What is CapEx Software and Why It’s Key to Success

Written by: Gary Smith

Finance teams are raising the awareness that Capex software is no longer a nice to have, it’s a necessity. With increasing pressure for complex decision making, in shorter timeframes with strict budgets, across multiple departments, processes that once worked just aren’t keeping pace with today’s business environment.

Here’s everything you need to know about Capex software and what’s driving the change.

Why Capex Software is the Next Frontier

As humanity progresses into unique interactive areas with virtual reality, augmented reality, and seamless payment gateways, we realize that “in the moment experiences” are demanded and needed to be competitive and evolve. They are not a requirement, but they are accepted and essential on a personal and business level, thus effective CAPEX software is the next frontier.

In business we have evolved our processes to give us quality information in a reduced time aimed at increasing margins and maintaining our competitive landscape. The revenue line is integrated into sophisticated customer relationship models (CRM’s) which automate our customer interaction from marketing through to the closing and managing of our customer relationships. The business case being easy for the Revenue number which must be greater than any other on the Profit and Loss.

Many years before this, most of us had already implemented our business case for ERP systems which were also aimed at the very essence of the CRM; integrating our processes to give quality, on time cost effective information. Which were delivered hand over fist as the world of legacy was consolidated and discarded.

So, if we now have the Revenue line under control (CRM) and the internal cost systems (ERP) then what could go wrong? Well let’s consider the area which we invest millions of dollars in trying to maintain our competitive advantage and overall efficiency. The one area a business must invest in to keep evolving, the process we call: Capital Expenditure.

The Capex Software Pains Driving Capex Software Innovation

For many years we had no choice in this area, no automation, no integration and quite frankly the business case for the CAPEX process and its importance had been overlooked. Of course, accountants would use ledger books and have become proficient in excel. But neither are integrated, neither give high quality decision making and neither are timely in interaction and fraught with mistakes.

But this is the digital age, and we can no longer rely on simple tallies and legacy formulas in spreadsheets to drive million-dollar projects. The reliance on manual non-integrated tools costs business in today’s environments. Out of date financial data, errors in spreadsheets, requests getting lost in the email systems makes the CAPEX process expensive and rigid. This results in organizations spending more time figuring out and implementing workarounds than reacting to everchanging markets, market environments and global economics.

Every business has its own business strategy, all with business cases for Capital expenditure, but it is without doubt that a business case for CAPEX software will be one of the easiest requests you can make in this and future budgeting periods. It’s essential and regardless of strategy or industry, capex software will undoubtedly enhance the performance of your business.

The Purpose of Capex Software

Good Capex software will connect data, people, financial plans to strategy with timely quality decision making, aimed at driving in time business decisions. The software will align business objectives with financial planning, market trends and operational tactics which then in turn will assist transformation, increasing business value. Today unintegrated capital systems cannot keep pace and deliver results close to live, in the moment, integrated capex software is needed.

Let’s consider this together. Never in our history has there been a better case for CAPEX software than the time we are in now and have witnessed in the last two years. The speed of change has been incredible. Interest rates have moved quickly, inflation is soaring, and supply chains are backed up 6 months or more.

Anyone of these can affect project viability let alone all of them appearing in such a tight timeframe. How can our spreadsheets and manual processes act quickly enough to deliver our business strategy. Quite simply they can’t; it’s impossible to maximize returns and deploy capital effectively without real-time integrated systems in what is now the “real market”.

Now it’s not all doom and gloom. The last few years have shown us that the age old 12 monthly Capex approval system had to change, needed to change, and must change to ensure our organizations are competitive. No longer can we assign capital and give managers a year to deploy. We must be able to rank our projects, evaluate them, deploy them, and react to market change in moments. Change has been needed for years and now it’s a necessity.

Capex Software: A Necessity, Not a Nice to Have

Integrated Capex software will ensure your business can react in every moment. It gives full visibility on all projects, can rank and re-rank projects, continually evaluates and improves viability ensuring the business remains competitive, aligned and responding to market fluctuations.

The business case is simple. Who would like to increase the average return on investment of every business project by 4%, deploy quicker and in turn be ahead of their competitive sets. I am sure every manager of every business and their shareholders.

The Capex process, like any, starts at the front end. With capex software senior managers who can define the Capital strategy up front so that every project is already ranked before review. These can be the normal financial drivers such as internal rate of return and can also encompass non-financial measures such as environmental and legislative compliance. All projects can be aligned to deploying the correct capital in relation to the business strategy. Being interactive, software will also re-rank projects in an instant based on new input drivers that are changed due to the current economic market or a simple change of strategy by the business.

Choosing the right projects to deploy is only the start. Automated workflows allow sign off to be quicker and more effective. In case studies this has taken sign off from weeks down to days. Resulting in projects being deployed, capitalized, and enhancing the business quicker than any non-integrated system.

Capital project execution software will track, trace, compare instantly. Combined with reporting dashboards, executives can make business decisions in the moment not waiting for manual systems to be updated.

In addition, capex software will contain the historic data for capitalized projects. This makes it easier to review the success on execution and comparison to future capital expenditure requests.

Quality decision making for capital expenditure starts with the tools that you use. In today’s competitive environment the timing of decisions is imperative and CAPEX software has become a necessity in the accurate deployment, tracking and execution of these decisions.

There is no question in my mind that deploying millions of dollars of company capital should no longer be on spreadsheets; it’s like keeping your money under your bed. To advance your business you need to deploy the capital wisely with CAPEX software. Capex software is a necessity, not a nice to have.