ID Number: G00139413



The Gartner Business Value Model: A Framework for Measuring Business Performance
31 May 2006
 
Michael Smith   Audrey L. Apfel   Richard Mitchell  

The Business Value Model is designed to address IT-to-business alignment, initiative prioritization and communication of IT's value contribution to the business. The Business Value Model supports the Balanced Scorecard, Six Sigma, Economic Value Added, agility and other methodologies.




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Pages: 64






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Table of Contents


    
 Analysis

1.0
    
 Introduction
2.0
    
 The Business Value Model Overview
3.0
    
 Target Audience
4.0
    
 Positioning the Business Value Model
5.0
    
 Guiding Principles for Metric Selection
6.0
    
 Applications of the Business Value Model
7.0
    
 Implement the Business Value Model at a P&L Level
8.0
    
 A Word of Caution
9.0
    
 High-Level Business Aspects
10.0
    
 Aggregate Measures
11.0
    
 Prime Metrics

11.1
    
 Business Aspect: Demand Management

11.1.1
    
 Aggregate: Market Responsiveness

11.1.1.1
    
 Target Market Index
11.1.1.2
    
 Market Coverage Index
11.1.1.3
    
 Market Share Index
11.1.1.4
    
 Opportunity/Threat Index
11.1.1.5
    
 Product Portfolio Index
11.1.1.6
    
 Channel Profitability Index
11.1.1.7
    
 Configurability Index
11.1.2
    
 Aggregate: Sales Effectiveness

11.1.2.1
    
 Sales Opportunity Index
11.1.2.2
    
 Sales Cycle Index
11.1.2.3
    
 Sales Close Index
11.1.2.4
    
 Sales Price Index
11.1.2.5
    
 Cost-of-Sales Index
11.1.2.6
    
 Forecast Accuracy
11.1.2.7
    
 Customer Retention Index
11.1.3
    
 Aggregate: Product Development Effectiveness

11.1.3.1
    
 New Products Index
11.1.3.2
    
 Feature Function Index
11.1.3.3
    
 Time-to-Market Index
11.1.3.4
    
 R&D Success Index
11.2
    
 Business Aspect: Supply Management

11.2.1
    
 Aggregate: Customer Responsiveness

11.2.1.1
    
 On-Time Delivery
11.2.1.2
    
 Order Fill Rate
11.2.1.3
    
 Material Quality
11.2.1.4
    
 Service Accuracy
11.2.1.5
    
 Service Performance
11.2.1.6
    
 Customer Care Performance
11.2.1.7
    
 Agreement Effectiveness
11.2.1.8
    
 Transformation Ratio
11.2.2
    
 Aggregate: Supplier Effectiveness

11.2.2.1
    
 Supplier On-Time Delivery
11.2.2.2
    
 Supplier Order Fill Rate
11.2.2.3
    
 Supplier Material Quality
11.2.2.4
    
 Supplier Service Accuracy
11.2.2.5
    
 Supplier Service Performance
11.2.2.6
    
 Supplier Care Performance
11.2.2.7
    
 Supplier Agreement Effectiveness
11.2.2.8
    
 Supplier Transformation Ratio
11.2.3
    
 Aggregate: Operational Efficiency

11.2.3.1
    
 Cash-to-Cash Cycle Time
11.2.3.2
    
 Conversion Cost
11.2.3.3
    
 Asset Utilization
11.2.3.4
    
 Sigma Value
11.3
    
 Business Aspect: Support Services

11.3.1
    
 Aggregate: Human Resources Responsiveness

11.3.1.1
    
 Recruitment Effectiveness Index
11.3.1.2
    
 Benefits Administration Index
11.3.1.3
    
 Skills Inventory Index
11.3.1.4
    
 Employee Training Index
11.3.1.5
    
 HR Advisory Index
11.3.1.6
    
 HR Total Cost Index
11.3.2
    
 Aggregate: IT Responsiveness

11.3.2.1
    
 Systems Performance
11.3.2.2
    
 IT Support Performance
11.3.2.3
    
 Partnership Ratio
11.3.2.4
    
 Service-Level Effectiveness
11.3.2.5
    
 New Projects Index
11.3.2.6
    
 IT Total Cost Index
11.3.3
    
 Aggregate: Finance and Regulatory Responsiveness

11.3.3.1
    
 Compliance Index
11.3.3.2
    
 Accuracy Index
11.3.3.3
    
 Advisory Index
11.3.3.4
    
 Cost-of-Service Index
12.0
    
 Appendix A: Frequently Asked Questions
13.0
    
 Appendix B: Sigma Table for Defects per Million


List of Tables


Table 1.  
 Business Value Model Applications
 

Table 2.  
 Prime Metrics of Real Value Creation Not Based on Well-Vetted or Legal Data Capture Points
 

Table 3.  
 Business Value Model High-Level Business Aspect Definitions
 

Table 4.  
 Sigma Table for Defects per Million
 

List of Figures


Figure 1. 
 Comparison of Standard Measures of Value to Actual Value in the U.S.
 

Figure 2. 
 Where Do I Start My BPM Evaluation? The Gartner Value Model
 

Figure 3. 
 Positioning the Business Value Model
 

Figure 4. 
 Business Value Model High-Level Business Aspects
 

Figure 5. 
 Business Value Model Aggregate Measures
 

Figure 6. 
 Target Market Index
 

Figure 7. 
 Market Coverage Index
 

Figure 8. 
 Market Share Index
 

Figure 9. 
 Opportunity/Threat Index
 

Figure 10. 
 Product Portfolio Index
 

Figure 11. 
 Channel Profitability Index
 

Figure 12. 
 Configurability Index
 

Figure 13. 
 Sales Opportunity Index
 

Figure 14. 
 Sales Cycle Index
 

Figure 15. 
 Sales Close Index
 

Figure 16. 
 Sales Price Index
 

Figure 17. 
 Cost-of-Sales Index
 

Figure 18. 
 Forecast Accuracy
 

Figure 19. 
 Customer Retention Index
 

Figure 20. 
 New Products Index
 

Figure 21. 
 Feature Function Index
 

Figure 22. 
 Time-to-Market Index
 

Figure 23. 
 R&D Success Index
 

Figure 24. 
 On-Time Delivery
 

Figure 25. 
 Order Fill Rate
 

Figure 26. 
 Material Quality
 

Figure 27. 
 Service Accuracy
 

Figure 28. 
 Service Performance
 

Figure 29. 
 Customer Care Performance
 

Figure 30. 
 Agreement Effectiveness
 

Figure 31. 
 Transformation Ratio
 

Figure 32. 
 Supplier On-Time Delivery
 

Figure 33. 
 Supplier Order Fill Rate
 

Figure 34. 
 Supplier Material Quality
 

Figure 35. 
 Supplier Service Accuracy
 

Figure 36. 
 Supplier Service Performance
 

Figure 37. 
 Supplier Care Performance
 

Figure 38. 
 Supplier Agreement Effectiveness
 

Figure 39. 
 Supplier Transformation Ratio
 

Figure 40. 
 Cash-to-Cash Cycle Time
 

Figure 41. 
 Conversion Cost
 

Figure 42. 
 Asset Utilization
 

Figure 43. 
 Sigma Value
 

Figure 44. 
 Recruitment Effectiveness Index
 

Figure 45. 
 Benefits Administration Index
 

Figure 46. 
 Skills Inventory Index
 

Figure 47. 
 Employee Training Index
 

Figure 48. 
 HR Advisory Index
 

Figure 49. 
 HR Total Cost Index
 

Figure 50. 
 Systems Performance
 

Figure 51. 
 IT Support Performance
 

Figure 52. 
 Partnership Ratio
 

Figure 53. 
 Service-Level Effectiveness
 

Figure 54. 
 New Projects Index
 

Figure 55. 
 IT Total Cost Index
 

Figure 56. 
 Compliance Index
 

Figure 57. 
 Accuracy Index
 

Figure 58. 
 Advisory Index
 

Figure 59. 
 Cost-of-Service Index
 



Browse Topics:
 
Business Value of IT
Corporate Performance Management
IT Performance Management
Business Metrics




© 2006 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartner's research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.




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