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Hype Curve Emerging Technologies - 2013

 

 Source: Gartner

IT Economics for Business - II

Real Options Valuation (ROV):
A complex technique than TCO, ROI and EVA. It is based on the financial estimation techniques used in stock options theory. ROV is used to modify the ROI calculation by considering the value that the current project could contribute to future projects. This approach typically enhances the ROI of projects such as IT infrastructure. The cost of implementing a whole new infrastructure for just one project for one business unit’s needs is so burdensome that no one business unit could ever justify starting the new infrastructure. However, the overall value of the new infrastructure to all the business units in the organization could be huge. ROV provides a technique for justifying that first project based on the future derived value.

Return on Assets (ROA):
A popular measure for the performance of companies, ROA can also be applied specifically to IT assets.ROA for IT assets can be calculated by isolating the IT-specific assets from the organisational assets and the net income due to IT assets from the overall net income. This can be hard to do, and the accounting systems need to be set up appropriately to provide any chance of achieving this on a repeatable basis. ROA approach has deeper implications than might be immediately obvious.

 Return on Infrastructure Employed (ROIE):
 ROIE is similar to ROA, but it focuses on IT services rather than IT assets. With ROIE, IT service cost (including depreciation) is the basis for computing a return. While ROIE can be used for a single project, it works best when calculated for aggregations of projects. For example, it might be used to compare the performance of different in-house or outsourced IT Providers. ROIE might be improved by providing the same IT service at a lower cost or by containing the cost growth of providing a particular IT service to less than the rate at which the organisation’s net income is growing.

Part 1 is here

Source/Credit: The Business Value of IT

IT Economics For Business - I

Total Cost of Ownership (TCO): It seeks to capture the full cost of an IT asset from initial purchase through implementation and operation to maintenance and “end of life” costs. This is a cost-based approach that does not equate to value. It is useful for measuring IT value because it allows comparison of alternative implementations that will meet the same business need and, presumably, have very similar values to the business. If the TCO of one alternative is significantly less than the others, it represents better value for money. It includes consideration like training costs, security costs, scalability costs, and the costs of reliability deficiencies. TCO incorporates perspectives that are not purely financial.

Limitation: It involves predicting future costs. This limitation can be minimised over time by tracking actual costs but, by then, the investment decision has been made.

Return on Investment (ROI):
It means calculating the revenue that the business generates or the costs that it saves in return for the investment that it is making. For an IT investment to be approved by the business, the IT Providers and the business must work together to demonstrate that the business will get its money back with a nice profit in an acceptable period of time (the payback period). In reality, ROI is typically expressed as a percentage of the investment, either annually or over the duration of the project, with the cash flows rendered as net present values. Typically, the assumed discounting rate is called the internal rate of return (IRR). It is linked to the cost of capital of the business or the amount of interest the business will pay to borrow the money to make the investment. Acceptable IRRs and payback periods vary immensely from business to business. Still, an IRR of at least 20% and a payback period of one to three years are the reasonable starting point for a discussion. It is very widely used to justify IT investments, particularly for new projects. Having said that, there is still the problem of predicting the future; ROI provides a good way to compare the financial value of very different projects and provides hurdles, through the payback period and IRR, that quickly cut off further, costly consideration of some projects.

Limitation: Organisations often have good systems established for making their investment decisions using ROI. Still, they may have weak systems for monitoring the actual ROI achieved and using historical data on project ROI results to inform their current and future investment decisions. Another limitation with ROI is that cost savings must be in real money rather than theoretical “efficiencies.” For example, a projection that an IT investment will save the business 12% of staff time is only a real cash flow if it results in 12% less staff employment. It is fair to note that the staff may not necessarily be terminated but may deploy their efforts to other productive work; however, this is rarely monitored or measured carefully.

Economic Value Added (EVA):

This approach starts with the assumption that the organisation exists to provide economically value to its shareholders. This may not be entirely true for not-for-profit organisations, but the approach still has value. The calculation and comparison of Economic Value Added is very similar to ROI except that the benchmark used for making investment decisions is not the IRR but the opportunity cost of using the money to make other business investments (e.g., leaving the money in the bank rather than funding projects).

Source/Credit: The Business Value of IT

10 Learnings From Cloud Offerings

IT Capability Frameworks

Buyer Process Maps

Buyer Process Maps captures the Buyer's Journey

Weekend Reading

• Why Management Consulting Will Be Disrupted: Part 2
• Why  Do So Many Incompetent Men Become Leaders
• How US Department of Veteran Affairs Transformed IT
• 7 Paradoxical Sales Principles
• How India Got Its Funk
• Stop Judging and Start Learning

Business Performance Framework

Credit: Gartner

My popular post on Digital Transformation 

Weekend Reading

• Easy Credit Dries Up, Choking Growth in China - NYTimes.com
• IT Doesn't Matter (to CEOs)
• iOS vs. Android: What App Platform Should I Choose?
• Sales Manager or Sales Leader: Which are You?
• Why Management Consulting Will Be Disrupted: Part 1
• The Key to Happy Relationships? It’s Not All About Communication

Running IT as a Business

A great slide on Benchmarking  IT spend averages across the industry

Source : Gartner.com

 Source : Forrester.com

What is Value Management

Australian Mining Boom Impacts And Prospects

Is Your Business Ready for Big Data

IT Services Model - Cloud Enablement

Australian IT Industry Growth and Competitive Snapshot 2013-2014

Aussie banks to start rolling out real-time payments by next year

With the Australian Payments Clearing Association (APCA), the banks - including ANZ, Bendigo and Adelaide Bank, Citi, CBA, Cuscal, NAB, and Westpac - submitted this attached to make this happen in February. KPMG has won a competitive tender to become programme manager, the plan now is to put out a request for tender next year, and selection of the key elements of the operating system.

What happens when Coles keeps prices down

A fantastic speech By - Ian McLeod, Coles Managing Director, "What happens when Coles keeps prices down?”. Transcript below, its a good read.

Digital Transformation - Update

Digital Transformation - Sweet Spot

 Different organisation require different approach for leveraging benefits from digital transformation in their evolution.

• Pure Digitisation leads to expansion of core business to digital platforms.
• Pure Transformation leads to change in traditional business model to a new type of business model.
• Combination of executing Digitisation (services and platforms) and Business Transformation (transforming culture and business model) in parallel is less agile and is a challenging task to achieve. However this is the best option, executing either option individually or sequentially will not give the desired outcome.

Post NBN Industries in Australia

Why Telcos are Endangered Species - 2012

 

Interview with Brad Howarth - Australian Innovation and Startups Landscape

As part of our ongoing interviews with CEO's, Media Personalities, Philanthropists, and VC’s, to gauge the innovation and startups landscape in Australia, today we showcase our interview with Freelance Journalist, Public Speaker Mr Brad Howarth, who writes on Australia’s startup industry, digital marketing, dangers of climate change and other relevant topics in this domain.

This is what Brad has to say in a detailed interview with me. Read it here

Digital Transformation - Redefining Industries

In the ongoing pursuit of exploring how our world is becoming Digitally Transformed and how this is going to impact every industry, I have outlined the following agenda for a view point and a book that is still in the exploration stage.

The following agenda outlines the scope for me to explore, write and share my rumblings. I'm keen to get some thoughts and feedback. So please don't hesitate to reach out to me.

Update: Updated work on this topic is here

Mobile Megatrends 2012

 

10 Myths about the Mobile Economy

10+1 myths about the mobile economy

Troubled Telco's

When 7 out of top 12 Telco's are in zone of trouble, then its easy to make out that industry has some challenges to tackle.

GFC - 2 In Making..

This is what forthcoming GFC - II is about in a single snapshot.

Internet Trends 2011 by Mary Meeker, Partner at KPCB

KPCB Internet Trends 2011

View more presentations from Kleiner Perkins Caufield & Byers

How to Qualify Sales Lead and forecast Sales Target

Sharing my thoughts on how to qualify leads and forecast target.

Over the years, I have successfully used the BANT framework across the Waterfall Model of Funnel.



Let's look at the stages of

• Stage 0 (Demand Generation)
• Inquiry  - via a demand generation campaign like email/social media/webinar etc. or a sales rep. driven
• I'm not sure how you have got these 22 leads.
• From here, 22 prospects needs to be qualified along with 3 existing qualified leads to be sure.

• Stage 1 (Lead Management)
• Awareness - customer says do I have a problem, root problem /or a symptom of a problem
• Exit criteria - Marketing Captured Lead (MCL) which is data requests like  decisions makers, address, email, employees and other details of an organisation
  
• Stage 2 (Lead Management)
• Consideration - mean buyers say I have a problem and a need
• Exit criteria - Marketing Qualified Lead (MQL) -  BANT 1 can be used to exit to the next stage 
• Stage 3  (Lead Management)
  
• Engagement  - mapping buyers journey to engage and see if my solution can solve your problem and shall I try it
• Exit criteria  - Sales Accepted Lead (SAL) - Tactical exit criteria are BANT 2
• Stage 4 (Opportunity Management)
• Intent - Customer is ready to learn more about it
• Exit criteria - Sales Qualified Lead (SQL) - BANT 3 or 4
• Stage 5
• Sales Opportunity is qualified and identified
• It's at this stage, sales rep starts his/her efforts

This process can take some time depending upon how much info (like personas and 360 deg  profile of customer) we have, but if we have most of it then, it's a 1-2 day exercise only.

By Stage 5, it will be interesting to see how leads/prospects qualify as an Opportunity. Also, funnel mix needs to be considered esp; how many opportunities are cross/up-sells and how many are new opportunities. 

This will also give a good indication at this stage whether forecasted numbers can be achieved or not.  This process will help to invalidate. Both bottom-up and top-down approach must be used for validation of forecast.

Since I don't know

• how many leads qualify for Stage 5
  
• what is  a typical size ($TCV) of a deal
• an average time of conversion from Stage 5 onwards  to close
• Conversion ratio (say 25%)

But if we know these 4 parameters, then the sales number can be forecasted with certainty.

Strategic Analysis - Facebook

Facebook Strategy Analysis - (2004 - 2011)

Thoughts For Nike Strategy - 2010

Cloud Computing For Enterprise IT

Cloud Computing