Gartner Research

The Gartner Business Value Model: A Framework for Measuring Business Performance

Published: 12 May 2017

ID: G00314698

Analyst(s): Michael Smith, Paul Proctor

Summary

The value model is a set of the most common business outcomes resulting from IT investments and ongoing IT services. Each metric in the model is mathematically linked to the financial statements, providing CIOs the ability to simulate the impact of IT investments and services on financial results.

Table Of Contents

Analysis

  • Introduction
  • The Business Value Model Overview
  • Target Audience
  • Positioning the Business Value Model
  • Guiding Principles for Metric Selection
  • Applications of the Business Value Model
  • Implement the Business Value Model at a P&L Level
  • Risk-Adjusted Value Management
  • A Word of Caution
  • High-Level Business Aspects
  • Aggregate Measures
  • Prime Metrics
    • Business Aspect: Demand Management
    • Business Aspect: Supply Management
    • Business Aspect: Support Services
  • Industry-Specific Extensions: High Technology
    • Business Aspect: Demand Management
    • Business Aspect: Supply Management
  • Industry-Specific Extensions: Mining Industry
    • Business Aspect: Demand Management
  • Digital Business: Leading Indicators Specific to This Form of Business
    • Side 1 — Registered Prospects/Customers
    • Side 1 — Growth Rate of Registered Prospects/Customers
    • Side 1 — Conversion Rate Between Customers and Platform Providers
    • Side 1 — Average Annual Purchasing Frequency Between Customers and the Content Providers
    • Side 1 — Average Price per Transaction Between Customers and the Content Providers
    • Side 1 — Average Fixed Fee Charged by Platform Providers to Customers
    • Side 1 — Average Variable Fee per Transaction Charged by the Platform Provider to Customers
    • Side 1 — Cost per Transaction for Platform Providers When Selling to Customers
    • Side 2 — Number of Registered Content Providers on the Platform
    • Side 2 — Growth Rate of Registered Content Providers
    • Side 2 — Conversion Rate Between the Platform Provider and Content Providers
    • Side 2 — Average Annual Purchasing Frequency Between the Platform Provider and Content Providers
    • Side 2 — Average Price per Transaction Between the Platform Provider and Content Providers
    • Side 2 — Average Fixed Fee Charged by Platform Providers to Content Providers
    • Side 2 — Average Variable Fee per Transaction Charged by the Platform Provider to Content Providers
    • Side 2 — Cost per Transaction for Platform Providers When Selling to Content Providers
  • Appendix A: Frequently Asked Questions
  • Appendix B: Sigma Table for Defects per Million

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