Challenge
Corporations create value through decisions. Trillions of dollars are spent each year on information technology (IT) that supports enterprise value
creation. Clearly, corporate decision makers realize that information is the key to value creation through decisions. Yet no methodology or tool currently
exists which allows corporate decision makers to accurately and quantitatively connect their vast information resources to the shareholder value created by
decisions. This capability gap creates lost value, both from suboptimal choices and lost time and resources spent on analyses which, at best, result in poor estimates
of the shareholder value of decisions.
Desire for Improvement
Executives report they want four elements to aid them in their decision making: objective and alignment, risk and uncertainty, usability (simplicity, speed,
flexibility), and communications and transparency. Decisions need to be made fast while still incorporating thousands, even millions, of pieces of qualitative and
quantitative information. As such, decision makers are often forced to over-simplify, using single-point forecasting and spreadsheet software such as Excel to make
an ROI calculation. This is hardly a good approximation to shareholder value. In other
cases, decision makers restrict their focus to short-term factors and even resort to using accounting numbers.
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Capability Gap
Neither existing software tools nor consultants can achieve the goal of maximizing shareholder value through decision making, as the task requires
the solutions of some very difficult and previously unsolved mathematical problems along with software to make those solutions practically accessible in a
corporate environment. Instead we see a proliferation of valuation methods (ROI, DCF, WACC), analytics software,
and niche applications. Spreadsheets are often used as an analytical platform, yet it is well-known that up to 80% of
spreadsheets contain errors, and even a “correct” spreadsheet is often impenetrable to all but its author.
Finding the Right Tool
A tool that can directly and quantitatively connect information to the shareholder value of any decision will represent a significant usurping
technology, providing the ability to unify decision-making processes across functional silos, management levels, and industries.
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