1. Purpose Provide tool and framework to gather and calculate IT Business Value to Intel. Partner with IT Business Value program to complete this document for project submissions. If you have already documented an Intel ROI for your project, please provide existing work in lieu of this document. If an ROI exists, please work with IT Business Value project manager and your finance analyst to identify additional project valu 2. Audience This document is intended for use by IT project/product and service owners and their finance analysts. The BVROI is to help project managers quantify the business value of their projects for the IT Business Value EB goal 3. Roles and Responsibilities IT project/product and service owners are responsible for providing data related to their projects. Finance analysts should assist with the ROI calculations and theory. Business Value team will identify value opportunity, validation of data, and measurement. 4. Key Contacts IT Business Value Program:
Finance:
5. Intel Finance ROI Standards There are some differences between calculating Business Value for Intel and the standard ROI calculated at Intel for IT project 1. The IT Business Value program is looking for value in the first 3 years of the project. 2. The IT Business Value program is looking for Intel revenue increases versus net income found in traditional ROI. 3. This BVROI can include headcount productivity gains as long as they are substantiated by HFE analysis, customer validation 4. The BVROI does not count IT benefits as business value for Intel. 5. The program counts 50% of headcount productivity as cash, which is not found in standard ROIs.
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is document. tify additional project value.
s Value EB goal
ated at Intel for IT projects:
aditional ROI. alysis, customer validation, and use the generic calculations in the dials.
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INSTRUCTIONS Steps 1-3 are for the Assumptions Page - Steps 4-6 are for the Value Dials Worksheet 1. Enter the qualitative analysis in the Assumptions worksheet: Focus on the project scope, basic financial assumptions, primary benefits, and so forth. 2. Enter benefit and cost assumptions in the Assumptions worksheet. 3. Explain the source of your data and assumptions: Customer requirements, Human Factors Engineering (HFE) data, key challenges and scope, and so forth. 4. List the value dials your project will impact and why? For example, time-to-market is the impacted value dial, and "Reduces product development by 50%" is the why. 5 Value Dial: Column A provides the value dial name and a definition. Identify which value dials apply and mark Column C. 6. Value Dial Calculation: Develop the calculation that will measure and quantify the dollar amount for each applicable dial: Take a look at generic examples in Column B and enter your project specific calculation in Column E.
Project Finance Assumptions Cost Descriptions
Benefit Descriptions
Source of Data
IT Business Value Dials
General Assumptions
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Check Value Can Be Dials That Apply Quantified? Yes/No Value Days of Inventory Days of Receivables Days of Payables Headcount Reduction Headcount Productivity Headcount Turnover System End-of-Life (EOL) Materials Discount Hardware/Software Avoidance Unit and Other Cost Avoidance Factory Optimization Scrap Reduction Risk Avoidance Time-To-Market Open New Markets Optimize Existing Markets Cross-Selling VOC (Intel Vendor of Choice) Direct Revenue Calculation (Generic Examples) (Value of 1 day) x (Days of inventory removed) x (15%) (Value of dollars receivable) x (Days of receivables removed) x (15%) (Dollar value of payables) x (days of payables added) x 15% (# of H/C reduced or avoided) x (Average burden rate for region & job type) (Number of employees affected) x (Time) x (Avg. burden rate) x (50%) (33% of annual burden rate/region/job type) x (# H/C turnover avoided) Cost of maintaining EOL'd system (Previous material pricing) – (Current pricing) Total cost of the H/W or software avoided Total of actual costs avoided (Value of product) x (Volume increase) Total value of scrap reduced or avoided (Value of risk) x (Probability of occurrence) (Value of increased market segment share) x (# weeks accelerated to market) (Increase volume) x (Average selling price) (Increase volume) x (Average selling price) (Increase volume) x (Average selling price) Value of positive ratings that ensures Intel's security in a particular market Total amount of revenue generated by IT developed products
If Yes, Enter Calculation
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INSTRUCTIONS 1. Project Name: Enter project name. 2. Brief Project Description: Enter project description. 3. Years: Definitions: a. Year 0 = Remainder of calendar year when project begins. For example, if a project begins in July 2002, this column will contain data for July - December 2002. b. Year 3 = The IT Business Value program counts only 3 years of data - please include data for the first 36 months. For example, if a project begins in July 2002, this column will contain data for January - June 2005. 4. Cash Outflows: Enter all cash outflows in $K unless otherwise specified. 5. Headcount: Enter new headcount only. Add/change position line items as necessary. a. Headcount runrate will vary by region and position. See your finance analyst for details. b. Enter number of heads needed, not dollars needed. 6. Expenses: Enter incremental cash expenses only. Add/change expense line items as necessary. a. Do not enter non-cash expenses such as depreciation. b. Include sales tax. 7. Capital: Enter incremental capital cash outflows only. Add/change capital line items as necessary. a. Include sales tax. 8. Tax Effects of Cash Outflows: Increasing cash outflows will decrease taxes. a. Please see your finance analyst for correct tax depreciation schedules, which will vary depending on capital equipment type. b. Please see your finance analyst for additional assistance in this area. 9. Cash Inflows: Enter all cash inflows in $K unless otherwise specified. a. Please reference value dials and consult with your finance analyst for guidance. b. Include only non-IT cash inflows/benefits for IT Business Value program ROIs. 10. Headcount Reduction/Avoidance: Enter only headcount that will be reduced or planned hires that will be avoided. Add/change position line items as necessary. a. Headcount runrate will vary by region and position. See your finance analyst for details. b. Enter number of heads reduced/avoided, not dollars avoided. c. Enter only non-IT heads avoided/reduced for IT Business Value program ROI. 11. Headcount Productivity Improvements (time based) a. Headcount Hourly Runrate: Headcount runrate will vary by region and position. See your finance analyst for details. b. # of Weeks per Year: This row should sum to 156 weeks (36 months). c. Hours Saved Per Week: Enter average time saved per week. d. # of Employees Improved: Input # of employees affected. 12. Expense Avoidance: Enter incremental cash expense avoidance only. Add/change expense line items as necessary. a. Do not enter non-cash expenses such as depreciation. b. Include sales tax. c. Enter only non-IT expenses avoided for IT Business Value program ROI. d. See cell notes in ROI forecast sheet and value dials sheet for additional details on calculations. 13. Cash Cycle/Working Capital: Input cash value inventory and/or receivables reduction. 14. Capital Avoidance: Enter incremental capital avoidance cash inflows only. Add/change capital line items as necessary. a. Include sales tax. b. Enter only non-IT capital spending avoided for IT Business Value program ROI. 15. Revenue Increases a. See cell notes in ROI forecast sheet and value dials sheet for additional details on calculations. b. Direct revenue refers to revenue generated from selling IT-developed products externally. 16. Tax Effects of Cash Inflows: Increased cash inflows will increase taxes. a. Please see your finance analyst for correct tax depreciation schedules, which will vary depending on capital equipment type. b. Please see your finance analyst for additional assistance in this area.
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Project Name: Brief Project Description: Year
ENTER FORECAST BELOW § Year 0 1 Year 2 Year Year 3 Total
CASH OUTFLOWS (COSTS) ($K) Headcount* Headcount Annual Runrate Positions Software Developers Project Manager Engineering Testers Marketing/Web Support Technical Assistance Center (TAC) Support Distribution Support Admin Support Other Total Incremental Headcount Total Headcount Costs Expenses (include sales tax) Software Licenses Software Maintenance Server Maintenance Distribution Costs Non-Capital Hardware Outsourced Marketing Collateral External Consulting Training-TAC Training-User Vendor Distribution Support Vendor Technical Support Web Site Changes/Development User Marketing Travel Other Total Expenses Capital Hardware PCs Servers Enterprise Software License Other Capital Equipment Total Capital Tax Effects of Cash Outflows Effect of Expense Changes New Expenses Tax Rate Total Expense Related Tax Decrease Effect of Capital Changes New Capital Tax Depreciation Rates Tax Rate Total Capital Related Tax Decrease Total Tax Decrease TOTAL CASH OUTFLOWS (COSTS) ($K)
$100.0
$100.0
$100.0
$100.0
0.0 $0.0
0.0 $0.0
0.0 $0.0
0.0 $0.0
0.0 $0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0 38.0% $0.0 $0.0 20.0% 38.0% $0.0 $0.0 $0.0
$0.0 38.0% $0.0 $0.0 32.0% 38.0% $0.0 $0.0 $0.0
$0.0 38.0% $0.0 $0.0 19.2% 38.0% $0.0 $0.0 $0.0
$0.0 38.0% $0.0 $0.0 11.5% 38.0% $0.0 $0.0 $0.0
$0.0 $0.0
$0.0 $0.0 $0.0
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CASH INFLOWS (BENEFITS) ($K) Headcount Reduction/Avoidance Headcount Runrate Positions
$100.0
$100.0
$100.0
$100.0
Fab Workers/Techs Design Engineers Software Engineers HR Support Finance Support Marketing Sales Distribution Support Admin Support Other Total Incremental Headcount Total Headcount Avoidance
0.0 $0.0
0.0 $0.0
0.0 $0.0
0.0 $0.0
$0.0
Headcount Productivity Improvements (time based) Headcount Hourly Runrate # of Weeks per Year Hours Saved Per Week # of Employees Improved Total Headcount Productivity Gains Expense Avoidance Headcount Turnover System End-of-Life Materials Discount Risk Avoidance Factory Optimization Scrap Reduction Waste Reduction Yield Improvement Software Licenses Software Maintenance Server Maintenance Distribution Costs Non-Capital Hardware External Consulting Travel Other Total Expenses Avoidance Cash Cycle/Working Capital Days of Inventory Removed Days of Receivables Removed WACC Total Cash Cycle Improvement Capital Avoidance Hardware PCs Servers Other Capital Equipment Enterprise Software License Other Capital Equipment Total Capital Revenue Increases Time-To-Market Open New Markets Optimize Existing Markets
$0.05 26.0
$0.05 52.0
$0.05 52.0
$0.05 26.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
15% $0.0
15% $0.0
15% $0.0
15% $0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
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Cross-Selling VOC Direct Revenue Total Benefits Tax Effects of Cash Inflows Effect of Expense Changes Total Expenses Avoided Tax Rate Total Expense Related Tax Increase Effect of Capital Changes New Capital Tax Depreciation Rates Tax Rate Total Capital Related Tax Increase Effect of Revenue Changes Total Revenue Increased Tax Rate Total Revenue Related Tax Increase Total Tax Increase TOTAL CASH INFLOWS (COSTS) ($K) NET AFTER TAX CASH FLOW ($K) Discount Rate DISCOUNTED CASH FLOW ($K) FORECASTED 3-YEAR NPV: §Sample data only in this document. $0.0 $0.0 38% $0.0 $0.0 $0.0 $0.0 100% $0.0 $0.0 38% $0.0 $0.0 $0.0 $0.0 87% $0.0 $0.0 38% $0.0 $0.0 $0.0 $0.0 76% $0.0 $0.0 38% $0.0 $0.0 $0.0 $0.0 66% $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 20% 38% $0.0 $0.0 32% 38% $0.0 $0.0 19% 38% $0.0 $0.0 12% 38% $0.0 $0.0 $0.0 38% $0.0 $0.0 38% $0.0 $0.0 38% $0.0 $0.0 38% $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
$0.0
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Project Name: Brief Project Description:
ENTER ACTUALS OR FORECAST FOR ALL QTRS IN YR 0 § Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year
DO NOT FILL AREA IN GREY § (copy/paste from forecast tab) Year 1 2 Year Year 3 Total
CASH OUTFLOWS (COSTS) ($K) Headcount Headcount Annual Runrate Positions Software Developers Project Manager Engineering Testers Marketing/Web Support Technical Assistance Center (TAC) Support Distribution Support Admin Support Other Total Incremental Headcount Total Headcount Costs Expenses (include sales tax) Software Licenses Software Maintenance Server Maintenance Distribution Costs Non-Capital Hardware Outsourced Marketing Collateral External Consulting Training-TAC Training-User Vendor Distribution Support Vendor Technical Support Web Site Changes/Development User Marketing Travel Other Total Expenses Capital Hardware PCs Servers Enterprise Software License Other Capital Equipment Total Capital Tax Effects of Cash Outflows Effect of Expense Changes New Expenses Tax Rate Total Expense Related Tax Decrease Effect of Capital Changes New Capital Tax Depreciation Rates Tax Rate Total Capital Related Tax Decrease Total Tax Decrease TOTAL CASH OUTFLOWS (COSTS) ($K) CASH INFLOWS (BENEFITS) ($K) Headcount Reduction/Avoidance Headcount Runrate Positions
$25.0
$25.0
$25.0
$25.0
$100.0
$100.0
$100.0
0.0 $0.0
0.0 $0.0
0.0 $0.0
0.0 $0.0
0.0 $0.0
0.0 $0.0
0.0 $0.0
0.0 $0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0 38.0% $0.0 $0.0 20.0% 38.0% $0.0 $0.0 $0.0
$0.0 38.0% $0.0 $0.0 32.0% 38.0% $0.0 $0.0 $0.0
$0.0 38.0% $0.0 $0.0 19.2% 38.0% $0.0 $0.0 $0.0
$0.0 38.0% $0.0 $0.0 11.5% 38.0% $0.0 $0.0 $0.0
$0.0 $0.0
$0.0 $0.0
$0.0 $0.0
$0.0 $0.0
$0.0 $0.0 $0.0
$25.0
$25.0
$25.0
$25.0
$100.0
$100.0
$100.0
Fab Workers/Techs Design Engineers Software Engineers HR Support Finance Support Marketing Sales Distribution Support Admin Support Other Total Incremental Headcount Total Headcount Avoidance
0.0 $0.0
$0.0
$0.0
$0.0
0.0 $0.0
0.0 $0.0
0.0 $0.0
$0.0
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Headcount Productivity Improvements (time based) Headcount Hourly Runrate # of Weeks per Qtr/Year Hours Saved Per Week # of Employees Improved Total Headcount Productivity Gains Expense Avoidance Headcount Turnover System End-of-Life Materials Discount Risk Avoidance Factory Optimization Scrap Reduction Waste Reduction Yield Improvement Software Licenses Software Maintenance Server Maintenance Distribution Costs Non-Capital Hardware External Consulting Travel Other Total Expenses Avoidance Cash Cycle/Working Capital Days of Inventory Removed Days of Receivables Removed WACC Total Cash Cycle Improvement Capital Avoidance Hardware PCs Servers Other Capital Equipment Enterprise Software License Other Capital Equipment Total Capital Revenue Increases Time-To-Market Open New Markets Optimize Existing Markets Cross-Selling VOC Direct Revenue Total Benefits Tax Effects of Cash Inflows Effect of Expense Changes Total Expenses Avoided Tax Rate Total Expense Related Tax Increase Effect of Capital Changes New Capital Tax Depreciation Rates Tax Rate Total Capital Related Tax Increase Effect of Revenue Changes Total Revenue Increased Tax Rate Total Revenue Related Tax Increase Total Cash Inflow Related Tax Increase TOTAL CASH INFLOWS (COSTS) ($K) NET AFTER TAX CASH FLOW ($K) Discount Rate Multiplier DISCOUNTED CASH FLOW ($K) FORECASTED 3-YR NPV: §Sample data only in this document. $0.0
$0.05 13.0
$0.05 13.0
$0.05 13.0
$0.05 13.0
$0.05 52.0
$0.05 52.0
$0.05 26.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
15% $0.0
15% $0.0
15% $0.0
15% $0.0
15% $0.0
15% $0.0
15% $0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0 38% $0.0 $0.0 20% 38% $0.0 $0.0 38% $0.0 $0.0 $0.0 $0.0 100% $0.0
$0.0 38% $0.0 $0.0 20% 38% $0.0 $0.0 38% $0.0 $0.0 $0.0 $0.0 100% $0.0
$0.0 38% $0.0 $0.0 20% 38% $0.0 $0.0 38% $0.0 $0.0 $0.0 $0.0 100% $0.0
$0.0 38% $0.0 $0.0 20% 38% $0.0 $0.0 38% $0.0 $0.0 $0.0 $0.0 100% $0.0
$0.0 38% $0.0 $0.0 32% 38% $0.0 $0.0 38% $0.0 $0.0 $0.0 $0.0 87% $0.0
$0.0 38% $0.0 $0.0 19% 38% $0.0 $0.0 38% $0.0 $0.0 $0.0 $0.0 76% $0.0
$0.0 38% $0.0 $0.0 12% 38% $0.0 $0.0 38% $0.0 $0.0 $0.0 $0.0 66% $0.0
$0.0 $0.0 $0.0
$0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
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