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There are at least three ways to improve business value. Among them are:

1. Higher Quality Output
   Improving the quality of the output of an organization or department will make the output more valuable or increase the demand for that output. Calculating business value anticipates a getting higher price for or an increased demand for goods or services.
2. Cost Reduction
   Cost reduction involves cutting wasteful activities that do not contribute to delivering value to the customer. Reducing the costs of producing goods or delivering services will allow the organization to increase productivity. Productivity increases open the door to higher profit margins by the allowing the customer to produce the same amount with fewer resources or by producing more with the same number of resources. Productivity gains can also increase market share by allowing the company to offer products at a lower price.
3. Risk Reduction
   A more complex and less understood form of increasing business value involves reducing the amount of risk the organization must bear to stay in business. Activities in this group include providing insurance against catastrophic events, fulfilling regulatory requirements, or shifting money around on a company’s balance sheet. This is the most complicated of the three because it does not directly involve supply or demand. These kinds of projects don’t necessarily add quality to output or reduce the cost of production. In order to justify them you must calculate the expectancy and cost of a catastrophic event that could put the company out of business. They are especially hard to justify because until the circumstances of catastrophic event occur, their value is not fully realized.

There is a degree of interrelatedness between all of these value propositions. For instance, if a company were to improve the quality of their product it would increase the demand for that product. It would also reduce waste and costs due to rework or warranty replacements. It may also reduce liability related to massive product recalls or fighting a class action suit against defective products. Each one of these angles should be considered when quantifying the benefits of a potential project.