Leveraging Value Management As A Force Multiplier

Innovation Leveraging Value Management As A Force Multiplier Manish Garg Forbes Councils Member Forbes Technology Council COUNCIL POST Expertise from Forbes Councils members, operated under license. Opinions expressed are those of the author. | Membership (fee-based) Sep 1, 2022, 07:30am EDT | Share to Facebook Share to Twitter Share to Linkedin Manish Garg is the co-founder and chief product officer at Skan.

ai , a computer-vision-based process intelligence platform. getty Research and analysis by McKinsey reveal about 70% of transformation efforts fail. So, assuming your firm belongs to the minority of the 30% where transformation doesn’t fail, the critical question is whether you realize the value of the technology investments.

Software vendors and the corporations that purchase enterprise software often wonder why things did not materialize the way the initial proof of concept or the pilot indicated to lead to transformational benefits. The millions of dollars in investment and the energy put into massive re-platforming efforts do not shift the paradigm or enable companies to leapfrog the competition. Of course, poor return on investment and the degree of transformation rely on various factors, including leadership commitment, competencies and caliber of the team, technology stack and vendor selection, and the implementation.

But there is another vital element that software vendors and corporations that license the technologies tend to underestimate or do not account for in creating exponential return—the concept of value management. In working with enterprises on several large-scale digital transformation efforts, I believe that value management is a proven difference between tepid results and transformational leaps. Before we go further, let’s understand the term and its origins.

The value management concept evolved from the concept of value engineering, which in turn is based on the work of Lawrence Miles , who, in the 1940s, was a purchasing engineer with the General Electric Company (GEC). As the original concept of value engineering was in the context of industrial goods and a desire for substitute materials and cost reductions, we can adapt the definition to enterprise technologies. MORE FOR YOU Google Issues Warning For 2 Billion Chrome Users Forget The MacBook Pro, Apple Has Bigger Plans Google Discounts Pixel 6, Nest & Pixel Buds In Limited-Time Sale Event Value management is a systematic process and methodology led by a multidisciplinary team to improve the value of a project or a program through a thorough analysis of stakeholder outcomes and developing ways to maximize the value from the investments into any product/software/program.

At a fundamental level, value management can be summarized in a simple equation: Value = Function (Cost, Benefits, Time). It is a judicious choice of priorities keeping the critical resource constraints in mind. Value cannot be determined just by benefits, but it is an optimization scenario.

Value management can span from initial analysis to determine fit to identifying high-value use cases, configuring the technology to fit the purpose, and gleaning ongoing insights and iterative improvements through continuous monitoring. The nature of a platform and the complexity of the functionality and footprint determine which of these phases in the life cycle is paramount. For example, in the case of ERP (enterprise resource planning) software, the process configuration and blueprinting are often critical, in addition to training and change management.

However, in the case of business intelligence (or process intelligence), the essential value enhancement may occur in how to interpret and use the data and insights into actionable strategy. While companies may deem some of the following steps as a part of pre-sales or value consulting and some to be implementation-related professional services, each of these areas will contribute to the extraction of value from a technology re-platforming. A systematic approach to identifying opportunity zones, value drivers, and diligent and detailed value management efforts will unlock transformational results.

Critical Success Factors For Value Management • Value management is a journey: Value management is not a one-time event but an ongoing journey to unlock value from capital investments. This ethos of continuous value generation is at the heart of successful value management endeavors. • Alignment of values: A technology vendor has a vested interest in selling the software.

However, successful technology vendors realize that enterprises must gain exponential value from their investment for long-term success. Otherwise, using value management as a smokescreen to sell a product will backfire during renewal or expansion within the account. • Fit for purpose: If one tries hard enough, it may be possible to fit a square peg in a round hole, but that will be a force fit.

Software vendors should not try to deem every enterprise challenge a nail since they have a hammer. A vendor that can walk away from opportunities that don’t fit into their core competency will become a trusted partner. A sale may materialize in the future when the circumstances and use cases match the platform’s capabilities.

• A multidisciplinary approach: Often, companies and technology vendors solely focus on one area or a specific challenge. While scope containment and focus are essential, value management often succeeds when addressing a broader set of challenges and a solution is not preordained. Hence a cross-functional team and a multidisciplinary approach yield better results.

• Beyond a big bang: It may be hugely satisfying to solve a staggering problem that results in a ticker tape parade. Consequently, many value management efforts ignore or underplay the importance of small but meaningful improvements cumulatively adding to tremendous value enhancement. Kaizen or continuous improvement should be the mantra of value management teams.

• Right resources: Value management efforts are typically the province of the vendors’ professional services teams or specialists from consulting firms. It isn’t easy to prejudge who will be a better fit without understanding the context. Professional services teams generally know their platform well and have experience from previous implementations.

A consulting firm can be more objective (of course, that is an assumption) and also brings highly specialized resources and a treasure trove of experiential data to the table. In some cases, combining resources from the vendor and a specialist consulting firm may be appropriate. • Budget Allocation: Often, corporations overpay in terms of license fees and cut corners on professional services and change management, resulting in failed transformation endeavors.

Hence, it is imperative to plan professional services and consulting services budget as a part of the overall program, which may be five to six times the base purchase price of the technology. If the corporations and technology vendors work together with a shared goal of maximization, value management endeavors can be transformational and help enterprises leap to a new normal. Value management is indeed a force multiplier.

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