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Posted: February 26th, 2022
The Value Proposition IT Acquisition Template 9
A value proposition is a succinct statement of a proposed solution and its value to an organization. Its best form is one sentence. It is basically a summary statement designed to quickly communicate the proposal concept and its value to executives to make them interested in hearing more about the proposed solution. The value proposition can also help to gain agreement and reinforce understanding among members of the proposal team on the essence and value of what is being proposed. The value proposition needs to briefly state the proposal and the value it will add to the organization. It is essentially an offer, such as “if the organization does this, it will get that in return.” The emphasis is on the value. There is no need to describe the cost and the risk in the value proposition. Executives who become interested as a result of the value proposition can quickly get additional information that describes the cost and risk. You should have that information from the prior activities you completed. The reason for not including cost and risk information is so that the statement can be brief, focused, and grab attention. Adding cost and risk information would make the statement lengthier, detract from the focus on value, and make it less likely to grab attention. An important requirement is that everything stated in the value proposition must be accurate and not misleading. If a proposal will generate $10 million but requires a $9 million investment, the financial benefit is $1 million, not $10 million. Further, the financial benefits cited must be both risk adjusted and discounted to reflect the time value of money. You generated the risk-adjusted, discounted financial benefit figure in your economic analysis activity. That should be the source of your figure. The figure in your economic analysis is likely to be a little different each year because of the discounting, so you will need to use an average or some other representative (but not misleading) figure. Not adjusting the expected benefit for risk and for the time value of money will make it appear that the financial benefit is more than it really is, which is inaccurate and misleading. Here are two examples of value propositions: Example #1: Providing proposal teams with a graphics database and graphics software will reduce the per-proposal support cost by one-third and enable 50% more proposals to receive graphics support per month with no increase in operations cost. Example #2: Converting from paper to electronic forms at all field offices with an online link to the central corporate database will reduce labor hours and errors, improve customer service, and result in savings of $3 million annually. These examples can be used as models for writing your own value proposition.
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IMPORTANT NOTE: This statement should be provided in a Microsoft Word (or other word processor) document. It should not be placed in an Excel worksheet because it is not an appropriate medium for transmitting the document to others or for printing it for distribution.
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