Article
Cost and Value Realization
A team works on a project, invests money comes out with a brilliant solution, claims to have created value for the company. Great!
Months later no one talks about it outside that team. Another team works on a project, invests the same amount of money comes out with a brilliant solution, claims to have
created value for the company and months later every person in the company cannot stop talking about how it changed their life. The difference? Both projects yielded benefits for the company, but people only realized the value in the latter project, because it met everyone’s expectation of value.
Then, would you agree that while the cost of any investment in a product or service is the same for everyone, the value realized from that investment will vary substantially from consumer to consumer?
Value creation comes from quantifying the outcome from work performed or invested in. Value realization goes beyond the quantifiable metric to meet expectations on multiple objective and subjective parameters. My neighbor in his late 70s, does not enjoy the same value from his high-end smartphone his son bought, as I do while using the same model of phone to work, conduct meetings, emails, telecons, etc.
Ramakrishnan Sudarshanam
Principal Consultant
&diligence
IT Strategy for Manufacturing
writes
Value realization involves many stages. To start with, value has to be first defined before taking a decision to invest in a product or service. The outcome expectation and the way it would be measured. Once the value is defined, the next stage is value delivery which happens when the product or service gets delivered and you make use of it or consume it. Value realization comes when you recognize it and experience an “Aha” moment while using that product or service and this is followed by value validation when you acknowledge and confirm the value received.
Uthaiah K P
Managing Partner
&diligence
writes
I have seen small & medium businesses investing in an expensive ERP and other technology solutions based on elaborate marketing efforts by companies but, regret the
investment given the complexity of implementation, budget overruns, data unavailability, and user complaints. While the same product is enjoyed in a large company that loves the product because it can handle the complexity, don’t mind the budget overruns because it is adding additional useful modules, they have structured data and a user profile that was begging for a bigger system. A prime example of Value creation and value realization.
In summary, while investing in any product or service it would be a very important step to also emphasize the value realization factor among the management and users.
Ramakrishnan Sudarshanam
Co-Author
Uthaiah K P
Co-Author
