Business Case For Operational Risk Management Software

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Executive Summary

Operational risk management (ORM) software combines functionality for control of work, process safety and barrier risk management. It’s significance has been boosted in the last 12 months by the acquisition of specialist vendors by larger software providers who plan to integrate ORM capabilities into broader EHS and asset management suites. According to Verdantix corporate surveys, the biggest challenge for champions of better industrial risk management has been securing budget. To help overcome this problem, this report provides a bullet proof quantitative model to calculate the Return on Investment and Net Present Value of control of work, process safety management and barrier risk management investments. Project leads can input their own assumptions into the model to calculate costs and benefits specific to their project.

Table of contents

Business Case For Operational Risk Management Software
Complex Industrial Facilities Require Sophisticated Risk Management Controls
New Technologies Open A Gateway To Overhaul Industrial Risk Management 
ORM Software Exploits New Technologies
Aligning With Four Strategic Goals Boosts Funding Prospects For ORM Software

How To Build The Business Case For ORM Software
Map Out A Phased Implementation Plan Which Reflects Available Resources And Business Priorities
Assess Current Time Commitment And Value Of Potential Time Savings 
Calculate Current IT Costs Across Software, Hardware And Consulting
Estimate The Three-Year Rolling Average Of Financial Losses Caused By Failed Risk Controls

Apply The Model To Quantify Financial Benefits
Business Case Model Applied To A $100-Billion Revenue Oil and Gas Firm 
Business Case Model Applied To A $20-Billion Revenue Mining Firm 
Business Case Model Applied To A $10-Billion Revenue Aerospace Manufacturer

Table of figures

Figure 1. Aligning With Four Strategic Goals Boosts Funding Prospects For ORM Software
Figure 2. Five-Year Implementation Plan For ORM Software Modules, Sites And Users
Figure 3. Costs And Benefits Associated With Implementing ORM Software 
Figure 4. Financial Summary Of ORM Software Business Case—$100 Billion Oil And Gas Firm
Figure 5. Financial Summary Of ORM Software Business Case—$20 Billion Mining Firm 
Figure 6. Financial Summary Of ORM Software Business Case—$10 Billion Aerospace Firm 

About the authors

Malavika Tohani

Research Director

Malavika leads the Verdantix Operational Excellence practice. Her current research agenda focuses on the digitization of Operational Excellence and covers operational risk technologies, best practices and growth strategies. Her recent research focussed on benchmarking the capabilities of the prominent operational risk software vendors. She has over 10 years’ experience in research and strategy consulting. Malavika previously worked at Frost & Sullivan, managing and delivering advisory projects for clients involving expansion, acquisition, benchmarking and product development strategies. Malavika holds a MSc in Economics from Madras School of Economics.

David Metcalfe

CEO

David co-founded Verdantix in 2008 and leads the firm’s research and advisory work on the digitization of Operational Excellence which covers software, systems integration, wearables and drones. Prior to founding Verdantix, David was a Senior Vice President at Forrester Research and Head of Analysis and Forecasting for BT. He holds a PhD from Cambridge University in Game Theory and Decision Analysis and worked as a Research Associate at the Harvard Business School.

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