Here is a stepwise approach to developing a quantifiable value model for your program vision. Establish the Vision of the Business Imperative. Why is it being considered? Research the corporate executive vision to see how this project or initiative may meet that goal. Tie it to industry developments where applicable. Identify Business Drivers emanating from the...
There are different value recipient personas who imbibe value in their own unique way. The following are some of the personas that are typically found when narrating the value story: Bean Counter: The bean counter persona is essentially one who likes to “nickel and dime” financial transactions. They are extremely detail-oriented and are typically mired in...
When you are developing business value cases, there is often the need to calculate the projected value of your initiative through industry benchmarks. Looking for credible benchmarks takes an effort. Here are six tips to surf for value modeling benchmarks: Look to see if your organization has a subscription with the research companies. Their industry...
Risks (or probable risk) is an integral component of the value equation. Any project or initiative worth something has an inherent risk factor associated with it. So how do you calculate the financial impact of risk? Simply put: Financial Impact of Risk = Probability of Risky Event Occurrence * Financial Impact (Cost) of the Risky...
Unlike the quantification of benefits which may end up in meandering discussions, the quantification of costs is generally easier. Costs of tangible goods or services are easier to measure as they are usually the direct cost of the service/good. Indirect costs such as training, hiring/firing, adoption, process re-engineering should also be taken into account when...
I have seen several times where projects are described in terms of only their benefits. No mention is made of costs and/or risks. This is just plain wrong. Any project or initiative has a cost associated with it. Perhaps the cost is sunk or sometimes implicit but there is always a cost. Just like there...
The quantification of benefits is where most valufiers become gun shy. They are afraid of putting themselves or their organizations on the line by projecting benefits based on their calculations. If there is an industry-standard way of calculating benefits, there is generally no hesitation. So how does one quantify benefits? Let’s walk through two examples....
A key component of the value model is the list of benefits attached to the intended project or initiative. In general, the benefit statements are very easy to articulate but the “value” of the value model lies in how we plan to measure and track these benefits. In a typical model, every benefit statement needs...
Business value is generally defined as the net benefit of a course of action of an enterprise. In this context, an action usually manifests itself as a program, project or an initiative. Obviously, since the potential value of a “possible course of action” cannot yet be realized, we will have to simulate it to help...
When one is explaining value modeling to a CFO, you want to focus on the main things: the value proposition of the organization, how you calculated the metrics, what metrics did you use, etc. So how do you keep the value propositions into easily understood dimensions that are generally applicable to companies across industries. I...