Methods and systems for valuing a business decision

• US 20050108084A1
• Filed: 08/09/2004
• Published: 05/19/2005
• Est. Priority Date: 08/08/2003
• Status: Abandoned Application

• Current Assignee: Ernst & Young LLP
• Original Assignee: Ernst & Young LLP
• Inventors: Agarwal, Anurag, Freeman, Peter, Ramamoorti, Sridhar
• Application Number:
  US10/914,595
• Publication Number:
  US 20050108084A1
• Time in Patent Office: Days
• US Class Current: 705/10
• CPC Class Codes: G06Q 10/06 Resources, workflows, human or project management; Enterprise or organisation planning; Enterprise or organisation modelling
• CPC Class Codes: G06Q 20/108 Remote banking, e.g. home banking

Abstract

Methods, systems, and processor instructions to determine a first direct cost associated with at least a partial implementation of a business decision, the first direct cost including at least one of productivity gains and losses, determine a second direct cost based on a non-implementation of the business decision, the second direct cost based on the productivity gains and losses, determine a first risk reduction associated with at least a partial implementation of the business decision, the first risk reduction based on a business relationship risk(s), determine a second risk reduction associated with a non-implementation of the business decision, the second risk reduction based on the business relationship risk(s), and, associate the business decision with a value, the value corresponding to a sum between differences of: (i) the first direct cost and the second direct cost, and, (ii) the first risk reduction and the second risk reduction.

Claims

1. A processor program product disposed on a processor-readable medium, the processor program product having processor instructions for causing at least one processor to:

determine a first direct cost associated with at least a partial implementation of a business decision, the first direct cost including at least one of productivity gains and losses,

determine a second direct cost based on a non-implementation of the business decision, the second direct cost based on the at least one of productivity gains and losses,

determine a first risk reduction associated with at least a partial implementation of the business decision, the first risk reduction based on at least one business relationship risk,

determine a second risk reduction associated with a non-implementation of the business decision, the second risk reduction based on the at least one business relationship risk, and,

associate the business decision with a value, the value corresponding to a sum between;

(i) a difference between the first direct cost and the second direct cost, and,

(ii) a difference between the first risk reduction and the second risk reduction.

2. The processor program product of claim 1, where the business decision includes at least one of alternative dispute resolution (ADR) and early dispute resolution (EDR).

3. The processor program product of claim 1, where the at least one of productivity gains and losses includes at least one of:

a cost of diverted time, a cost of diverted resources, a value of diverted time, a value of diverted resources, and a productivity rate.

4. The processor program product of claim 1, where the first direct cost and the second direct cost includes at least one process and settlement cost.

5. The processor program product of claim 4, where the at least one process and settlement cost includes at least one of:

expenditures to third parties, expenditures to experts, expenditures to consultants, internal administrative costs, a number of new cases, actual costs of using alternatives, estimated costs of using alternatives, actual costs of using prevention, and estimated costs of using prevention.

6. The processor program product of claim 4, where the at least one process and settlement cost is based on at least one of:

maximum time for disposition of an EDR case, peak disposition month for an EDR case, maximum time for switching between litigation and EDR, peak switch month for switching between litigation and EDR, average process costs per EDR case per month, average settlement cost per EDR case, percent of cases switching from EDR to ligitation, maximum time for disposition of a litigation case, peak disposition month for a litigation case, maximum time for switching between EDR and litigation, peak switch month for switching between EDR and litigation, average process costs per litigation case per month, average settlement cost per litigation case, and percent of cases switching from litigation to EDR.

7. The processor product of claim 4, where the at least one process and settlement cost is based on a phased-implementation of the business decision.

8. The processor program product of claim 1, where the first direct cost and the second direct cost includes at least one reserve savings.

9. The processor program product of claim 8, where the at least one reserve savings includes at least one of:

an amount reserved for contingency cases, an amount of excess reserves, a hurdle rate, and an annual revenue.

10. The processor program product of claim 1, where the at least one business relationship risk includes at least one of:

a risk of losing an alliance, an employee risk, a supplier relationship risk, a capital provider/rate change risk, a customer risk, a competitor risk, a regulatory risk, and an insurance risk.

11. The processor program product of claim 10, where the risk of losing an alliance is based on at least one of:

a number of partners, a percentage of partners lost, lost profits, lost intellectual property, average failure separation cost, average cost to divest per venture, average initial capital outlay per venture, and growth rate via alliances.

12. The processor program product of claim 10, where the employee risk is based on at least one of:

a cost of replacing an employee, at least one interim cost, and at least one human resource cost.

13. The processor program product of claim 10, where the supplier relationship risk is based on at least one of:

a number of key suppliers, a number of non-key suppliers, and a reduced profit from a lost supplier.

14. The processor program product of claim 10, where the capital provider/rate change risk is based on a total debt, a weighted average borrowing, and at least one shareholder class action cost.

15. The processor program product of claim 10, where the customer risk is based on lost patrons, acquisition costs, acclimation costs, lost profits, and costs of increased public relations.

16. The processor program product of claim 10, where the competitor risk is based on a number of SBU competitors, a number of hostile relationships, and an opportunity cost of fostering alliances.

17. The processor program product of claim 10, where the regulatory risk is based on a regulation cost, a lobbying cost, and lost profits from increased government regulations.

18. The processor program product of claim 10, where the insurance risk is based on claims received, premiums paid, percentage reimbursed by a provider, and a percent reduction in premium.

19. The processor program product of claim 1, where the first risk reduction and the second risk reduction are based on at least one intellectual property risk.

20. The processor program product of claim 19, where the at least one intellectual property risk includes at least one of:

damage to intellectual property and loss of intellectual property.

21. The processor program product of claim 1, where the first risk reduction and the second risk reduction are based on at least one litigation outcome risk.

22. The processor program product of claim 21, where the at least one litigation outcome risk includes at least one of:

a potential exposure risk and a likelihood of exposure risk.

23. The processor program product of claim 1, where the first risk reduction and the second risk reduction are based on at least one adverse publicity risk.

24. The processor program product of claim 23, where the at least one adverse publicity risk includes at least one of:

damage to brand name, direct advertising expenses, corrective advertising expenses, selling costs, general costs, and administrative costs, increased lobbying, and increased regulation.

25. A method, comprising:

determining a first direct cost associated with at least a partial implementation of a business decision, the first direct cost including at least one of productivity gains and losses,

determining a second direct cost based on a non-implementation of the business decision, the second direct cost based on the at least one of productivity gains and losses,

determining a first risk reduction associated with at least a partial implementation of the business decision, the first risk reduction based on at least one business relationship risk,

determining a second risk reduction associated with a non-implementation of the business decision, the second risk reduction based on the at least one business relationship risk, and,

associating the business decision with a value, the value corresponding to a sum between;

(i) a difference between the first direct cost and the second direct cost, and,

(ii) a difference between the first risk reduction and the second risk reduction.

26. The method of claim 25, where the business decision includes at least one of alternative dispute resolution (ADR) and early dispute resolution (EDR).

27. The methd of claim 25, where the at least one of productivity gains and losses includes at least one of:

a cost of diverted time, a cost of diverted resources, a value of diverted time, a value of diverted resources, and a productivity rate.

28. The method of claim 25, where the first direct cost and the second direct cost includes at least one process and settlement cost.

29. The method of claim 28, where the at least one process and settlement cost includes at least one of:

expenditures to third parties, expenditures to experts, expenditures to consultants, internal administrative costs, a number of new cases, actual costs of using alternatives, estimated costs of using alternatives, actual costs of using prevention, and estimated costs of using prevention.

30. The method of claim 28, where the at least one process and settlement cost is based on at least one of:

maximum time for disposition of an EDR case, peak disposition month for an EDR case, maximum time for switching between litigation and EDR, peak switch month for switching between litigation and EDR, average process costs per EDR case per month, average settlement cost per EDR case, percent of cases switching from EDR to ligitation, maximum time for disposition of a litigation case, peak disposition month for a litigation case, maximum time for switching between EDR and litigation, peak switch month for switching between EDR and litigation, average process costs per litigation case per month, average settlement cost per litigation case, and percent of cases switching from litigation to EDR.

31. The method of claim 28, where the at least one process and settlement cost is based on a phased-implementation of the business decision.

32. The method of claim 25, where the first direct cost and the second direct cost includes at least one reserve savings.

33. The method of claim 32, where the at least one reserve savings includes at least one of:

an amount reserved for contingency cases, an amount of excess reserves, a hurdle rate, and an annual revenue.

34. The method of claim 25, where the at least one business relationship risk includes at least one of:

a risk of losing an alliance, an employee risk, a supplier relationship risk, a capital provider/rate change risk, a customer risk, a competitor risk, a regulatory risk, and an insurance risk.

35. The method of claim 25, where the first risk reduction and the second risk reduction are based on at least one intellectual property risk.

36. The method of claim 35, where the at least one intellectual property risk includes at least one of:

damage to intellectual property and loss of intellectual property.

37. The method of claim 25, where the first risk reduction and the second risk reduction are based on at least one litigation outcome risk.

38. The method of claim 37, where the at least one litigation outcome risk includes at least one of:

a potential exposure risk and a likelihood of exposure risk.

39. The method of claim 25, where the first risk reduction and the second risk reduction are based on at least one adverse publicity risk.

40. The method of claim 39, where the at least one adverse publicity risk includes at least one of:

damage to brand name, direct advertising expenses, corrective advertising expenses, selling costs, general costs, and administrative costs, increased lobbying, and increased regulation.