| Digital's Investment Evaluation Methodology
A Consensus-building Process for Fully Understanding
the Business Impact of Information Technology Investments
---------------TM +----------------------------------+
| | | | | | | | | |
|d|i|g|i|t|a|l| | |
| | | | | | | | | |
--------------- | |
| |
| |
| |
| [art here] |
| |
| |
| |
| |
+----------------------------------+
----------------------------------------------------------------main--
The Consulting Service That Helps You Make the Right Choice
----------------------------------------------------------------main--
Time and time again over the past thirty years, the innovative
use of information technology has proven to be a deciding factor in
achieving competitive advantage. That's why companies worldwide work
diligently to select the optimum information technology with which to
outdistance the competition. However, given the complexity of modern
technology, the rapid pace at which it changes, and the difficulty of
predicting technology's impact on the business environment, it's hard
to know for sure whether you've made the right choice.
Digital Equipment Corporation recognizes and understands this. As
an extensive user of information technology and a company that
operates in an extremely competitive industry, Digital has experienced
the same misgivings. To reduce uncertainty in its own information
technology investment decisions, Digital developed the Investment
Evaluation Methodology (IEM).
Because Digital is sensitive to the needs of its customers, the
company is offering IEM as a standard consulting service. IEM is a
rigorous, collaborative process designed to provide you with an
accurate economic picture of the full costs, benefits, and risks of
information technology investments. It defines the linkage to your
business strategies and objectives, aids in the prioritization of
multiyear expenditures, and provides implementation metrics by means
of sophisticated sensitivity and risk analyses. IEM has been used
successfully at companies in a variety of industries and application
areas to help managers that are proposing or deciding on information
technology investments to clearly see the expected economic return.
----------------------------------------------------------------main--
The Nine Step IEM Process
----------------------------------------------------------------main--
Step 1: Build a Team
Based on the scope of the proposed information technology
investment program, you and the Digital IEM consultant will establish
a cross-functional study team of knowledgeable individuals from the
company's information systems, finance, and operations organizations.
The IEM process will then be configured to the specifics of your
situation and represented in a study work plan.
Step 2: Define the Environment
The IEM consultant and the members of the study team will prepare
a ``current state'' financial picture of your business operation as it
exists today, and predict what is expected to happen over the
foreseeable future. The financial picture is built by integrating the
company's organizational objectives, activities, cost drivers, and
resource requirements using Activity-based Cost Accounting concepts.
Step 3: Understand the Proposed Investment Program's Functionality
The study team will perform an in-depth evaluation of the
proposed investment program to understand the technology, business
functionality, and operational requirements as they relate to the
organizations involved. To aid this process, the IEM consultant can
call upon the wealth of technical expertise and practical experience
available within Digital.
Step 4: Analyze the Impact
The IEM consultant will analyze the investment program's impact
on the company by evaluating the business functionality (Step 3) as it
relates to your current environment (Step 2). All effects predicted by
the analysis--good or bad--will be presented. The consultant will
offer you fresh insight into those impacts based on previous
experience in performing these evaluations in various industries and
application areas.
Step 5: Define the Costs and Benefits
The IEM consultant will translate the predicted impacts into
financial and nonfinancial costs and benefits based on your
operational objectives and strategies. IEM consultants are experienced
in identifying benefits and setting realistic, measurable goals for
their achievement.
Step 6: Construct a Financial Model
The IEM consultant will design a mathematical model of the
predicted costs and benefits and perform a discounted cash flow
analysis. For those benefits that cannot be quantified, the consultant
will guide the study team through a score and weight exercise to
determine the relative importance of each unquantifiable benefit in
supporting organizational
strategies and achieving organizational goals.
Step 7: Analyze the Risk
The IEM consultant will assist the study team in building a
mathematical representation of the sensitivity and risk factors
associated with the proposed investment program. The result will be
a graphic representation of all the possible returns on your
investment based on an auditable set of business parameters.
Step 8: Summarize the Results of the Study
The study team will prepare a report summarizing the study
process and its highlights and present the report along with a set of
recommendations to top management.
Step 9: Establish a Measurement Process
The study team, guided by the IEM consultant, will define
investment implementation and operational metrics, outline a review
process, and propose a review team.
----------------------------------------------------------------main--
For More Information
----------------------------------------------------------------main--
For more information, please contact your local Digital sales
representative.
Digital believes the information in this publication is accurate
as of its publication date; such information is subject to change
without notice. Digital is not responsible for any inadvertent errors.
The following are trademarks of Digital Equipment Corporation: DEC,
DECdecision, DECstation, DECsystem, DECUS, DECwindows, the DIGITAL
logo, HSC, MASSBUS, MicroVAX, PDP, Q-bus, RSX, RT, ULTRIX, UNIBUS,
VAX, VAXBI, VMS, and VT.
|