TVM stands for Total Value Management, financial modelling technique that helps companies measure and improve the value of their business through creative uses of technology in the connected economy.
“It quantifies the total benefits and total costs of ownership of major technology projects, in systematic process, that takes into account company’s competitive position,” says JD Edwards first TVM manager, Sanjiv Bansal.
He says the company is rolling out TVM in both Australia and New Zealand to satisfy gradual change in the way companies evaluate major IT solutions acquisitions.
“Traditionally most solutions offer complex spreadsheet that produces an isolated ROI [return on investment] for that solution,” says Bansal.
“This approach is time consuming and incomplete in terms of looking at portfolio of solutions.
“Large consulting firms on the other hand, can build custom business case for IT acquisition, but the likely six figure cost is prohibitive,” he adds.
“These models struggle with the overlap of benefits from one point solution to the next. The whole concept of ROI and TCO [total cost of ownership] models miss the point of acquiring the enterprise software in the first place.”
The fastest ROI doesn’t necessarily deliver the most value, he says while admitting time to benefit is important. “TCO models don’t focus on value at all. The lowest cost of ownership for any company is to keep their current technology. But the reason this isn’t done is that businesses are looking for value creation and not cheap way out.”
TVM is useful for developing cost benefit analysis and board level business cases for clients planning major systems projects, says Bansal. “It lets users quantify the exact benefits of the technology upgrade before selecting their solution. Once that’s been selected software licence structure and associated payments can be engineered to reflect the business benefits as they accrue.”
Bansal says the trend overseas is to replace the traditional ERP selection process of RFI (request for information) and RFP (request for proposal) by implementing focused solutions for specific areas of business, to create maximum value, rather than simply re-engineering the whole IT system after the normal ERP selection process.
“TVM answers these questions by identifying upfront areas of improvement and the right solution.”
A chartered accountant, commerce graduate and TVM specialist, Bansal previously worked with enterprise software firm Intentia New Zealand, where he was involved in implementations and pre sales, building economic justification models for prospective customers.
Prior to this he was part of the team implementing BPCS at Fletcher Challenge Steel and Wire, where he was also the company accountant. He also worked in Hong Kong for seven years, as an investment analyst with fund management company.
Needless to say, TVM demands strong numerical and analytical skills, experience in the software industry and broad knowledge of leading companies in global industries.