Past experience has taught us that conventional methods for assessing investments usually only take into account direct outcomes. The Steinbeis Transfer Center for Consulting of Medium-Sized Businesses now supports companies by providing its Benefit Asset Pricing Model (BAPM®) as a tool for decisionmaking. The model looks at the overall outcomes of an investment – which, as we know from experience, paints a more accurate picture.
The new model is closely based on a technique used by Dr.-Ing. Michael Schabacker of Otto-von-Guericke University in Magdeburg to assess capital market investments. It is a useful tool for evaluating the utilization of investments and process changes at a holistic level and is accurate to more then 90 per cent.
The model works by calculating different levels of utilization, quantifying these and combining them with the corresponding cost in something called a “dynamic investment process”. This shows in unequivocal terms, and in detail, which returns can be expected from which level of utilization. The Benefit Asset Pricing Model improves the quality of decision-making, especially with important investments and procedural changes under extreme uncertainty. They also help companies monitor subsequent progress.
Customers of HSi, a company from Erfurt, invited Steinbeis project manager Klaus Manzke to help them use the model to assess their utilization of a calculation program. To do this, they analyzed individual parts of the existing planning process before launching software with an assessment of the associated resource implications (such as personnel). The team then worked out which of the software’s applications would be needed and how much investment this would entail (licensing, maintenance costs, third-party and in-house implementation expenses). The functions offered by the software changed the overall process, culminating in quantitative savings and a variety of qualitative improvements. These were then examined in more detail, estimating the return on each utilization as a function of each defined utilization variable. Quantifiable outcomes when using the software (such as much shorter planning cycles), and qualitative benefits (e.g. precise production times, clarity, traceability) were then pinpointed precisely, thus confirming the usefulness of the software.