Financial Services Growth Calculation on New Busines
- May 28, 2004 at 6:39 am #35686
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We are having a difficult time determinining the best way to calc 6 Sigma benefits for developing new financial products or growing additional business. The way we do it today is to determine the “net/net” profit on each individual transaction; then we divide by the term of the contract; then make 12 months of that as our benefit. We have a company standard that states we can only capture 12 months of benefits on any project.
Ex: $10,000 with 5% net margin with 48 month tenor/term
(10,000 x .05) /48 = net profit p/m ; then x 12 for the annual savings
The result is a very small benefit; one that probably does not capture the true benefits. This discourages managers from taking on growth projects due to the small benefits reported to corporate. Any other best practices out there? I am a MBB and would like to confidentually discuss with other financial services MBB.0
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