Decision Making with Cost, Value and Risk
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Quick overview of the concepts behind CVR. Please contact me if you would like to put the concepts into action ! I can guarantee a coaching session with me will change the way your managers and executives view decision making !
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Decision Making with Cost, Value and Risk
- 1. Making Business Decisions: A New Look at the Basic Elements of Business Value Paul Morse pjsna@msn.com
- 2. Agenda Background The Essence of Business Spending Cost Value Risk Cost Value Risk Business Layers Discussion Throughout
- 4. The Essence of Business Spending Some Spend - $ Equals some Unit of Work Over Time $ = Work Unit Time
- 5. CVR – Cost Value Risk The three elements of any decision What is it going to cost? What will I/we get for that cost? What are the risks if I/we do it, or don’t do it? Cost Value Risk Risk Value Cost
- 6. Alternate Decision Timelines T0 Option A – CVR Profile Option B – CVR Profile CVR Profile Decision Point
- 7. What is Cost ? Many ways to look at cost TCO – Total Cost of Ownership Looks at Lifecycle costs Hard/direct and soft/indirect costs ROI - Return On Investment Hurdle Rate is key - % return to beat EVA – Economic Value Added Similar to ROI Not Common is US Internal to Company Most common – Spreadsheet jungle
- 8. What is Valued ? Support Partners Security Interoperability Seamless Upgrades Technology Roadmaps Availability/uptime Strategy Integration Assessment help – studies, POC, training, etc. Indemnity
- 9. Common Risks Opportunity Cost – wrong decision Technology – obsolete/change ? Implementation Issues/timeframe Cost Overruns Legal Organizational User Acceptance/Training effort Vendor longevity/stability
- 10. Ideal CVR Profile C V R Strive For a Better CVR Profile Than the Competition And be ready to prove it …..
- 11. CVR Summary Universal decision making method Works on everything Streamlines decision making at all levels of an organization Very flexible/expandable Every “suggestion box” should use it Great way to stand out from the competition.
- 12. Strategies Expense Asset/Equity Management Sales Governance Key Business Elements/layers Assess CVR TCO ROI TVO Technical RFI/P Etc. Project Portfolio InfoWorker User Apps App Plat LOB ERP CRM Portal Infra Network Storage Cloud Email F&P Cogs/Sales SGA/Sales IT/Sales Key Perf Indicators Rec’v days Invntry days Cost/invoice IRR NPV ROI, Etc. Cash Flow Corporate Objectives Revenue Net Income Return on Assets/ Equity Business Results
- 13. Resources IBM Institute for Business Value http://www- 935.ibm.com/services/us/gbs/bus/html/bcs_whatwethink.html Oracle CIO Central http://www.oraclecio.com/Main/Home/Home_w.html Microsoft http://www.microsoft.com/windowsserver/compare/linux/windows -server-tco.mspx MIT Sloan CISR http://cisr.mit.edu/ CIO.com http://www.cio.com CFO.com http://www.cfo.com http://www.amazon.com/Making-Technology-Investments-Profitable- Business/dp/0471227331 There are many, many more…
- 14. Discussion Audience example if time
- 15. Thank You … no, really.
- 16. Labor Capital Technology Natural Resources Partners, Etc. Organizational Boundaries External ForcesOrganizationResource Pool Market Regulation Natural Competition Etc.
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