pre-start

Year 1

Year 2

Year 3

Software

Hardware

Consulting

Personnel

Training

Other

Total per period

FINANCIAL ANALYSIS

Results

Net cash flow before taxes

Net cash flow after taxes

Annual ROI - direct and indirect benefts

Annual ROI - direct benefits only

Net Present Value (NPV)

Year 1

Year 2

3-Year IRR

0
#DIV/0!

0
#DIV/0!

0
N/A

#DIV/0!
0

#DIV/0!
0

N/A
0

Payback period
Average Annual Cost of Ownership

Year 3

3+ years
0

Err:523

0
N/A

FINANCIAL ASSUMPTIONS
All government taxes
Cost of capital

45%
7.0%

2015 Nucleus Research, Inc. Reproduction in whole or part without written permission is prohibited.
All calculations are based on Nucleus Research's independent analysis of the expected costs and benefits associated with the solution.
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