Quantifying business value
1 like276 views
Chris Par is an enterprise architect with over 12 years of experience helping businesses digitally transform. He is currently the CEO of Borderless Geek and President of IASA Malaysia. The document discusses various techniques for quantifying the business value of initiatives, including total cost of ownership, ROI, customer satisfaction index, user adoption analysis, and others. Case studies on how these techniques have been applied at companies like Cat & the Fiddle and Airbnb are also presented. The document provides business leaders with the right language and frameworks to evaluate technology investments based on financial and strategic value.
Quantifying business value
- 1. Quantifying Business Value of Your Business Model By Chris Par CEO of Borderless Geek
- 2. Borderless Geek 2 Chris Par CEO of Borderless Geek President of IASA Malaysia Worked in:- “Chris has over 12 years experience in IT as an Enterprise Architect. His main role is to help businesses to transform digitally and effectively to achieve higher maturity as Digital Business. Over 12 years, he has worked in various MNC and local companies from various industries which includes Motorola, Dell, GfK, Dong Energy, Vedel IT and Tan Chong Group. During his tenure in Tan Chong Group, he held the role as Senior Manager in President’s Office and tasked to plan and design a digital platform for the entire Tan Chong Group.”
- 3. Borderless Geek 3 Speaker in Conferences Set up 90 IT headcounts in Vietnam Trainer in various locations Digital Government Consultant to Malaysian Government
- 4. Borderless Geek 4 My Career Journey Software Tester Software Developer Technical Lead Software Architect Enterprise Architect CEO Business FocusedTechnical Focused
- 5. Borderless Geek 5 About Enterprise Architect • A role that help Business to change and adopt technology. • A role that focuses on Business, Data, Software and Infrastructure. Business Data Software Infrastructure
- 6. Borderless Geek 6 Biggest Challenge When You talk to the Business
- 7. Borderless Geek 7 Business and IT can never talk
- 8. Borderless Geek 8 The Right language to be used to talk to Business $$$$ $$$$
- 9. Borderless Geek 9 It is all about business • Anything that generates business value! • Anything that can be measured in $$$! • It is what grows the business. • It is what sustain the business.
- 10. Borderless Geek 10 Example: CRM Software - SalesForce Class Discussion • What is the business value? • Why does a business want to invest in it?
- 11. Borderless Geek 11 5 Categories of Business Value Financial Improvement Constituent Improvement Reduce Complexity and Redundancy Economic Development Fostering Democracy
- 12. Borderless Geek 12 Case Study: Cat & the Fiddle Founder: Daniel Tay (2014) “Singapore's food and beverage scene is a challenging one, with fierce competition and high labour costs.” • Q Why did you decide on an online cheesecake business? A I am a pastry chef by training, and keeping the business online allows me to keep costs low. High rents make it very difficult for us to set up a physical shop, and also the reach is only within that proximity. Online, our reach is limitless. https://www.straitstimes.com/business/techs-the-way-to-sell-cheesecakes Market Singapore Asia Cost Greatly reduced fixed cost from manual process Business Revenue Product Sales Food Partnership, Café and Delivery Sales 3,000 Cheese Cake Per Month
- 13. Borderless Geek 13 Case Study: Airbnb
- 14. Borderless Geek 14 1. Total Cost of Ownership • CAPEX vs OPEX • Fixed Cost vs Variable Cost • It is what spent in outflow cash • Build at least 3 year Cost Projection Applicability: Financial Improvement, Reduce Redundancy and Complexity
- 15. Borderless Geek 15 Example: Total Cost of Ownership Y1 (USD) Y2 (USD) Y3 (USD) Vendor V1 V2 V1 V2 V1 V2 Capex Server/Hardware 100,000 120,000 - - - - Software Development Fee 200,000 300,000 - - - - Opex Licensing 400,000 400,000 400,000 400,000 400,000 400,000 Maintenance 600,000 550,000 600,000 550,000 600,000 550,000 Total 1,300,000 1,370,000 1,000,000 950,000 1,000,000 950,000
- 16. Borderless Geek 16 2. ROI (Simple) • Simplest and quickest way to justify an investment if it is profitable or not. • Formula: (Gain of Investment – Cost of Investment) / Cost of Investment Applicability: Financial Improvement, Economic Development
- 18. Borderless Geek 18 Advanced Technique: ROI with discount rate/ NPV
- 19. Borderless Geek 19 NPV Formula
- 20. Borderless Geek 20 3. Customer Satisfaction Index • Simple and easy to construct. • Easy to understand and plan for next course of actions. Applicability: Constituent Improvement
- 21. Borderless Geek 21 Example: Using Spider Chart to display Customer Satisfaction Index Survey
- 22. Borderless Geek 22 4. User Adoption Analysis • It shows the growth trend of new user acquisition. • Easy to understand and powerful tool to persuade sponsor. Applicability: Fostering Democracy
- 23. Borderless Geek 23 Example: User Adoption Analysis % = New User / Total User Size
- 24. Borderless Geek 24 5. Gross Merchant Value • GMV is total value of merchandise sold over a given period of time through a customer-to-customer exchange site. • Normally used to measure the value of a Marketplace.
- 25. Borderless Geek 25 6. Price Earning Ratio (P/E Ratio) • It is the ratio for valuing a company that measures its current share price relative to its per-share earnings. • It is a earning base valuation. Normally, measure based on Net Profit. • Startups use Revenue to measure it and it is commonly accepted by Angel investors or ECF platform.
- 26. Borderless Geek 26 7. Net Tangible Asset • NTA (net tangible assets) is described as the total assets of a company, excluding intangible assets (such as goodwill, trademarks and patents) minus total liabilities.
- 27. Borderless Geek 27 For a startup, how to value your company? 1. Find the closest market competitor and benchmark against it P/E Ratio Earning Potential Market Size 2. Work out a reasonable estimated value discounted from market competitor 3. If an investor buys it, the price is set.
- 28. Borderless Geek 28 Resource • https://www.investopedia.com/
- 29. Borderless Geek 29 About Chris Par Chris Par 12 years President of IASA Malaysia CEO of Borderless Geek “I help business to transform digitally.” • Mobile No: +6012 379 0810 • Email: chris.par@borderlessgeek.io