# Patent

## Title
Business opportunity analytics with dependence

## Abstract

A system and method are provided to analyze the value of an opportunity, including the dependence and interrelationship between opportunities. A computer-implemented system having a number of software modules is provided that facilitates the calculation of portfolio effects and enables, among other things, the modeling of opportunities, including generic nomenclature and procedures for describing and encoding a wide range of relationships between opportunities.

## Background
CROSS-REFERENCE TO RELATED APPLICATIONS
This application is related to co-pending U.S. patent application Ser. No. 09/706,097, filed Nov. 3, 2000, as well as co-pending applications U.S. patent application Ser. No. 10/224,393, entitled “Dynamic Construction of Business Analytics,” U.S. patent application Ser. No. 10/224,489, entitled “System and Method For Creating and Deploying Customized Web-Based Analytical Applications,” U.S. patent application Ser. No. 10/224,380, entitled “Business Portfolio Analytics,” and U.S. patent Ser. No. 10/224,368, entitled “Multi-Stakeholder Software Analytics,” all of which were filed concurrently with the present application. Each of the above-indicated applications is incorporated by reference herein.
FIELD OF THE INVENTION
The present invention relates to a system and method that enables the use of enterprise software to analyze the economics of an opportunity, including the dependence and relationships between opportunities.
BACKGROUND OF THE INVENTION
As used herein, the term “opportunity” includes, for example, any specific business deal, product, distribution channel, customer, or other decision around which an end-user wants to perform economic evaluations. The term “portfolio effect” includes, for example, the economic relationships between opportunities, where the result of at least one opportunity is dependent on or related to one or more other opportunities.
Typically, existing systems and methods of analyzing opportunities do not account for dependencies and relationships between two or more opportunities. For example, in existing systems, the profitability of a particular customer or particular product is analyzed “in isolation” based on a static model of inputs and outputs. Similarly, risk is generally limited to a sensitivity analysis that tests the impact of various assumptions on a result (e.g. a net present value calculation). Traditionally, each of the “Assumption” variables affects only the item (e.g. product, customer) being analyzed. These, and other, drawbacks limit the effectiveness of existing opportunity analysis methods.
FIG. 1 is an example of a tornado chart, generated using a typical opportunity analysis method that does not account for portfolio effects. As shown in FIG. 1, the probability of each assumption and the effect it may have on the Net Present Value (NPV) is independent of each other assumption and of other opportunities.
Another drawback of existing systems is that they do not provide generic nomenclature and procedures for describing and encoding relationships between opportunities, suitable for inclusion in and use by enterprise software. Thus, with existing systems it is not practical to evaluate on an economic basis the interrelationships between opportunities. These and other drawbacks exist.
SUMMARY OF THE INVENTION
The present invention overcomes these and other drawbacks of existing systems by enabling a system and method for using enterprise software to analyze the economics of an opportunity, including the dependence and relationships between opportunities.
According to one embodiment, the invention may comprise any suitable computer-implemented system, comprising a number of software modules that facilitate calculation of portfolio effects, where the results of one or more opportunities is dependent on or related to other opportunities. The invention may comprise modules that enable, among other things, the modeling of opportunities, including generic nomenclature and procedures for describing and encoding a wide range of relationships between opportunities, suitable for inclusion in and use by enterprise software the creation of database tables that enables the encoding of relationships, the evaluation of opportunities and the determination of portfolio effects. The database table may comprise a number of fields that facilitate the evaluation of relationships between opportunities.
Other aspects of the present invention will become apparent from the following detailed description considered in connection with the accompanying drawings that disclose embodiments of the present invention. It should be understood, however, that the drawings are designed for purposes of illustration only and not as a definition of the limits of the invention.



BRIEF DESCRIPTION OF THE DRAWINGS
FIG. 1 is an example of a tornado chart, generated using a typical opportunity analysis method that does not account for portfolio effects.
FIG. 2 is a schematic representation of a constraint-type portfolio effect according to one embodiment of the invention.
FIG. 3 is a schematic representation of a dependence-type portfolio effect according to one embodiment of the invention.
FIG. 4 is an example of database table coding relationships according to one embodiment of the invention.
FIG. 5 is a tornado chart illustrating opportunity analysis with portfolio effects according to one embodiment of the invention.
FIG. 6 is an example of a database table illustrating a most favored nation constraint according to one embodiment of the invention.
FIG. 7 is an example of a database table illustrating a cost dependence portfolio effect according to one embodiment of the invention.
FIG. 8 is a schematic flow diagram illustrating a conventional method of evaluating an opportunity.
FIG. 9 is a schematic flow diagram illustrating one method for evaluating portfolio effects in the context of an opportunity evaluation.



DETAILED DESCRIPTION OF THE INVENTION
FIG. 8 illustrates a conventional method for evaluation of an opportunity. As shown in step 1000, a general economic model for an opportunity is created. At step 1002, specific assumptions for a specific opportunity may be developed. These assumptions are entered into the economic model (step 1004), out of which are calculated certain results (1006). In this process, each specific opportunity is evaluated entirely in isolation, on a “stand-alone” basis, and the economic evaluation process does not capture any interrelationships between opportunities.
FIG. 9 is a schematic flow diagram illustrating a method for evaluating portfolio effects according to one embodiment of the invention. As shown in FIG. 9, the process may include, as indicated at step 1000, modeling an opportunity. Modeling of an opportunity may be done in any known manner, except that according to the invention the modeling takes into account the dependence between opportunities, as detailed below. As indicated at 1002, specific assumptions for a specific opportunity may be developed, and entered into the economic model (step 1004). At step 1006, any assumptions that trigger the creation of a new “dependence” are recorded in a database of dependencies. The economic model of the opportunity includes any calculations required to identify the new dependency. Preliminary results, that exclude portfolio effects, are then calculated at step 1008. At step 1010, the dependence database is queried—searched for any dependencies that impact the particular opportunity being evaluated. If any relevant dependencies are found, the information in the dependence database is used to modify the economic results of the opportunity (step 1012), allowing for a final set of economic results to be output that includes portfolio effects (step 1014).
According to one aspect of the invention, portfolio effects may be classified into at least two categories. For example, portfolio effects may be categorized as constraint-type portfolio effects or as dependence-type portfolio effects. If an opportunity is a constraint, an element or action of that opportunity affects (e.g. imposes, or creates, an impact on) the value of a set of one or more other opportunities. This type of effect is show schematically in FIG. 2. As shown in FIG. 2, an action or element of Opportunity A affects the value of Opportunities B-E. If an opportunity has a dependence, then that particular opportunity depends in some way on a set of other opportunities. The causality is reversed from the constraint-type effect. A dependence-type relationship is illustrated in FIG. 3, wherein the Opportunity A depends upon an element of one or more of Opportunities B-E.
An example of a constraint is a “Most Favored Nation” term in a business contract (or other) relationship. A Most Favored Nation term may be, for example, a contract term in an agreement with Customer A that imposes a constraint on contracts with all other Customers, namely that no customer will be offered a more favorable term than Customer A. Customer A has in effect imposed a constraint that affects the value of other Customer agreements.
One example of a dependency is where a project (e.g., Opportunity A) depends upon the successful completion of other projects (e.g., Opportunities B, C, D and E). Other dependency relationships are also possible.
According to one embodiment of the invention, portfolio effects may be generalized and coded through use of one or more database tables. For example, a database table may be used to define certain elements of each portfolio effect. FIG. 4 is an illustration of a database table according to one embodiment of the invention. As shown in FIG. 4, a database table may comprise a number of fields that pertain to elements of the dependence or relationship between two or more opportunities. For example, a database table may comprise the following fields: name, description, origin, type, variable, comparison, value, filter and value model. Of course, other fields are possible and not all these fields need to be used. The Description field may represent a description of a dependence. An Origin field may identify the origin (source) of a business opportunities—this is a pointer to a particular business opportunity. The Type field may identity whether the dependence is a constraint or dependence type. This can signify whether the element constrains other opportunities, or whether it is dependent on other opportunities. The Variable field refers to a particular assumption or metric that is part of the business model of an opportunity. For example, some variables include “discount”, “quantity”, “profit”, etc. The Comparison field may include a comparative operator, such as “less than”, or “more than”, etc. The Value field may include a specific numeric value to be used in a comparison, in combination with the value of the Variable field and the operator of the Comparison field. The Filter field may identify a related set of opportunities. For example, “All Opportunities”, or “All Opportunities in Southeast Region”. The Value Model field is applicable for “Dependence” type relationships and specifies how the value of the dependent opportunity is affected by the other related opportunities.
When an opportunity is created and evaluated (FIG. 9: Step 1006), any new dependencies that are being created are first identified. For example, an opportunity model might have an input assumption labeled “Pre-Requisite Opportunities?”, and if the user selects “Yes” they are then asked to select some other opportunity that is the pre-requisite. In this situation, a new dependence is being defined, and that dependence is recorded as a record in the dependence database. If the user selected “No”, then no dependence is being created and evaluation can proceed as normal.
Later during the evaluation process (FIG. 9: Step 1010), a search of the dependence database is conducted. The search checks for all records where the current opportunity is the “Origin”—in other words, all dependencies that are relevant to the current evaluation. Based on the information returned from the dependence database, the evaluation results for the opportunity are modified to include the portfolio effects.
By including portfolio effects using the described protocol, the economic analysis can include and display the impact of related opportunities, as illustrated in FIG. 5. For example, using a tornado chart analysis, one or more of the elements may comprise dependences or relationships.
Several features of the invention may be illustrated with reference to the following examples. In the first example, a bank is considering signing an agreement with a corporate customer (TravelCo.) in the travel industry for a line of credit. One term of the agreement is a so-called “Most Favored Nation” clause, that specifies that the bank cannot offer this same line of credit product to any other customer, in the same industry, at a lower rate than this particular customer is receiving (e.g. 5%). If the bank does, then that lower rate will apply to TravelCo also. The interest rate on the line of credit is referred to as “line_of_credit_rate” in the analytic models.
At FIG. 9, Step 1006, the fact that the agreement contains a so-called Most Favored Nation clause triggers the recording of a new dependence in the dependence database. The details of this database record are shown in FIG. 6. With reference to FIG. 6, the name and description are recorded to represent the type of dependency (these are specified as part of Step 1000, modeling the opportunity). The Origin field simply points to the current opportunity being evaluated. The Type, Variable, Comparison, Value, Filter, and Value Model are also recorded on the basis of the specific terms of the current opportunity being evaluated. In this example, the agreement specifies that no other customer in the travel industry shall have a line of credit interest rate lower than 5%.
Later during the evaluation process, (FIG. 9, Step 1010), the dependence database is queried for any records where the “Origin” field is the current opportunity. As a result, the record (shown in FIG. 6) is identified. Based on this information, at FIG. 9, Step 1010, the following sequence occurs: First, all other agreement with corporate customers in the travel industry are identified (based on the “Filter” field), and of these, any with an interest rate on a line of credit of less than 5% are identified (based on “Variable”, “Comparison”, and “Value” fields). Of agreements that do have an interest rate less than the 5% threshold, the system identifies the minimum of all of the interest rates and applies that minimum to TravelCo's evaluation (based on “Value Model” field).
In the second example, a company is evaluating a potential sale of a new class of jet engines to an airline (TransNational). Because the class of engines is quite new, the cost of the engines is highly dependent on the volume of other orders received from other airlines. If more other orders exist, the costs for the engines will be substantially lower. Manufacturing estimates that costs will be reduced 20% for each 100 engines ordered.
In this example, the database record shown in FIG. 7 is recorded when the opportunity is being evaluated (FIG. 9, Step 1006). Later (FIG. 9, Step 1010), this record is identified as being relevant (based on the “Origin” field). At FIG. 9, Step 1012, all other sales of engine XYZ are identified (based on the “Filter” fields). Of these sales, any with a quantity greater than 1 are identified (in this case, that will be all of the sales of engine XYZ). The field “Variable” in this case identifies the variable of interest for the other sales of engine XYZ. The field “Value Model” then specifies that an addition term should be MULTIPLIED to the engine_cost variable, and that the multiplier should be calculated as 0.8^Q/100 where Q is total quantity of the other sales.
The present invention is not to be limited in scope by the specific embodiments described herein. Indeed, various modifications of the present invention, in addition to those described herein, will be apparent to those of ordinary skill in the art from the foregoing description and accompanying drawings. Thus, such modifications are intended to fall within the scope of the following appended claims. Further, although the present invention has been described herein in the context of a particular implementation in a particular environment for a particular purpose, those of ordinary skill in the art will recognize that its usefulness is not limited thereto and that the present invention can be beneficially implemented in any number of environments for any number of purposes. Accordingly, the claims set forth below should be construed in view of the full breath and spirit of the present invention as disclosed herein.

## Claims

1. A computer implemented system for analyzing metrics associated with an opportunity, including any portfolio effects due to the results of one or more of opportunities being dependent on or related to other opportunities, the system comprising:
one or more processors executing a plurality of modules, the modules comprising:
a modeling module that provides models of two or more opportunities, wherein a model of a given opportunity enables a determination of one or more metrics representing the value of the given opportunity as a function of one or more variables that impact the value of the opportunity; and
a dependency module that obtains information related to dependencies between two or more of the opportunities, wherein a dependency is a restriction placed on a variable of a model of a first one of the two or more opportunities that depends on either (i) a variable of a model of a second one of the two or more opportunities, or (ii) a metric representing the value of the second one of the two or more opportunities determined from the model of the second one of the two or more opportunities; and

an electronically readable storage medium providing storage for a database that stores information obtained by the dependency module related to the dependencies between the opportunities, wherein the information stored in the database for a given dependency includes an identification of a variable of a model of one of the two or more opportunities that is restricted by the given dependency;
wherein the one or more processors further execute a calculation engine that implements a model provided by the modeling module to determine metrics representing the value of a given opportunity, wherein the metrics reflect one or more dependencies between the given opportunity and other ones of the opportunities.

2. The system of claim 1, wherein at least one model of one or more opportunities comprises a variable having an uncertainty and a dependency, and wherein the dependency of the variable dictates that the uncertainty of the variable is either a function of a variable of another model of another opportunity or a function of a metric representing the value of the other opportunity.

3. The system of claim 2, wherein any assumptions that trigger the creation of a new dependency are recorded in the database.

4. The system of claim 1, wherein the calculation engine first implements the model provided by the modeling module to calculate preliminary metrics that do not reflect dependencies between the given opportunity and other ones of the opportunities, queries the database for any dependencies between the given opportunity and other ones of the opportunities, and, if any relevant dependencies are found, implements information related to the found relevant dependencies that is stored in the database to modify the preliminary metrics to provide a final output that includes the metrics representing the value of the given opportunity and reflects the found relevant dependencies.

5. The system of claim 1, wherein the dependencies for which the dependency module obtains information include constraint-type dependencies, wherein a constraint-type dependency exists where the variable of the model of the first one of the two or more opportunities is constrained to a range of possible values that is defined in part based on either a variable of the model of the second one of the two or more opportunities, or a metric representing the value of the second one of the two or more opportunities determined from the model of the second one of the two or more opportunities.

6. The system of claim 1, wherein the database comprises a number of fields that pertain to elements of dependencies between the opportunities, including one or more of a name, a description origin, a type, a comparison, a filter, or a value model field.

7. The system of claim 1, wherein the dependencies for which the dependency module obtains information include dependence-type dependencies, wherein a dependence-type dependency exists where the variable of the model of the first one of the two or more opportunities is equal to either a variable of the model of the second one of the two or more opportunities, or a metric representing the value of the second one of the two or more opportunities determined from the model of the second one of the two or more opportunities.

8. A computer implemented method for analyzing metrics associated with an opportunity, including any portfolio effects due to the results of one or more of opportunities being dependent on or related to other opportunities, the method comprising:
modeling by a computer opportunities to provide models of the opportunities, wherein a model of a given opportunity enables a determination of one or more metrics representing the value of the given opportunity as a function of one or more variables that impact the value of the opportunity;
obtaining information related to dependencies between two or more of the opportunities, wherein a dependency is a restriction placed on a variable of a model of a first one of the two or more opportunities that depends on either (i) a variable of a model of a second one of the two or more opportunities, or (ii) a metric representing the value of the second one of the two or more opportunities;
storing the obtained information related to dependencies between the opportunities to a database, wherein the information stored in the database for a given dependency includes an identification of a variable of a model one of the two or more opportunities that is restricted by the given dependency;
implementing a model of a given opportunity to calculate metrics representing the value of the given opportunity, wherein the metrics reflect one or more dependencies between the given opportunity and other ones of the opportunities; and
storing the calculated metrics.

9. The method of claim 8, wherein at least one model of the opportunities some comprises a variable having an uncertainty and a dependency, and wherein the dependency of the variable dictates that the uncertainty of the variable is a function of either a variable of another model of another opportunity or a function of a metric representing the value of the other opportunity.

10. The method of claim 9, wherein any assumptions that trigger the creation of a new dependency are stored with the obtained information related to dependencies.

11. The method of claim 8, wherein implementing the model of the given opportunity to calculate the metrics comprises:
implementing the model to calculate preliminary metrics that do not reflect dependencies between the given opportunity and other ones of the opportunities;
querying the database for any dependencies between the given opportunity and other ones of the opportunities; and
if any relevant dependencies are found, implementing stored information in the database related to the found relevant dependencies to modify the preliminary metrics to provide a final output that includes the metrics representing the value of the given opportunity that reflect the found dependencies.

12. The method of claim 8, wherein the dependencies for which the dependency module obtains information include constraint-type dependencies, wherein a constraint-type dependency exists where the variable of the model of the first one of the two or more opportunities is constrained to a range of possible values that is defined in part based on either a variable of the model of the second one of the two or more opportunities, or a metric representing the value of the second one of the two or more opportunities determined from the model of the second one of the two or more opportunities.

13. A processor readable medium for analyzing metrics associated with an opportunity, including any portfolio effects due to the results of one or more of opportunities being dependent on or related to other opportunities, the processor readable medium comprising:
a first processor readable program code for modeling opportunities to provide models of the opportunities, wherein a model of a given opportunity enables a determination of one or more metrics representing the value of the given opportunity as a function of one or more variables that impact the value of the given opportunity;
a second processor readable program code for obtaining information related to dependencies between two or more of the opportunities, wherein a dependency is a restriction placed on a variable of a model of a first one of the two or more opportunities that depends on either (i) a variable of a model of a second one of the two or more opportunities, or (ii) a metric representing the value of the second one of the two or more opportunities determined from the model of the second one of the two or more opportunities;
a third processor readable program code for storing the obtained information related to dependencies between the opportunities to a database, wherein the information stored in the database for a given dependency includes an identification of a variable of a model of one of the two or more opportunities that is restricted by the given dependency; and
a fourth processor readable program code for implementing a model of a given opportunity provided by the first processor readable program code to calculate metrics representing the value of the given opportunity, wherein the metrics reflect one or more dependencies between the given opportunity and other ones of the opportunities.

14. The processor readable medium of claim 13, wherein at least one model of an opportunity comprises a variable having an uncertainty and a dependency, and wherein the dependency of the variable dictates that the uncertainty of the variable is either a function of a variable of another model of another opportunity or a function of a metric representing the value of the other opportunity.

15. The processor readable medium of claim 14, wherein any assumptions that trigger the creation of a new dependency are stored with the obtained information related to.

16. The processor readable medium of claim 13, wherein fourth processor readable program code comprises:
code for implementing the model of the given opportunity to calculate preliminary metrics that do not reflect dependencies between the given opportunity and other ones of the opportunities;
code for querying the database for any dependencies between the given opportunity and other ones of the opportunities; and
code implementing stored information from the database related to found dependencies to modify the preliminary metrics to provide a final output that includes the metrics representing the value of the given opportunity that reflect the found dependencies, if any dependencies are found.

17. The processor readable medium of claim 13, wherein the dependencies between the given opportunity and the other ones of the opportunities for which information is obtained comprise constraint-type dependencies, wherein a constraint-type dependency exists where the variable of the model of the first one of the two or more opportunities is constrained to a range of possible values that is defined in part based on either a variable of the model of the second one of the two or more opportunities, or a metric representing the value of the second one of the two or more opportunities determined from the model of the second one of the two or more opportunities.