The Economic Value Proposition Matrix® (EVPM) model was initially used to conduct an Independent Verification and Validation (IV&V) as a consulting engagement for a Super Independent oil and gas company assessing the CAPEX for a digital oilfield implementation for an old brownfield—circa 2004.
Its development basis is taken from our industry sponsored 2004 study, Roadmap to Enterprise Optimization: A Guide to the Impact of Information Driven Field Operations on the Petroleum Corporation. EVPM well proven and has been in continuous commercial use and upgrade since then.
2. The Sales Problem
• Getting Your Message Through
• Management is always busy
• New/disruptive technology is “by
definition” not well understood
• A good “demo” may have
helped this rep!
• The inventor of the machine gun
needs the inventor of bullets
and,
• The right “qualified” customer
3. Traditional Methods of Explaining Value
• Feature -- Benefit
• Product focuses
• “This coffee cup is made of ceramic
and holds heat better than plastic”
• Does NOT truly Differentiate
• Value Proposition
• “My solution will increase your net
income by 75%”
• However, Often
• Overstated
• Not Demonstrable
• Not Defendable
4. Actual Benefit Statements
• These are taken from a recent
presentation
• Mid size software firm
• Established company
• Business Process Management
space
1. Has He or She Garnered Your Trust?
2. Would You Buy from this Sales Representative?
3. What is the Credibility of the Firm Represented?
• “Decreased human errors by 100%”
• “Reduced losses from 8% per month to less than 1%
per month through sales order process automation”
• “Gained ability to monitor inventory process in real
time”
• “Improved control over XXX delivery process and
reduced manual work by more than 70%”
• “50% increase in the daily processing of orders”
• “Enhanced credit control system for partners through
increased information visibility”
5. Purpose of the EVPM Model
Translate Technology into the Language of Business
Buying Influences
• Economic
• Technical
• User
• Coach
Source: Miller Heiman
6. Brief History
• Developed Over Two Decades
• Extensive CAPEX Assessment with
Super Major circa 2000
• Early DOFF Valuation
• Vetted by over 50 Major Clients
• Oil & Gas Operator
• Major IT Firms
• Major Industrial Products Firms
• Addresses the Real Concerns of
Clients
• Measurable Value
• Directly Addresses Intangibles
7. EVPM Process
• Problem Identification and
Assessment
• With Client
• “Straw man” Proposal
• Components of Value
Determined and Measured
• Tangible
• Intangible
• Financial Model
• “What If” Risk Mitigation
8. Components of Value
Category Definition Example
Cost Takeout Completely eliminating a specific activity or
process
Redeploying a resource from a non value-
added activity to a value-added activity
Cost Avoidance Identifying and correcting an error that was
not budgeted for correction but would have
caused an expense had it not been corrected
Correcting an engineering design flaw
before the flaw goes into production.
Productivity & Efficiency Gains Increase in productivity that improves existing
resource utilization.
Removal of a bottleneck that is causing
capacity restraint
Correcting a process to allow more
productive time by shifting from wait time
to production time
One-time Cash Flow Impact Decreasing and or eliminating one-time cash
flow impact
Elimination of redundant information/data
stores
Monetize Capital
Intangible Benefits that improve operations of the
business and /or are necessary to control,
protect and enhance company assets, but are
not quantifiable due to the nature of the area
being improved
Improvement of communications between
different operational units/supply chain
Reduced small equipment shrinkage