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Business Economic Value
 AIE
About BDE
BDE Profile
More Information

 

Applied Information Economics (AIE) 
Service Overview

Business Decisions Economics Inc is in the business of helping executives evaluate IT projects as capital investments with measurable and quantifiable benefits. The results are a powerful enhancement to the usual method of analysis (CBA, EVA, ROI, etc.) that reduces the uncertainty about the true economic value of the project. 

With the Applied Information Economics (AIE) methodology, Business Decisions Economics consultants: 

·         Use a unique AIE toolset to determine the realistic economic value for IT investments by improving the accuracy of Return on Investment (ROI) valuation before or after the fact.  This is accomplished by reducing the uncertainty about 1. The costs, 2. The benefits including intangibles, and 3.The risks of the investment. 

·        Apply an approach based on empirically derived concepts in Economics, Statistics, Decision Analysis, Information Theory, and other disciplines. 

·        Believe and demonstrate: 1. You can measure anything, 2. You can make rational valuations and decisions without perfect information, 3. Anything having that has value has economic value, and 4. Information has an economic value that you can calculate. 

·        Quantify benefits that seldom appear in an ROI analysis because analysts erroneously think they are “fuzzy” and can’t be quantifiably measured.  As a result, funding decisions are made on incomplete evidence and compelling information that is not adequately considered. 

·         Identify the investment’s most sensitive variables and quantitatively compare the cost of gathering additional information to the value of reducing the uncertainty of those variables. 

·        Calculate the economic impact of the investment’s risks (e.g., cancellation, acceptance, technology atrophy, etc.) and justify risk mitigation strategies (e.g., real options, multiple alternatives, etc.) to offset the risk and optimize the investment. 

·        Prioritize IT portfolios, using modern portfolio theory, on the basis of a complete economic profile of each investment. Use your corporate objectives and past successes to create a decision chart for accepting or rejecting IT project requests. 

·        Understand and model the “cost of waiting’’, “revenue deceleration” and the “expected opportunity loss” if the project is delayed or not implemented.  

·        Deliver large project valuation in less than 6 weeks (usually 4 or less) at a total analysis cost of 1/2 % to 2% of the project’s investment cost.  The value that you receive from a Business Decisions Economics analysis typically exceeds 10 times the fees paid for the analysis. 

·        Deliverables consist of:

-          Business Decisions Economics findings, recommendations and consultive review

-          A full report, including one section for each AIE process step

-          The final Excel spreadsheet model reflecting the investment’s costs, benefits, risks

-          All deliverables are prepared using your preferred metrics, such as ROI, IRR, NPV, EVA, etc.