TVP (Total Value Proposition)
Total Value Proposition (TVP) is a simple and straightforward methodology that allows objective decision making to be carried out when justification based on absolute financial measures is inadequate, inappropriate or impossible. TVP is particularly relevant in today’s climate. It allows a rigorous decision making approach to be applied to all projects without the need for dubious or artificial translation of benefits into monetary equivalents. Benefits that relate to value creation, reduction of risk and lowering of cost are expressed succinctly and unambiguously to provide reviewers and approvers with a total view of the value associated with any proposition.
The Core TVP process involves a 4-step approach:
SRT - Scope, Resource and Time – impact on individuals: Any project has its constraints. Any change to its scope will automatically stress the resources required (people and/or money) and the amount of time that the project will need for completion. Knowing how any change impacts these variables enables a balance to be reached such that there will be no surprises down the line.
VRC - Value, Risk and Cost – impact on the organisation: Any change within an environment can only impact three variables - the overall value that is provided to the organisation, the risk that the organisation has to bear and the cost of any process. The obvious route is to maximise value while mitigating risk and minimising cost. However, in many verticals (e.g. pharmaceuticals), risk is not an option, and cost may be higher to enable risk to be minimised. Elsewhere (e.g. manufacturing), cost may be more of a focus than risk.
Game Theory – competitive impact: There is always a cost associated with not carrying out a certain action – for example the cost of lost opportunity - and this is often left out from any decision making process. Through the use of a simplified Game Theory process, Quocirca enables this cost to be identified and highlighted and to estimate the impact on the proposed change.
RoI/TCO – financial impact: Return on Investment and Total Cost of Ownership are tools that have been around for a long time, but are fraught with problems due to practitioners not having access to the full financial information required. Within Quocirca's TVP methodology, a comparative RoI/TCO approach is utilised, creating a quick but effective means of assessing how rapidly a project will (or will not) provide real financial business benefit.
By bringing these four approaches together, Quocirca's TVP methodology enables vendors and users alike to rapidly gain visibility of how important a proposed change is, or is not, to the business. As a shared tool, TVP can effectively cut through to a reasoned decision - saving time and cost on both sides, and helping to buildon-going trust-based relationships between vendors and their customers.