Creating Value with the Value Proposition Canvas

Featured | Posted by kamleshgsingh

The value proposition canvas is important for all businesses. It can be used for new products, initiatives foundation. It can also be used for knowing the value proposition of our existing business as well as for any new businesses and ventures.

The value proposition canvas consists of two major areas. One is focused on the customers and their needs while the other is focused on value proposition, we offer to fulfil our customer needs.

Value proposition canvas can be seen as the foundation and most important layer for forming any business and ventures. It can be also easily linked to the business model canvas Value Proposition and Customer Segments sections.

It is fairly easy to prepare and gives a full overview of our customers and how we fulfil their needs with our unique offerings.

We must start with our customer segments and define a unique persona in the “Customer” section. Based on the customer persona, we can fill up the “Want – Gain” section.

Ideally if you have completed the “Empathy Map” and “Persona” for your ideal customer then you can easily fill in the “Want – Gain” as well as the “Need – Pain” sections.

Let’s get the Customer section filled up,

1. In the “Customer” section fill up the ideal customer persona information. Focus on defining the key aspects of the ideal customer segment.

2. In the “Want – Gain” section fill up the customer wants and/or gains. What will the customer gain if they get the solution they are looking for.

3. In the “Need – Pain” section fill up the customer pain points and/or needs. Think about what pains will be resolved and what the customer really needs.

4. In the “Early Adopters” section fill up the customer sub segment that will be the early adopters of the product / solution / service.

5. In the “Early Majority section fill up the customer sub segments that will be the early majority of the product / solution / service.

After completing the “Customer” section, let’s move to the “Product” section and fill up the benefits, features and user experience parts. Let’s get the Product section filled up,

1. In the “User Experience” section fill up what customers will experience when they use the product/solution/ service.

2. In the “Benefit(s)” section fill up the key benefits of the product.

3. In the “Feature(s)” section fill up the key features of the product.

4. In the “Unique Value” section fill up the Unique Value offered by the product. This should be something that none of our competitors or alternatives offer.

5. In the “Alternatives / Competitions” section fill up what are the current alternatives include what competitors are offering.

Please do remember to ensure the value proposition product and customer sections are in synchronised with each other and complimenting.

Here is the complete overview of the “Value Proposition Canvas” and how it will look like.

This completes the value proposition. Do remember to review and revise it a few times as you might not get it 100% right in the first attempt and there will be need to review it with team and key stakeholders.

With the value proposition canvas, you should be able to share the entire proposition to stakeholders with just one slide.

Please keep it simple and brief. The details for each section can come from respective detailed exercises of “empathy map”, “persona”, “product prototype” etc.

I hope you will like, share and use this for your creating value propositions. In my next series of articles, I will share about more useful concepts that I have used over years and which are necessary must have for everyone to learn and know.

Create New Venture and Startups using Lean Canvas

Posted on January 8, 2022 by kamleshgsingh

The Business Model Canvas can be used to document and understand the existing business overview. For new entirely new businesses we can use the Lean Canvas Model.

Lean Canvas business model can be easily filled up if the business information is clearly available. It helps to bring structure and thought on important aspects of the business.

Lean Canvas helps in defining new venture and startups with ease. It consists of 9 major segments which can be defined in one single slide while details on each can be put up on separate slides or documents for reference, inputs and refinements.

Now let’s briefly define the segments for better understanding.

1. Problem: List down the problems of your customer segments. Specify which key problems will be solved.

2. Existing Alternatives: List down what are the existing alternatives and how customers cope with these problems or solve them using alternatives.

3. Customer Segments: Focuses on knowing all the involved key customer segments of the business. Questions to ask are,

Who are our most important customers?
For whom are we creating value?
Is our customer base a Mass Market, Niche Market, Segmented, Diversified, Multi-sided Platform etc.

4. Early Adopters: List the sub segment of customers that will be early adopters of the solutions and services.

5. Unique Value Proposition: This is one of the important segments where we clarify the value proposition(s) of the business.

a. What problems are we helping to solve?

b. What unique value do we deliver to our customer segments?

c. Which customer needs are we satisfying?

6. High-Level Concept: List the high-level concept of your unique value proposition.

7. Solution: Outline the solution and service for each problem. Also check that the solution matches the unique proposition and high-level concept elements.

8. Key Metrics: In this section specify your top 3 to 5 Key Performance Indicators which will help you measure your business and its success. Use SMART method to defined clear, concise and measurable metrics.

9. Unfair Advantage: In this segment specify your unfair advantage. It is something that cannot be easily copied. E.g. your years of experience of specific industry.

10. Channels: In channels we specify the business channels we use for business. Questions to ask are,

Which Channels do we use to reach our Customer Segments?
How are our Channels integrated?
Which ones work best (profitable & cost-efficient)?

11. Costs Structure: This is an important to highlight all our business costs and including our liabilities.

What are the costs for our business?

12. Revenues Streams: In this section we note our revenue streams and how we generate revenue including our assets.

What are our revenue streams?
How we do generate the revenue?

Once you noted all the information, you can easily transfer it to the one slide overview.

Now go ahead and give it a try. You can also use this for clearing your understanding on any ideas, start-ups and ventures. This simple overview can help you understand and explain your start-up or venture clearly to others. It will also help you sharpen your business and make a call whether its worth trying as well as identify gaps that you will need to fill.

After you have understood the Lean Canvas model, you can easily understand what are the key areas and where are the potential gaps are for the business.

In my next article I will share an overview of value proposition model that can be used for any new business ideas with in existing business.

Know everything about the business with in an hour

Featured | Posted by kamleshgsingh

We all need to know our businesses and stakeholders well. In this brief article, I would like to share an important and east tool that I have used significantly and it works very well.

The best and the easiest way to understand the complete overview of any business as well as our key stakeholders is to create a business model canvas for them.

The process is relatively straight forward. All we need to do is to setup 30 minutes call with respective business owner and/or stakeholder and run through the series of questions which they can easily answer.

Important is to ensure you note or record answers to all questions meticulously. Also pay attention to listening and body language as your stakeholders speak. This will help you engage and understand the real issues and which areas are well defined versus areas requiring attention.

The Business model canvas is 8 segments consisting of 3 to 5 questions for each segment. Ideally it is best to fill it up in the below order.

1. Customer Segments: Focuses on knowing all the involved key customer segments of the business. Questions to ask are,

Who are our most important customers?
For whom are we creating value?
Is our customer base a Mass Market, Niche Market, Segmented, Diversified, Multi-sided Platform etc.

2. Channels: In channels we specify the business channels we use for business. Questions to ask are,

Which Channels do we use to reach our Customer Segments?
How are our Channels integrated?
Which ones work best (profitable & cost-efficient)?

3. Customer Relationships: In the section we discuss and document about how we manage customer relationships.

How do we manage customer relationships with our customer segments?
How are they integrated with the rest of our business model?

4. Value Propositions: This is one of the important segments where we clarify the value proposition(s) of the business.

What problems are we helping to solve?
What unique value do we deliver to our customer segments?
Which customer needs are we satisfying?

5. Key Activities: Key activities are key activities we do to meet our core business needs and deliver the unique value propositions

What Key Activities do our Value Propositions require?
Which Key Activities do partners perform?

6. Key Resources: In this segment fill up the list of key resources we need to run the business.

What Key Resources do our Value Propositions require?
Which Key Resources are we acquiring from partners?

7. Key Partners: Here we define and list down our key partners for the business.

Who are our Key Partners?
Who are our key suppliers?

8. Costs Structure: This is an important to highlight all our business costs and including our liabilities.

What are the costs for our business?

9. Revenues Streams: In this section we note our revenue streams and how we generate revenue including our assets.

What are our revenue streams?
How we do generate the revenue?

Once we collected all the answers, we can document them on one slide for easy overview.

You can also use this for knowing about any businesses of your choice. This simple overview can help you understand the business clearly within an hour.

Once you have understood and documented the business model, you can easily understand what are the key areas and where are the potential pain points of the business.

In my next article I will share an alternative version of business model canvas that can be used for any new business startups.

Small and Medium Enterprises and ERP Systems

Posted on December 4, 2012 by kamleshgsingh

Introduction

Enterprise Resource Planning (ERP) Systems have been around for more than four decades now, during each decade the ERP system needs and feature continued to evolve and become more user friendly and widely used by majority of enterprises.

On one side ERP systems continue to evolve and on other side the business needs continued to change we moved from industrialization economy to information economy and from information economy to entrepreneurs’ economy.

Entrepreneurs’ economy means it’s an era where generation x and generation y; who want to work more independently and have their own businesses are taking entrepreneurial path of becoming entrepreneurs’ coming up with their own businesses.

This is leading to flourishing of small and medium business enterprises. These enterprises open a big window opportunity for simple and effective enterprise resource planning systems.

SME Defined

SME stands for Small and Medium Enterprise. The definition varies country by country based on every countries economic status. For Singapore SME’s before April 2011 were termed as companies that have net fixed assets of more than SGD 15 million in manufacturing area and for non-manufacturing companies with employee base of less 200 staff.

From April 2011 the definition is changed and updated to be companies that have annual sales turnover of not more than SGD 100 million or have employee base of less than 200 staff.

If we look at SME’s definition for other countries then it varies based on what suites as SME for the respective country. Although the deciding criteria remains number of staff, annual sales, net asset investment in most cases the absolute numbers differ per country. For some countries SMEs are further broken up in definition as small enterprise and medium enterprise.

Why ERP systems for SME’s

Enterprise resource planning systems have been around for more than 4 decades. In past four decades ERP systems have evolved a lot and so does the vendors offering ERP solutions evolved. From several vendors the market share came down to handful which acquired several other smaller vendors to be the vendor of choice. The big 3 names are SAP, Oracle and Microsoft.

Most of the MNCs and Big size companies have already implemented ERP solution from one of the top 3 vendors. This is leading to saturation of further implementation of ERP systems and it turns to more upgrades and managing the customer accounts.

A study of market share shows that SAP, Oracle and Microsoft are leading in market share of up to 53% in year 2010 while the remaining 47% is shared by other smaller ERP vendors. This leads to the need of firstly evolving ERP systems that fit small and medium enterprises by efficiency (simpler and faster to use) and effectiveness (low cost and scalable).

The other solid reason for ERP vendors to move in the direction of SMEs is due to the fact of growing number of SMEs. Millennium decade is the decade when Generation X are reaching their late 30’s and early 40’s leading towards becoming entrepreneurs while Generation Y phasing in and having the need to work independently leading to initiate their own businesses.

The Enterprise profile statistics report of Singapore (published on 10^th July 2009 by Singapore Department of Statistics) based on data of year 2003 to 2007 shows that Singapore has 160000 enterprises and 99% of these enterprises are small & medium enterprises (SMEs). Only 1% of enterprises are non-SMEs (large size businesses). These SMEs value added to Singapore economy between year 2003 to 2007 have increased up to 49% and theses SMEs are employing 60% of workers in the country. This shows that at least up to 49% of Singapore businesses have potential for ERP vendors to deliver meaningful solutions to.

Above statistics is just for Singapore and if this is checked worldwide then in opens up a huge market space which ERP vendors can target to deliver meaningful solutions. Given that number of SMEs will continue to grow ERP vendors are targeting to capture the market share of SMEs.

For ERP vendors there is also another plus point of entering this market and that is related to mergers, acquisitions and disentanglements. The fast changing pace of business changes lead to faster and faster acquiring, merging and disentangling of business divisions by various enterprises. In doing so if ERP vendors have suitable solutions they would be able to help transform these businesses much more smoothly and hence keep the market share growing and their customers satisfied.

ERP Systems Implementation Barriers for SME’s

ERP systems are by their nature wide ranged covering various business processes in an enterprise. As ERP systems integrate various business processes and automate them, they are seen as complex in nature. For ERP systems to be implemented and used by SMEs the biggest barriers are following.

Costs

Cost of ERP Systems from initiation to whole life cycle management is number one barrier for implementing ERP systems in SME’s

Small and Medium enterprises are generally cash poor with low information technology budget and spending power.
Generally an ERP project implementation has lot of one time implementation costs in the area of Consultants, Project Mgmt, Software Licenses, Hardware – Hosting and PCs, and User Trainings.
Additionally the ongoing maintenance and support costs of good ERP systems are very high for small and medium enterprises.

Time

ERP systems require a long time for implementation and changes. Time is number 2 barrier in ERP Systems implementations. Generally full implementation of ERP systems could take from 6 month to 1.5 years depending on size and complexity of enterprise and customization and integrations requested. Small and Medium Enterprises does not have so much of time to get the ERP systems implemented. Also more the time and complexity it leads to more costs which is already number one barrier for ERP systems implementation.

People (Resources)

ERP systems implementation requires various skilled resources to correctly and smoothly implement the solution. From SMEs it requires skilled business resources that know the business process very well and able to spend time with the project time during entire project life cycle. SMEs are generally small in size and its resources are multi hated (play multiple roles) leading to no or very little time to spend on ERP systems projects. This is one of the key barriers which can lead unsuccessful ERP systems implementation.

User Trainings and System Friendliness

ERP systems are wide and complex in nature and generally have too many screens, options and features. This means users need to be well trained and continued to be trained for effective use of ERP systems. SMEs being small in size have less number of users to be trained but the same users could have multiple hats leading them learn and remember several options, steps, features to successfully use ERP system. This leads to information overload and user resistance. Additionally SMEs being small in size also have faster staff change rate as very often staff joined in will learn and leave for working in bigger size organisation. This leads to continuous need for trainings of new staff.

Business Process Management

For effective configuration and installation of ERP systems, business processes of the enterprise must be well documented, maintained and owned. For SMEs the business process management is most of the time not formally documented and maintained. This leads to ERP systems configuration and implementation barrier. It also leads to higher costs of firstly documenting business processes for the enterprise and then applying the same for ERP systems implementation.

IT Department and IT Infrastructure

ERP systems require robust infrastructure and IT supporting department to be able to implement ERP solution. In SMEs IT department is generally very very lean or nonexistent. Also the IT Infrastructure for hosting and support of applications is nonexistent leading to hiring of outside service provider resources which leads to higher IT costs and as vendor resource may not have all SME IT systems knowledge could lead to unsuccessful ERP systems implementation. The barrier even continues post implementation during ERP systems upgrades and maintenance.

Strategies to Overcome Implementation Barriers

ERP Systems Implementation barriers for SMEs are Costs, Time, People, User Trainings, System Friendliness, Business Process Management, IT Department and IT Infrastructure. For overcoming these barriers ERP vendors have to come up with ERP systems that are optimized for following areas,

User Friendly System with e-learning training options for self-learning
Optimized system features, options and steps to meet the core business needs only. So only must have features enabled, rest disabled/removed to reduce usage complexity. This would lead to lesser time for training and system knowledge acquisition by enterprise staff.
Well documented business process management overview specific to industry segment with link to system functions/configurations which will help enterprise to see the end to end business process overview and how changes would impact configurations. This would help in reducing amount of time to be spent by enterprise staff on business process management. Also in many case SMEs could easily see the end to end process and choose to go with out of the box setup.
Pre-defined and success proof ERP Systems project implementation methodology that would reduce the time required at each step of the project and hence increasing the speed of implementation and reducing the costs of implementation.
Software offering where IT hosting, system maintenance and support is take care by ERP vendor itself. This would lead to internet based ERP solutions that would be readily available and can be easily accessed using standard web browser (thin client). This would address SME’s need as they generally don’t have IT department or have very very lean IT department and infrastructure. This would save huge IT investment costs of ERP Systems implementation. By managing the ERP Systems IT Infrastructure and Support, ERP vendors can offer ERP systems with lower costs of ownership to SMEs.

ERP Vendors have to come up with product offerings for SMEs that help address the implementation barriers. The products offered must be,

Internet hosted

Save Client Implementation and Maintenance Costs
Can be accessed using standard web browser (thin client)
Use standard internet protocols and messages for communication and data exchange

Out of the box

Standard Industry best practice business processes used in the tool
Pre-configured for businesses to allow them to start using within days
Configurable flexibility for businesses that want some parts to be configured

Low Cost

Installation is ERP vendor hosted and managed means no IT Infrastructure costs to SMEs
Pay for Use based on number of users subscribed in every month and functionality/modules they use

Above can be achieved using Software as a Service (SaaS) technology concept and ERP vendors are starting to offer products and services using SaaS technology.

Conclusion

ERP vendors are well aware of the growing number of entrepreneurs and SMEs. They also know the opportunity and growth potential in this area. ERP vendors like SAP, Oracle and Microsoft have come up with solutions that could fit SMEs. As the opportunity is seen by all IT vendors there is a lot of competition and new entrants in ERP Systems for SMEs.

For more SMEs to adopt ERP Systems its essential that ERP Systems are internet hosted, out of the box and low cost. The need and use of ERP Systems will continue to increase for SMEs till the time the systems are low cost and faster to implement and easy to use meeting SMEs’ needs. The challenge for ERP Systems effective implementation and use in SMEs still remains in below areas.

Lift and Shift

ERP Vendors have to continue to think and come up with plug and play ERP Systems. By plug and play its meant lift and shift of ERP Systems. SMEs are often acquired by other larger SMEs or larger enterprises and for such cases ERP systems and data used by SMEs should be easy to lift and shift or easily portable to other enterprise’ ERP System.

Mobility

ERP vendors also have think about SME solution to be compatible and light enough to access from mobile devices and tablets. Given the growing power of mobile devices and growing use of tablets for business this is an essential must to be brought in place.

Success and Failure of ERP Implementations In Brief

Posted on December 4, 2012 by kamleshgsingh

Success and Failure of ERP Implementations

ERP Implementation projects success and failure depends on several factors. The top five factors are as described below.

Clear understanding of Scope and Ownership :

Its essential that the project scope is clearly understood and the project is owned and driven by business than by IT. All members of the project team must know the scope clearly and plan execution based on must have scope items. Business Management normally the CEO or COO or CFO of the organization should own the business requirement and help define clear scope and business priorities with in the specified scope.

Clear Benefits identification and management:

All projects are done for a business reason with benefits clearly defined and agreed. Business case must detail out the benefits with clear ownership for each factor and who will be driving it to realize the benefits. Some benefits can be reported during the project execution phase itself while others would be realized post implementation. So its important that benefits are owned by the business and reported to management on timely and standardize manner.

Right Resources:

For ERP implementation success its essential to have best people in the organization with through knowledge in respective areas are chosen to be represent the business requirements and to drive the project from business side. The project should have the best and experience ERP consultants to be able to drive the technical execution correctly. Resources allocation to the project should be normally 50% or more as anything lower could lead to priority conflicts and affect the implementation

Managing Change Management:

Change management is highly important and requires high attention and management. The change management for the project scope changes needs to be managed in a structured manner using project boards as improper change management would lead to implementation delay and can affect the business objectives very highly. The other side of the change management is related to people in the Organization as moving to a new system requires buy in and involvement of various people of the organization. The people related change management in the organization should be managed through HR and company’s top management to ensure all businesses and their people support the change and be part of it to make it a success.

Integration needs:

Normally IT systems and specially ERP systems implementations lead to organizational structure and roles change. On one side along with the system automation certain roles in the organization get redundant while on the other side some people’s role increases while some other new roles have to be created to manage the new system related functions/activities. Its essential that the integration needs owned by business with well-defined planning and clear ownership for execution.

Post Implementation needs:

The real work for ERP Implementation is to ensure there is clearly defined ownership of post implementation support (e.g. change, incidents, issue handling, access request etc.) is establish during the project itself and required teams are involved in the ERP implementation at various stages of the project. It’s also essential to define how user trainings and ongoing organizational changes would be handled with respect to ERP system.

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