GSA IP ROI Calculator

Click above image to enlarge.

GSA is pleased to introduce the IP ROI Calculator, developed by Bill Martin, GSA IP Interest Group Chair. The ROI Calculator is based on a membership poll, which determined the top IP related issues:

• Locating IP
• IP integration
• IP quality
• IP pricing

*All five main sections are not necessary to gain a desired output. If a user can make a decision before entering data in the Product ROI or Sensitivity Analysis sections, these sections are not required. If the user would like to explore how different variables impact their end product's Profit Before Taxes results, the Product ROI and Sensitivity Analysis sections will help identify where resources can have the largest impact. Please note that NPV or IRR are not used in the Product ROI calculator. Depending on usage/feedback, this might be included in a later version.

Functioning as an Excel workbook, the five sections include:

• Introduction - Includes flowchart and brief descriptions for each section.
   
• IP Qualitative - Contains a short list of questions about the type of IP, team's experience, how you validate and test compliance of your internally developed IP, availability of external IP, etc. This examines the internal development risks. Specific costs are not included in this section. Costs are looked at in IP Make or Buy.
  
  
• IP Make vs. Buy - Based on quantitative/numbers information by reviewing the costs to internally develop an IP block vs. purchasing and performing QA inspection testing. The purchasing cost includes licensing, maintenance and royalties. For internal development, the tool estimates the number of design spins required based upon team experience and how the IP is validated. Personnel assigned to support IP are also considered. Total internal IP development costs as well as purchasing IP (licensing) costs are calculated and shown. Recommendations will be provided to the user with a final Make or Buy recommendation.
  
  
• Product ROI - Requires more data and will involve other people involved in Marketing, Finance, Manufacturing and Operations. Rather than looking solely at the IP Make or Buy decision, this provides the user the opportunity to see impact at the end product.
  
  
• Sensitivity Analysis - Allows the user to determine the impact of 4 different variables. Tabs within this section include:
  • Development Expenses
  • Market Introduction
  • Market Share
  • Manufacturing Costs
  • Sensitivity Comparisons
    
    

Download the IP ROI Calculator (EXL, 260 KB)

The IP ROI Calculator was created to provide a framework that allows users to add their own data and criteria for their Make vs. Buy decision. This workbook relies on the following published works:

• Developing Products in Half the Time: New Rules, New Tools by Smith & Reinertsen. John Wiley & Sons 1998

• The Mythical Man-Month by Frederick P. Brooks, Jr. Addison-Wesley 1995

• IBS Study by Handel Jones ~2005
  
  

Contact Information:

Kristen Pillans, GSA Research

E-mail: kpillans@gsaglobal.org