EVC™ Framework

Quantifying, Measuring, and Enabling ENTERPRISE VALUE CREATION

Glomark-Governan Blog

No Shortcut to Communicating Value to Internal or External Customers!


When it comes to communicating the value of a new initiative or solution, many executives (i.e., sales leaders, marketing executives, CIOs, CTOs) believe that a quick way to do it is the right way.

 

Unfortunately, in many cases a fast approach to value communication has negative consequences.  It is a well-known fact that a large percentage of new projects fail to realize and sustain their forecasted value.

 

“Give me something that our sales teams can use to quickly—and with the least possible effort—help our customers understand our value proposition, and justify investing in our solution” –is a common statement that we have heard from sales and marketing managers for many years.

 

The bottom line is that for most business-to-business solutions, rapid ways to communicate value, such as the use of rapid ROI calculators, fail.  Value selling success occurs when the necessary activities to define and communicate value are effectively integrated into our business process(es).

 

Even initiatives that require agility and fast implementation, require an objective value assessment; otherwise a necessary solution may not be approved, or may fail to create value because the right stakeholders—the ones that will enable the value, or manage the users of the solution— were not effectively involved to validate and agree on the benefits, requirements, and metrics.

 

There are number of considerations and best practices that enterprises and managers can adopt for effective value selling.  The following are some of them:

 

Communicating Value Is a Process.

Whether you are selling an initiative or solution internally or externally, don’t just think about your selling process —also consider the buying process and put yourself in the decision maker’s and decision influencers’ shoes, to understand what they will need to make the decision.  Additionally, get involved the individuals that will have to participate in the enablement of the benefits of the solution.  What is it that all of the stakeholders will need to understand, know, and validate the value?  What do they need to be sure that your solution meets their needs, is the best alternative, can be justified, and is not put on hold until a later date?   

 

Communicating Value is neither a quick task, nor function, nor a separate process.  Whether you are trying to sell something as part of your IT, sales, engineering, or operational function—Value Communication is a series of activities that must be integrated into your business process, in order to “identify, define, assess, economically quantify, and effectively validate” the value with the necessary stakeholders, to be sure that your solution is not only sold, but also it becomes an implementation success, and the benefits are sustained throughout the solution’s lifecycle.  

 

Companies Don’t Buy – People Buy.

Value means different things to different people; and if more than one person is going to be involved in the decision to invest in your solution—which is the case for most internal and external selling situations— then we must consider the position and level in the organization for each involved individual, in order to determine the type of value creation that they need to understand, to move forward with your solution or initiative.  Consider that the value perceived, for example, by a technical manager (e.g., IT or engineering manager), is different than the value perceived by a non-technical business manager (e.g., marketing manager, or human resources manager), and different to the value perceived by a financial manager, or by a President and CEO.

 

An Effective Value Management Practice Requires Effective Value Models and Templates

In enterprises, everybody is busy; and not everyone has all the necessary time to effectively define how a solution or initiative can create value for the different types of buyers, constituencies and stakeholders. 

 

A trend and best practice, is creating generic value creation “templates” for either, solutions (by vendors and providers used for external selling), or for use by business areas (for internal staffs, to internally assess and communicate value).  

 

These models or templates must include the common type of benefits that apply to a solution, or to an area, with the necessary formulas, and required data and assumptions needed to determine, forecast and communicate the value to external or internal customers.  

 

Effective value models—which can be used as templates when necessary—require a simple, yet effective structure for the benefits.  If the benefits and their formulas are not objective, then customers (internal or external) will lose confidence in the benefits presented, and will not buy into the value of the proposed solution.

 

Contact Glomark-Governan at  information@governan.com to find out more about how to create effective value templates for your organization; and implement an effective value management practice that is mature, and that can be easily and effectively adopted by your IT, Operations, Sales and/or Marketing teams to ensure that your solutions and initiatives are not only effectively evaluated, but also that your customers realize the expected benefits!

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Tangibilizing the Intangible Benefits of Analytics, Big Data and IoT.


In the business world, Big Data and Analytics represent the process for managing, discovering and analyzing meaningful patterns in data sets; which often are so large and complex that traditional databases and applications are insufficient to deal with them.  Analytics rely on the use of effectively structured information, and the application of algorithms and statistics to determine and define trends, problems, and opportunities.

 

In the new Digital Economy, enterprises now rely Big Data and Analytics to analyze, describe, predict, and improve business performance; to a point where the overall success or survival of many companies depend on their strategy for using Big Data and Analytics.

 

While individuals with a technical background—such as CTOs, CDOs, and Data Managers— understand the technological and operational benefits of Big Data and Analytics, many of the non-technical business managers and professionals have not been able to economically forecast, and measure the benefits from investments in Big Data and Analytics.

 

Nonetheless, while the business outcomes of the early types Analytics, which appeared decades ago, were difficult to predict, Analytics have evolved; and these days the various types of are Analytics are becoming easier to forecast and measure. Today we can find informative-type analytics, predictive analytics, prescriptive analytics, and automation analytics with the Internet-of-Things.

 

The uncertainty in the effects and benefits of Analytics has been decreasing, and the economic benefits of Analytics solutions are becoming easier to anticipate, measure, and economically quantify.

 

To learn more about “Tangibilizing” the intangible benefits of Big Data, Analytics and IoT, go to ->

http://www.glomark-governan.com/store/tangibilizinganalytics.html


Strategic vs. Tactical Value Selling


To some sales and marketing professionals, Value Selling means “ROI Selling”—in other words, it means presenting the financial return of their solution to their customers.

 

However, when executives make investment decisions, ROI is just seen as a threshold.   ROI— whether it is IRR, payback, NPV, EVA, or just simple ROI—is used as an indicator by financial executives to determine if an investment passes the minimum financial requirements of a corporation or institution; and if a solution would become a profitable investment for their company.  But at the end of the day, and in most situations, the individuals that make investments decisions are business or technology executives—operational managers and executives that need to know more than the ROI of your solution.

 

Another misconception is that presenting the economic value of a solution is just one more tactic that can be used at the end of the sales process; and only if the customer needs help with the financial justification. 

 

Value Selling— A Strategic or Tactical Practice?

 

Presenting the ROI of your solution can be a tactic to convince a CFO that your solution meets their financial requirements; however, value selling is more than an ROI calculation.   Value Selling must be a process, and not just a report.  In other words, Value selling is both—strategic and tactical.

 

Strategic Value Selling

 

A Value Selling Strategy for an opportunity must be part of a complete strategic sales plan.  When your strategic sales plan identifies who is the key buyer (the person that will have the final decision for the particular solution that you are trying to sell to that account), your strategy must determine how you will reach and meet that person; as well as what type of value he/she is looking for (the ‘what’s-in-it-for-me); so you can prepare and be ready with the right value discussion and content.  For example, you will need to be prepared with the right value creation content if that final decision-maker is the President of a company, versus a Facilities Manager.  Your sales strategy and value selling effort for a new opportunity must be defined early in the sales process, in order to prepare the right solution value content, and be able to convince that final decision maker that your solution will create the type of value that he/she is looking for his/her company.   

 

Additionally, if you sell complex technological solutions, you (jointly with your customer) must clearly identify your customer’s enterprise needs, before you determine the best solution scope.  In other words, determining which of the products and services that your company offers will best meet the customer’s business needs; and what would be the best scope and implementation strategy for your customers, and for your company (i.e., a solution that is architected with the scope that is profitable to both, the vendor and the buyer).

 

Tactical Value Selling

 

Properly building a compelling business case—one that is built jointly with the customer—can be used to advance each and “all” stages of the sales process.   Sales professionals need to be taught how each component or section of an effective Business Case can be used to maximize the chances of closing an order— from the beginning of the sales cycle, to present strategic value and alignment; to the closing stage, to convince the customer to move forward NOW!

 

…and remember: “Companies don’t buy —people buy”.  And value means different things to different people.

 

The EVC framework from Glomark-Governan can be adopted and adapted by technology and service providers to implement (or enhance) an effective “strategic, as well as tactical” enterprise-level Value Selling practice.  A practice that can help you achieve the maximum utilization of your existing ROI tools, and your existing sales methodology and training approach.   Contact us at information@governan.com for a demonstration on how we can assist you enhance and maximize your sales effectiveness; to meet your sales quota, and satisfy and retain your existing customers.  


Why are CIOs getting harder to contact, and what can a vendor do to reach them?


If you are a vendor trying to reach a CIO that you have not met before, have you wondered why he/she doesn’t want to take your call?

 

Obviously there are several reasons, but the number reason is because the amount of vendors trying to reach CIOs has increased substantially. 

 

Here are other reasons why this is happening:

  • The Cloud has enabled an exponential increase in software startups, that are eager to show their solutions to CIOs.
  • Social media has changed the buying process.  CIOs can find a lot of information about the vendors, and pre-select who they want to speak with, before engaging a conversation with a vendor.
  • CIOs are becoming more business-focused; and many vendors speak features and capabilities, and not business outcomes.
  • ROI-selling speeches from vendors tend to be vague.  Most vendors’ rapid ROI tools generally do not objectively demonstrate the strategic impact for their client; nor demonstrate how exactly their solution’s features would result in outcomes in the business areas; and CIOs are looking for more than simple ROI sales speeches, and/or more than just TCO reductions.
  • CIOs receive some many emails every day from vendors, that your email, even when you can help, will easily get lost.

 

The question then would be: what tactics and strategies IT solution and service providers should use, in order to increase their chances of reaching a CIO or CTO, when they are convinced that their solution can help a specific company?

 

Since technology solutions do indeed help CIOs, if you are a vendor, or a CIO, what would you recommend a vendor needs to do to reach a CIO?  

 

A Question to CIOs: Is now the time to start developing business skills in your IT organization?


According to Gartner: “By 2020, 100% of IT roles will require intermediate level of proficiency in business acumen”

 

Experts and analysts all agree that CIOs, CTOs, IT leaders, and IT teams must make a shift on their focus— and besides managing efficiencies in their IT operations, they also must spend effort in collaborating and communicating more effectively with the business areas, to assist them determine how IT can help them in their digitalization and transformation efforts.

 

Development of Business Skills in IT Teams

This shift on focus requires everyone at all levels of the IT organization—from the development and operational teams, to the CIO— to develop and acquire more business skills.  It is now a prerequisite for IT success, and no longer an option.  IT teams must understand “how to assess the needs of the business areas” from the operational to the strategic level; and how those needs in the business areas can be enabled and sustained with IT.   To accomplish that IT teams must change their communication approach, and raise their awareness of the overall business context.   To create, enable and sustain business value, IT teams must be able to assess and understand “how to” create a positive change in a business process, or on people, workflows, business management decision making, and end-customer experience and satisfaction.   

 

This brings this discussion to our company’s EVC Framework.   EVC (which is an acronym for Enterprise Value Creation) has been a 20 plus years’ effort.   Before releasing the new EVC Framework version 3, we spent the last few years studying and assessing in detail all other common frameworks; and realized that none of them provide IT teams an effective structure and process on “how-to” effectively impact and enable end-customers’ needs; such as: how IT solutions can increase sales, expand markets, generate more leads, satisfy customers, retain employees; etc.

 

The EVC Framework v3 provides teams—in internal IT organizations, as well as in technology vendors— with the necessary competence and structure to:

 

-   Assess the business strategic and operational needs.

-   Identify benefits in all business areas.

-   Assess how any IT solution will create a positive effect on an internal or external customer business process.

-   Assess the uncertainty of a benefit.

-   Quantify any benefit in economic terms, and forecast improvements in an objective way.

-   Assess, quantify and measure “intangible benefits”.

-   Identify any resistance by all stakeholders (inside and outside IT), and get their commitment and agreement on how the benefits will be measured and realized.

-   Determine the necessary pace, magnitude of impact, and urgency of any project.

-   Ask the business area teams the right questions, to collaborate effectively with them in the realization of the value of every IT initiative and IT service.

 

I encourage you to contact me or anyone in our staff, to learn more about the EVC Framework v3, and give you a presentation and demonstration of the elements, principles, and enabling tools, which will allow your complete organization develop the necessary business acumen required to help the business in this new digital age.

 

Sincerely,

 

Ruben Melendez

President and CEO

Glomark-Governan




Are DevOps and ITSM Enough for Customer Success?


If we ask a CIO or an IT professional, the answer most likely will be ‘Yes’; but if we ask a business area executive —like a CMO, CFO, VP of Sales, VP of Customer Success, or CHRO— what would the answer be? Would he or she actually know what DevOps and ITSM is?

 

Both, DevOps and ITSM Frameworks, result in tremendous improvements in IT processes and capabilities.  IT organizations are more effective and mature when they implement DevOps and/or ITSM Frameworks.

 

DevOps, which is a cultural shift and collaboration between the IT development, operations and testing teams, lead to faster time-to-market, lower failure rate of software releases, shorter lead-times between fixes, and faster mean-time-to-recovery in the event of a new release crashing.

 

ITSM, or IT service management frameworks, help IT organizations implement a structured method, with the necessary capabilities, processes, strategy, and life-cycle approach to “IT” services.  Most enterprises that have implemented an ITSM framework are happy with the outcome.  Many have reduced considerable expenses, and improved the efficiency and quality of their IT services by implementing and adopting an ITSM framework.

 

However, are DevOps and ITIL, which are successful for managing IT processes, enough to make an enterprise meet the goals of each business area?

 

The main objectives of DevOps and ITSM are about improving IT; with primary focus on the “internal” customers.   Their attention is on internal SLAs, which are IT metrics and IT performance goals; but they do not provide the “how-to” identify the external customer needs, the degree of urgency for an opportunity or threat, and how-to quantify, forecast, and measure the final effects (benefits and KPIs) for the internal areas and the external customers.

 

Additionally, major enhancements in technology —like the Cloud, Analytics, Mobility, and the Internet-of-things (IoT)— are forcing enterprises to innovate and disrupt their processes; and IT is at the center and core of every business process transformation.   The structure and goals of IT organizations is changing; from just being a “service provider” to become a “strategic business enabler”.  ITSM and DevOps are indeed helping IT teams improve the way IT teams communicate and collaborate (internally), and improve the structure, quality and efficiencies of IT processes; but there has been a major gap between how IT collaborates and communicates with each of the business areas for “business value creation”.   Many IT initiatives succeed technologically, but many also fail from a business outcome perspective.

 

An emerging framework, EVC™ (Enterprise Value Creation), takes DevOps and ITSM frameworks to the next level.  EVC complements DevOps and ITSM frameworks; it doesn’t replace them.  EVC allows IT leaders and their teams, to understand the actual effects of IT services and IT initiatives on “sales, marketing, human resources, manufacturing, logistics, and financial goals and strategies” in a measurable and economic way.

 

EVC provides the how-to turn a business case into an actionable plan, where all the stakeholders (including the IT teams) proactively validate, participate, and communicate, to enable and sustain the “business outcomes” of IT.

 

EVC is not new, it has been continuously enhanced for 20+ years; but the recently released version 3 is structured to help IT teams better communicate and collaborate with internal and external customers.  EVC enables and sustains the “business and customer” benefits of IT assets, IT services and IT initiatives.

 

EVC makes IT people and managers “speak” the language of their customers.

 


Contact Glomark-Governan to learn more about the EVC Framework.

Digital Transformation Requires a New Approach to IT Value Creation!

 

Enterprise Transformation

The Cloud, mobile devices, mobile apps, and the Internet of Things (IoT), have created a new digital era. Consumers and market conditions are rapidly changing, hence the businesses’ strategies and processes must adapt to these changes. Organizations are experiencing a digital transformation and a disruption in all business processes, as they rely more and more on IT each day.


Proactive IT Management

On the other hand, IT – which was often considered a support department for business areas – is now at the center, and a critical element of business value creation. For the last decade, IT has had the role of a “service provider”, who is meant to understand the needs of its customers (the business areas), and provide services that meet their needs and expectations; however, this is rapidly changing! IT and the business can no longer work separately; now the customer of both entities is the same: the end user.

For this reason, IT and business areas must proactively work as partners to collaborate and agree on customer needs, and make decisions together, in order to fulfill the mission for which all organizations exist: creating value for the end-customer through innovation and the digitalization, and disruption of all business processes!


Dynamic IT Management Frameworks

But, are IT organizations really ready to bear this burden?

Management frameworks such as ITIL (for Service Management), COBIT (for Governance), and other quality standards have helped IT leaders understand their role, define their priorities, and define the roadmap for the future. However, the challenge is now growing bigger, since now it’s not only about having processes for ensuring consistent outputs that ultimately enable outcomes for the customer, or aligning the IT strategy with the business strategy; now it’s about creating value in a dynamic way from and through IT.


IT Management Using Two-Modalities

Business cycles are shorter and many initiatives need to be implemented (from idea to execution) in months in many cases, thus creating the need for what is commonly known as a Two-Speed-IT, which consist of two management modalities for the execution of initiatives:  A traditional speed for implementation, and a fast and agile speed.

In other words, IT management and value creation using two-modalities is now the main concern of organizations’ C-level executives; and it seems that the guidelines provided by the most common management frameworks, that have been useful for years, now fall short in helping CIOs overcoming the current challenges; mainly by not operating in a dynamic mode.


The Future of IT Management and Frameworks

In this new digital era, IT has now more responsibility for the overall business success. Most enterprise’s initiatives depend on IT’s success, and many times initiatives must be completed before the time-to-market opportunity for the business expires (and with limited resources!).  Because business cycles are shorter now and more dependent on IT, so IT’s response to the customers’ changing demands must be faster and more dynamic; IT executives must expand their vision and adopt a more enterprise-wide focus. The objective? IT value creation with two modalities.


Creating value through IT may sound easy, as a generic requirement for all IT organizations. But, do IT organizations, and moreover CIOs, know HOW TO enable two modalities of business value through IT?  Are they using a trial-error approach? Or are they planning ahead and building strategies and updating their frameworks, like ITIL, to practically enable and ultimately realize value for the relevant stakeholders? That’s something that only time will tell.


What IT frameworks are you using to implement and manage IT value creation?



Forecasting and Communicating the Economic Benefits of Innovation, Digital and IT Initiatives.

#1 in a Series: Tangibilizing the Intangible

“A mid-level operations manager has a new digital innovation-initiative to present to his company’s executive management for consideration, with two potential benefits. One benefit is the reduction on the number of calls received at the Call Center, because customers will now place orders online; and the other benefit is an increase in customers’ satisfaction because customers will have a lot more information on the products that they can buy online.  Using just the reduction on number of calls —which will not eliminate any people, but will re-purpose the time saved by the Call Center agents— is not enough to demonstrate a positive ROI and justify the investment.  The other benefit, which is about providing existing customers with more information and better ways to place orders online, will most likely result in avoiding customers to buy from the competitors.  The mid-level manager that is preparing the business case for this initiative is hesitating on how to sell and communicate the value of the project to his management— he is willing to commit to an SLA to reduce the number of calls, but doesn’t want to commit to, or being measured on an intangible benefit related to customer’s retention and revenue protection.  He may just include the cost savings benefit because it has a higher likelihood of realization, but will not include in the business case the revenue protection benefit.


This dramatize the problem that many managers, teams, and enterprises have these days on the handling of intangible versus tangible benefits. The way enterprises treat, forecast, measure and manage “intangible” benefits is not only a problem, but also a major challenge because with the increased attention to innovation, transformation, agility, and disruption of business processes, teams and managers will face an even higher pressure in the near future, to forecast, economically quantify, measure, and commit to intangible benefits.

These series of articles will present tips and excerpts from the EVC™ (Enterprise Value Creation) version 3 Framework from Glomark-Governan, on why and how to treat the benefits of innovation, digital, and transformation initiatives, including the ones considered Intangible.


The Importance of Quantifying Intangible Benefits

Glomark-Governan’s twenty plus years of experience and research on business case practices, indicates that intangible benefits on average represent over 70% of the potential positive cash flow impact for each new innovation initiative.   While innovation and transformation initiatives bring many benefits about cost reductions, the benefits related to revenue increase are generally considerably greater in economic impact for any enterprise.

Additionally, If Intangible benefits are not included in business cases, not only important benefits cannot be approved, but also projects that are approved without the identification of intangible benefits in a measureable way have less chances of resulting in a business success, because the stakeholders responsible for the project execution and implementation are not aware of the expected business outcomes; and SLAs and KPIs are not assigned to the important intangible benefits.


Intangible vs. Tangible Benefits

There are many definitions and descriptions about the difference between Tangible and Intangible benefits; but in general, people consider benefits as Intangible when there is high uncertainty in the possible realization of the benefit, during and after the initiative implementation.

Intangible benefits can always be measured, therefore quantifying them in economic terms may not be as difficult as it often appears—the challenge, however, is on forecasting a specific improvement (before and after the initiative) because Intangible benefits tend to have dependencies that are not controllable by the stakeholders. Hence the need for doing an objective Uncertainty Analysis for a benefit (tangible or Intangible) in order to increase the chances of realization.

Stay tuned for the next articles in these series, that I will be posting with tips, best practices, and suggestions on the handling of Intangible, Innovation and Transformation Benefits!

If you would like to receive notifications on the continuation on these series of tips on forecasting, quantifying and measuring intangible benefits, send us an email at information@governan.com

 

ABOUT EVC: Quantifying and forecasting an economic benefit from any initiative is easier, more objective, and compelling, when enabling methods from the EVC framework are used, such as the EVC Causation, Uncertainty and Predictability analyses. Using the EVC Framework’s enabling methods prior to an innovation project implementation, considerably improves the likelihood that the project’s operational and strategic goals are met—increasing the probability of the project’s business success!

ROI of Big Data and Analytics

The IoT will make Analytics more measurable, and it will be easier to forecast the economic benefits of Analytics.  

Depending on the type of Analytics, the certainty of realizing economic benefits increases, and is more predictable
-from Descriptive Analytics – to Diagnostic Analytics - to Predictive Analytics – to Prescriptive Analytics - to Automated Analytics.

Is the goal of your sales force to increase the number of calls to CXOs?

Why did the CIO of a $99 billion company agreed to meet with the CEO of a 30 employee company, but didn’t accepted a request to meet with the CEO of the largest IT company in the world? 

 

Vendors want their sales people to do as many calls to CXOs as possible, but even the CEOs of large technology companies often cannot meet with their largest customers’ CXOs.  Why?  Simply, because they don’t speak the same language.  

 

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