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Business Intelligence Applied: Implementing an Effective Information and Communications Technology Infrastructure by Michael S. Gendron

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Organizational Value Propositions

Any organization should be able to describe what it does to bring value to its customers. In other words, what does the organization offer that the customer is willing to pay for? It may be easier to think of this in terms of something we are all familiar with: paying taxes. Suppose your local town wanted to increase taxes by 1 percent to pay for a building. Will the building be perceived to have enough value (utility) to the citizens so they are willing to pay higher taxes? If yes, then the tax increase is a valid value proposition, and the citizens are likely to vote for the tax increase. If not, then the tax increase will most likely get voted down because of insufficient perceived value. In economic terms, this concept is referred to as willingness to pay.

Value has several definitions in Merriam-Webster 's dictionary, a few of which are relevant to the definition of a value proposition:

  • A fair return or equivalent in goods, services, or money for something exchanged.
  • The monetary worth of something: market price.
  • Relative worth, utility, or importance; a good value at the price.

The definition of proposition is “something offered for consideration or acceptance.” So a value proposition is defined as what an organization provides (proposes or offers) to the customer for which the customer considers the asking price a fair return on equivalent goods or services (value). This value proposition must be understood before value-based ICT can be ...

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