Taking the Uncertainty Out of ROI | GHX

Karen Conway

Executive Director, Industry Relations
Tuesday, September 20, 2016

Taking the Uncertainty Out of ROI

As my friends know (and my poor husband must deal with), I am currently studying statistics in grad school. In the midst of the occasional (okay not always so occasional) challenge of a new theorem or mathematical formula, I have gained a new appreciation for the concept of uncertainty, which is what statistically significant research tries to reduce, while recognizing that it can never be completely eliminated.   

There is credibility in recognizing this reality and in properly applied statistical tests, just as there should be when measuring the value of technology investments. And that’s why GHX chose to commission Forrester Consulting to apply its Total Economic Impact™ (TEI) methodology to the calculations we use to help customers (current and prospective) measure the value of using the products and services GHX delivers to providers and suppliers. Last year, Forrester certified that our value calculation methodology, which includes more than 70 underlying calculations, conformed to its rigorous TEI model. More recently, we commissioned Forrester Consulting to conduct a study using real customer data to measure the potential value that providers and suppliers can achieve with GHX. 

Here’s why we are so proud of our TEI-certification and excited to share the results of the study. The TEI methodology was developed specifically to answer the technology buyer’s question, “What am I getting for my money?” and it has been applied to measure the value delivered by companies including Cisco, Microsoft and Oracle. According to this objective analysis by Forrester, the value of GHX products and services can be significant: more than 300 percent return on investment (ROI) for manufacturers and 700 percent for providers.1 

We recognize that, just as with statistical studies, there are a lot of variables. The customers that Forrester interviewed and whose data was used to calculate the value documented in the case studies are mature customers who have worked to optimize their utilization of GHX products and services. Forrester has documented and confirmed the benefits achieved and presents the data in a manner that can help other organizations see what’s possible with a similar commitment to getting the most value out of their investment in GHX.

Value is always the result of an organization’s commitment to learning what is possible, training employees, adopting best practices and maximizing utilization of what the technology can deliver. 

At GHX, we believe in the value of what we offer. We also think it is important to be conservative when measuring that value in order to build trust in the measurements. Forrester agrees, which is why a fundamental part of the TEI methodology is the inclusion of risk elements into calculations. Customers can easily determine areas of uncertainty and adjust calculations based on their confidence in their own organization’s ability to achieve full value. That’s the power of measuring uncertainty I spoke about before. 

As part of our conformance with the TEI methodology, our value calculators include not only the fees paid to GHX but also any internal costs incurred by the customer. We also built in the capability for customers to factor in their own cost of capital, rather than use some generalized percentage.

In the end, we believe in our ROI calculations and in the new case studies published on the GHX website. At GHX, value is not just a measurement. It is a way of doing business. 

We invite you to download and review the Forrester study. In addition to the unabridged version that contains both the provider and supplier analysis, Forrester also created separate downloads for the provider and supplier segments, along with summary infographics. Feel free to reach out if you would like to continue the discussion. Your perspectives are of value to GHX.

 

 1The Total Economic Impact™ Of The GHX Platform, a commissioned study conducted by Forrester Consulting on behalf of GHX, July 2016

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