How to determine the added value of a solution?

We seek to bring value in everything we do. There is nothing worse than wasting time. But how to define value? What is the added value? I propose to focus on the different types of value that a project, an action or an activity can have.

This value is not always monetary, as you will see in the next few lines. Everyone defines value according to his or her point of view, which is what makes the diversity of products and services offered. So there is no single answer as to what constitutes value, but rather an alignment between the value your organization wants to deliver to its customers and the value it actually delivers.

Value can be measured in different ways. There is of course the simplest one which is the physical product or the service rendered. But let’s look at the value of all the extras or features of the product or service. I suggest you look beyond the product or service itself. We look at the solution and what it changes in your organization and for your customers.

I will distinguish two main categories: the internal value, therefore for yourself, your organization, and the external value: for your customers.

Some types of internal values that your solution provides

Increased revenues (or reduced costs)

This value is obvious, if the new version of your product or service can produce more revenue. There are two ways to do this: on the one hand by selling more, on the other hand by having a lower cost of ownership. This increases the value to the organization. It is often the only value evaluated for a solution, because it is the easiest to measure. It is directly in $ or easy to convert. We improve the processing time and convert the gain in FTE (Full Time Equivalent) into $.

Security and business continuity

This value is more and more used, especially on the cybersecurity aspect. As systems gets hacked, and data is stolen daily, it is the new must-have, to protect your public image. Does the solution ensure data security? How does the solution behave in case of a major failure? Do we have fast backup or workaround systems to keep us going? If you are asking yourself these questions, it is because this value is important to your organization. The indicators are the level of risk, the recovery time, the number and severity of incidents …

Process efficiency

Efficiency should not be confused with reduced spending. When I talk about process efficiency, I’m talking about improving service delivery.

  • The solution reduces exceptions.
  • More clients can access the system or access at the same time (load).

In short, we do better with the same resources.

Effect on human resources and mobilization

When teams are disengaged, productivity drops and ultimately, the entire performance of the organization suffers. What value do you place on your human resources? The measure can be absenteeism rate, retention rate, ease of attraction, employee satisfaction … How the solution impacts those who generate value in the organization? Even if the benefits are intangible, they can have unsuspected impacts.

Flexibility and scalability of the solution

Agility… a buzzword, but is it a key value for your organization? Do you need to be faster, more flexible, to evolve? Will the solution impact the ability to implement other solutions in a reduced time frame? On the contrary, are you creating a “monster” that will slow you down? Whether it’s an approval process, a prioritization process, an inbound processing process, a decision support tool, a collaborative ideation platform, make sure you consider this value if it’s important to your organization.

Availability and accessibility of management information

Who can drive their organization without data? This type of value focuses on the solution’s contributions to the availability, accuracy, and dissemination of reports, as well as its flexibility of use. A solution must ensure that it provides the data to drive it, otherwise, how can we be sure that it delivers the expected results? Solutions that require the manipulation of many files to see how they perform may be less valuable to some organizations. If you have to contact the supplier and wait two weeks for each change to the report, is that value added for you? It is often the operational teams that place the most importance on this value.

External values of your solution

Quality of the solution

It is obvious, but always good to remember, quality is often an intrinsic value. Whether it is

  • the average time before the microwave needs to be replaced or repaired,
  • the waiting time before you can obtain a passport,
  • the quality of the 3G network coverage,
  • the number of complaints generated,
  • the level of customer satisfaction,

All these indicators reflect the quality of the product or service.

Legal or normative compliance

Depending on the sector of activity, this value has more or less importance. It can be measured in different ways: in particular with the number of non-conformities present in the organization or the proportion of a law or standard covered by the solution. It is very complex to transform this value into $. While the cost of the fine for non-compliance is known, the costs associated with being prohibited from operating for several weeks are very difficult to define. Sometimes it is your customers who impose certifications or labels on you.

Contribution to public image

This value is measured by means of specific awareness surveys or by associating the organization with a key word (innovation, sustainable development, trust, etc.). It takes a long time to build and can degrade quickly. It is more important for organizations that serve their products directly to the customer. If its measurement is costly, it is quite easy for a project team to estimate whether the impact of the solution is positive or negative on this image.

Value for customers and partners

This value is particularly applicable in multinationals, the public service or the government sector. These are the benefits provided to other entities of the organization. From a purely accounting point of view, the solution brings nothing to the business unit that implements it. On the other hand, it helps other sectors to deliver more value. For example, sharing a system or resources with other entities, without charging them the cost. It can also be economies of scale obtained by negotiating a larger contract…