About the EVC™ Methodology
The Enterprise Value Creation™ (EVC™) Methodology from Glomark-Governan includes models and elements to effectively and objectively identify, assess, and measure the economic value created with investments in technology and services.
As compared to traditional Return on Investment (ROI) methods, Glomark-Governan’s EVC Methodology is designed to ensure that the executives reviewing the business case have a clear understanding of the assumptions, data, and formulas used to calculate each benefit and cost of the initiative.
The EVC Methodology, contained in the Genius suite of software tools, is designed to provide various levels of needs’ assessment: from simple business cases, to advanced risk analyses and project prioritization.
The EVC Methodology contains three main models:
The TBO assessment starts with the mapping of the initiative’s features and capabilities to operational benefits. The mapping is followed by a thorough assessment of the operational causes and effects to determine the means of quantification in each benefit. Each benefit formula has a Measurable Assumption, which could be used as an operational performance indicator (OPI) once the investment is made. The type of EVC Causes and their relationship with the Effect is used to determine the uncertainty (worst, most likely, and best cases) in the forecasted improvements in each quantified benefit.
- Total Cost of Opportunity (TCO)
- Total Benefit of OpportunityTM (TBOTM)
- Total Risk of OpportunityTM (TROTM)
Benefits are also grouped in four profit-impact types, including: Cost Reduction, Cost Avoidance, Revenue Increase, and Revenue Protection. The Cost Reduction and Revenue Increase benefits assist in understanding the positive impact on the organization’s cash flow. The Cost Avoidance and Revenue Protection benefits assist in understanding what would happen to the bottom line if the investment is not made. An effective TBO assessment must include these four types of profit impacts.
To assess the ROI and financial impact of the initiative, it is also necessary to calculate the TCO. Glomark-Governan’s TCO model allows for an assessment of the capital and non-capital expenses, as well as the initial and the ongoing expenses.
|To assess the Total Risk of Opportunity or TRO, worst case, most likely, and best case values are assigned to some of the assumptions. These are assumptions that have a high probability of being higher or lower than estimated; and that may have a high impact on the cost or benefit forecasted. Uncertainty is used with all assumptions to assess the TRO, which allows executives to examine the forecasted results of varying "what if" scenarios.
The three models (TCO, TBO and TRO) are used in a three-phase EVC Framework, for forecasting, comparing, and measuring EVC, allowing companies not only to create objective business cases, but also select projects from an economic and risk perspective, and measure the economic benefits and ROI of investments, during and after implementation.