Table of contents
How much is an Idea worth? Valuation is the way to find out.
Valuation is AGREED's way of answering the question, "How much is this Idea worth for the business?".
The value of an Idea is determined by itemizing how it will change current expenses and revenues. In AGREED these changes are called Value Items.
Value Items capture how much the Idea will impact the business. There are three types of Value Items:
Personnel Expenses: Whose work will change? How much more or less time will they spend?
Non-Personnel expenses: What will the company buy more or less of?
Revenues: How will the Idea impact sales?
Every Idea involves at least one type of Value Item. Some involve all three.
Valuation is key to getting buy-in from Stakeholders and Decision Makers.
Support and approval come when reward outweighs the risk and everyone believes the numbers.
Credible data means confident decisions and certain outcomes.
Valuation makes it possible to align HR, Finance, and IT planning.
The value of an Idea is determined by entering Value Items. Each type of Value Item has a step-by-step workflow. Guidance is provided for each step.
Valuation happens in the Idea workspace. Every Team Member plays an important part.
Idea Leaders estimate the costs and benefits according to their best judgment.
Validators upgrade the estimates to real numbers and upload relevant documentation.
Stakeholders and Decision Makers ensure that all the right bases are covered.
For AGREED users in an enterprise program:
Every Idea is Valued Based on comparison to baseline financial details provided by your organization.
Agreed will include the amortization period based on your organization's input.
For Personnel Value Items, compensation ranges are based on the gross salary of the personnel and are calculated based on their actual positions within every range, for each group.
About Valuation with AGREED
Nobody trusts a number unless they know what it means and where it comes from.
Here's more information about how AGREED calculates the business value of an Idea.
The Idea Value reflects the recurring annual impact at a steady state once the Idea has been fully implemented.
The Value is quantified on a simplified cash accounting basis. This may differ from the GAAP impact of the Idea.
An Idea’s value accounts for any and all off-setting costs and benefits, both one-time and recurring, wherever they occur across the entire company.
One-time costs or benefits are real cash (not write-offs) that the company may spend (e.g. buying a new piece of hardware) or save (e.g. selling a piece of land).
Implementation costs are included as Value Items.