ROI TOOL CERTIFICATION PROGRAM

The appearance of the Nucleus Research certification logo indicates that an organization has submitted its ROI, TCO, or other value-based calculator for independent, third-party review and validation of the fields and figures represented and calculated. Users of these tools can be assured that they are built on accurate calculations and that they provide a fair assessment of value.

THE PROGRAM

The Nucleus Research certification program is an independent assessment of an ROI, TCO, or value calculator created by a vendor. Vendors submit their tool for n-depth analysis, and certification is an assurance for the user that the tool properly, and fairly assesses value.

During the validation process Nucleus Research analysts review every calculation in the tool, tracing the results presented back through the underlying formulas to the supporting data. Calculations are checked for accuracy and adherence to generally accepted accounting principles. When used, benchmark and default data is analyzed for source, currency and reasonableness.

CERTIFICATION STANDARDS

To be certified a vendor tool must meet the following standards:

1) All formulae are valid and correct with calculations for ROI, IRR, TCO, NPV, and payback used properly.

Why: Metrics such as IRR, 3-year ROI, cost-benefit, and risk-adjusted ROI are not substitutes for ROI. 3-year ROI, cost-benefit, and risk-adjusted ROI are not correct financial calculations based on generally accepted accounting principles. In many cases, when these metrics are used in a vendor calculator, they overstate the benefits the customer will actually receive.

2) The source and basis for all calculations are fully transparent.

Why: The calculations used to assess value are standard financial calculations and do not represent a trade secret. Honest vendors are fully transparent about how the data is generated as well as the actual calculations used to present results.

3) Assumptions and benchmark data come from a credible source, are reasonable, clearly noted, and fully modifiable by the user.

Why: Building on overly aggressive benchmark data can generate an unrealistically optimistic view of a project’s value. When used, benchmark data must be noted and fully modifiable by the user.

4) The results are accurate based on the underlying data and presented in a way that does not overstate the value.

Why: The results should be presented in a straightforward way so that users can form an accurate estimate of the value of the project from a financial point of view.

For information about the certification program or to confirm that the tool you are using is certified please contact info@nucleusresearch.com