Presentation Abstract

An Economic Model for Estimating Model-Based Systems Engineering Internal Rate of Return Benefits

  • Speaker: Lonnie VanZandt - Enterprise Architect, Sodius
  • When: Day 4 : Wednesday May 25th
  • Over the last two decades, innovative and forward-looking systems engineers have investigated new tactics for their engineering of complex, collaborative enterprises and have either been pioneers in introducing new forms of specification notations, visualizations, and analyses or have been early adopters of such new tactics within their organizations. Today, proponents of model-based systems engineering capabilities struggle to express to their organizations not only the improvements in personal productivity of switching from traditional practices to MBSE practices but, more importantly, the economic benefit of having entire business units, companies, or joint ventures switch from traditional engineering to MBSE tools and methods. MBSE proponents have found the making of economic arguments difficult because there has not been an effective way to numerically represent the value of an effective systems engineering practice. This paper presents a case study and an economic model that enables an organization to perform common business case financial decision making using Internal Rates of Returns versus the Cost of Capital for systems engineering practices, methods, and tools. The model affords MBSE service providers and MBSE tool vendors new ways to construct value-based revenue models that monetize their offerings. The model also provides MBSE proponents a defensible means of economically justifying changes in business practices to adopt MBSE across an enterprise.