SAVINGS ACCOUNT: A page from Tec Labs' cost analysis
| Task |
Time saved: Year (hours) |
$ saved: year |
| Quick, easy printing from any station to any printer |
105 |
1,050 |
| Converting files |
52 |
520 |
| Faster server/computers = faster printing, saving, file finding, etc. |
52 |
520 |
| Direct faxing capabilities |
150 |
1,500 |
| All documents are filed neatly on the network instead of indiv. diskettes, and lost directories |
75 |
750 |
| E-mail letters, documents, databases, photos, etc. prevents "phone tag" |
100 |
1,000 |
| Internet access reduces research time and ordering time |
52 |
520 |
| Remote networking--Larry can type letters, salesperson spreadsheets & other docs |
200 |
2,000 |
| Less training time: all stations would be the same |
75 |
750 |
| Everyone could log in to network--Kathlene wouldn't have to manage connections |
90 |
900 |
| Windows 95 allows multitasking |
52 |
520 |
| Maximizer for Windows = faster, more organized graphical user interface |
52 |
520 |
HAPPY RETURNS: A portion of Rosemount's ROI analysis (actual figures removed)
ROI Analysis
In total, we are estimating benefits of $XX/year at $XX/year sales. This estimate will be further refined once a specific vendor is chosen. Looking more specifically at the quantifiable benefits, the following are categories for improvement.
Resource improvements: Labor savings will come in all areas of the business. We anticipate saving six heads a year at an average fringed labor rate of $XX/year. The new system will also allow the company to continue to leverage head-count additions in future years, estimated to be XX% of sales.
Quality improvements: Quality issues are projected to cost $XX/year at $XX/year in sales. A conservative estimate that the new system and reengineered processes will save only 50% of these quality costs per year would result in savings of $XX/year at $XX sales.
Asset management: We anticipate a conservative reduction of 10% of our total of $XX inventory, or $XX/year. Improvements made in the front end of the order-entry process will yield corresponding improvement in days sales outstanding (DSO). We anticipate savings of one day, or $XX/year, in DSO.
Sales impact: The new system will allow us to more accurately process orders, handle customized product, and provide more timely information on order status. We will improve service and quality and reduce lead times and time to market for new products and options. We utilized a conservative sales impact of 1%, or $XX per year.
Measures For Measures
A technology plan may be a big strategic document, but what's at its heart? Metrics, metrics, and more metrics, says Anita Cassidy, author of A Practical Guide to Information Systems Strategic Planning. Inc. Technology asked her to expand on that idea:
"As the saying goes, 'You can't improve what you can't measure.' Gathering metrics challenges you to improve and progress, and gives you external and internal standards against which to assess your company.
"Be careful what metrics you use: one set does not fit all companies. Your metrics must reflect--and align with--your business and technology strategies. They should reflect how your company goes to market, delivers value, or obtains a competitive edge: whether through innovation, speed, quality, service, or cost. Your technology metrics should be consistent with your company's mission, values, objectives, and strategic direction. What does the company expect from technology? To generate revenues (improve time to market, improve customer service, open new distribution channels), transform the business (streamline operations, provide business information), or reduce costs?
"You should have metrics that measure both the efficiency and the effectiveness of technology. Effectiveness metrics, such as user-satisfaction surveys, identify the value technology is bringing to the business.
"Metrics are the foundation of a continuous improvement process. Tracking them is an ongoing journey, and the practice must reflect a change in management philosophy. Metrics are only as good as the leadership behind them."
