1. Clarification Workshop

2. Clarify Cost/Benefit Model
3. Conduct
Measurements
4. Conduct
VIA
5. Conduct
Risk & Return
Analysis
6. Make
Recommendations
1. Classify &
Plan
2. Clarify
Intangibles &
CBA
Purpose: Develop a comprehensive spreadsheet-based model of the costs, benefits and risks of the proposed system investment
Approach: Use clarification methods to develop a specific cost/benefit formula

3. Risk/Return Analysis Intangibles Measurements Value of Info. $ $$$
“Customer Satisfaction”
“Strategic Alignment”
“Flexibility”
“Technology Risk”
“Information Quality”
etc.. . 5%
10%
15%
20%
30%
$2 mill
$4 mill
$6 mill
Measurements
Value of Info. $
$$$
Measurables
Errors in Decision X
Change to Strategic Measure M
Productivity in Activity Y
Cycle Time of Process Z
Chance of cancelation of Project
Etc.. . $$
Each company will decide on its own what “compliance”, “strategic” and “economic” mean precisely. Also, they will determine their own boundaries on the classification chart and the specific analysis requirements in each “zone” of the chart.
Risk
Calculate Risk/Return Position
"expected" ROI
50%
100%
150%
200%
250%
-50% 0%
Probability
of a negative ROI
Probability of a positive ROI
Organization's investment limit
Acceptable region of investment
Return

4. Schedule Highlights

5. Workshop Schedule
Workshop 1 –
Workshop 2 -
Workshop 3 -
Workshop 4 -
Workshop 5 –
We will also rely on additional interviews and assignments outside of workshops to complete the objectives

6. Workshop 1 Objectives Confirm investment objectives and approach
Scope the decision model
Identify parts of the investment are fixed vs. optional
Confirm the list of independent investments
Confirm the acceptance criteria for investments (annual review, etc.)
Identify key benefits, costs and risks
Repeat for each investment in portfolio

7. Workshop 2-3 Objectives
Clarify the Intangibles & identify key variables
Benefits
Costs
Risks
Develop spreadsheet models

8. The Object of Measurement
Objects are the costs, benefits and risks that impact the return (i.e. cash flow) for the investment analysis
If an object seems like an immeasurable “intangible” it may just be ill-defined ?

9. Clarifying Intangibles
The “Intangible”
Possible Meanings After Clarification
“Employee
Empowerment”
Less management overhead
Certain decisions are more accurate and faster
“Information
Availability”
Time and cost of searching is reduced
Certain costly errors are less frequent
“Strategic
Alignment”
Stated organizational objectives (which should be measurable) are more likely to be met
Tools like “The Clarification Chain” are used to identify unit-of-measure variables hidden beneath the “intangible” label
I offer a challenge that given any intangible, I can clarify it and identify a method of measurement within 15 minutes (I’ve never lost)

10. Ambiguity vs. Uncertainty
Measurement requires unambiguous definitions
Ambiguity and uncertainty are not the same
Ambiguity is an unclear definition
Uncertainty still exists after ambiguity is removed
Narrowing the possible values of a quantity is a reduction in uncertainty

11. The Clarification Chain
AIE assumes that if a benefit or cost is defined
unambiguously, then it is measurable.
If it is “Better” it is different in some relevant way...
If it is relevantly different then it is observable...
If it is observable it is observable in some amount...
If we can detect in some amount then it is measurable.

12. The Clarification “Thought Experiment”
Imagine that you are a scientist capable of making clones of entire companies and that you have a cloned pair of your organization
Change one of the organizations so that one has the stated “intangible” and the other does not
Ask what would you actually observe that would be different between the two organizations

13. Overview for Clarification
Remember that one of the reasons things may seem to be immeasurable is that we do not understand the object of measurement
Use unambiguous definitions (ambiguous benefits always seem to be “Intangible”)
Use the Clarification Chain and Thought Experiment
The output of the clarification step should be to agree on a specific spreadsheet model

14. Model Concept