Investing in Innovation It is a truism of today’s business climate that one must innovate or die. However, success of an innovation development effort always has a significant level of uncertainty.

1. Investing in
Innovation
Murray Cantor, CTO

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You have questions
For development programs:
•How much should we invest?
•In what should we invest?
•Are we receiving value from progress?
•Should we continue to invest?

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The key question: “How do you measure the value of an incomplete project?”
Some incorrect answers:
• Nothing until shipped
• Sunk cost (Expense to date)

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The economists’ answer …
• To determine work, treat the effort as a
risky investment
• Model the Net Profit over the total program
life
• The value today of this profit stream is it’s
Net Present Value (NPV)
• The ROI = NPV / DevCost
• This would be trivial if all these numbers
were simple and easy…
NetProfit(t) =
Benefits(t) – DevCosts(t) – AfterDeliveryCosts(t)

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Uncertainty makes NPV, ROI much harder to reason about
Two views of the NPV Two views of the ROI
• Future values are uncertain
• Need to reason about the
probabilities
• Hard for people
• Need machine to augment
peoples capabilities
• Probabilities will change in time,
hence the need for AI and
machine learning

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Uncertain Economic Factors
• Costs:
• Development – staff costs, work estimates and
run rate, tooling/ops costs, vendor costs
• After Delivery – operations, maintenance, support
(partially dependent on development choices)
• Benefits
• Revenues based on price, addressable market
share, retention
• Efficiencies
• ….

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Using Aptage - Deciding to invest?
•Your organization sets a target of 8X
ROI from the project
•They want to be 60% confident of
reaching the target.
• Either reject programs that are too
risky or replan to get meet target and
risk appetite

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Aptage Portfolio View

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Which investments are closest to target?
Aptage Portfolio ViewEvaluate Option:
• Buy/Build
• Different Strategies
• Different Vendors
Compare
• economic forecasts, timelines, and
risk
CHOOSE, and execute working off the
uncertainty
Aptage J-S View

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Strategy
Decision Support
Execution
Delivery Support
• Make sound economic investment decisions
• Digital Transformation, Product Launches, Innovation
• Complex Systems, Construction, Hardware/Software
• Manage innovation, risk, and uncertainty to success
How likely to finish on time? When will work finish?ROI/Confidence Portfolio Probable J-S Curves

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We have answers
Q: How much should we invest?
A: Only as much as has acceptable risk of
meeting ROI target.
Q: Should we continue to invest?
A: Yes, If the likelihood of receiving ROI still
high enough.
Q: Are we receiving value from progress?
A: Yes, if the NPV and ROI are improving.

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How Aptage can help
• Aptage provides a foundation of economic theory, the mathematics of uncertainty, and
the simplicity of small data to:
• Provide sound economic and risk data-driven decision making to start, continue, and
kill project investments.
• Enable stakeholders, SME’s, and vendors to collaborate effectively to make best
decisions with all available information
• Instrument current models and forecasting tools with
uncertainty/probability/confidence
• Provide Aptage RBd for measuring schedule uncertainty
• Continuously revise projections based on team/vendor/program completion realities

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Proprietary AI that integrates
the best thinking about
managing uncertainty and risk.
Elicit ranges,
not averages
Utilize team beliefs
as probabilities
Delphi
Game theory
Leverage intuition
& mathematics
Aptage Differentiators
Our team has a unique combination
• Data science (the mathematics of uncertainty)
• Deep domain knowledge (econ of development)
Our IP is a small data, in-place, learning AI
• Continuously learns, predict, advices
• Proprietary Algorithm (Trade Secret)
• Although data available is small, Aptage can still
provide actionable advice for strategy/execution
AI Platform for
Projects

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Thank you!
Dr. Murray Cantor
CTO & Co-Founder
Murray@aptage.com
John Gonzalez
Vice President, Aptage Sales
(248)697-8757
John.Gonzalez@aptage.com