Our value engineering approach to the digital transformation is based on our vision that to introduce new technology, you have to rethink your business model. In today’s connected world this means that you have to make a commercial value model of your value network and of your role in it, and that due to the complexity of today’s value networks, you have to take a solid engineering approach to this. We elaborate this as an iteration over four activities, where value network design is the lead activity.
Value network design
When you design your value network, you clarify what product or service you deliver to whom, which business partners you need for this, what services these partners deliver, what they get in return, and how you jointly satisfy consumer needs. This ensures that everyone knows what they are doing to produce value for the customer. Our tools can be used to create and edit models of value networks.
To test economic feasibility of a value network design, you need to add quantitative market assumptions to estimate what the revenue for each partner in the network is. Our tools perform net value flow analysis and sensitivity analysis for you.
Your design of a value network is intertwined with your choice of technology. Available technology influences what activities can be performed, and this in turn influences what commercial transactions are possible in your value network. Hence, choosing technology is a cornerstone of our value engineering method.
Your market assumptions may not come out as expected, and so you must know how sensitive the expected revenue is to changes in market parameters. What is the risk that the revenue does not materialize? In addition, all actors in a value network have other interests too, and some parties may be less trustworthy than others. What is the risk of fraud when you introduce new technology? This requires an assessment of risk and their potential impact on your business. Our tools are able to do sensitivity analysis and to generate all possible fraud scenarios from a value model of your value network and rank them on cost for the victim and benefit for the fraudster.
Business transactions involve interactions with other businesses in your value network. This requires the coordination of many actors in a value network, and this requires a design of coordination processes. What the different actors in a value network must do to execute their commercial transactions depends also on technology choice and risk assessment, and so process design interacts with all other three activities in our value engineering approach.
To sum up, with our value engineering approach, we can assess the potential of your company to adopt and exploit new information technology, as well as explore new ways of doing business with your current technology. Contact us if you want to know more.