Develop an Appropriate Metric Should it increase or decrease Metrics Money

Develop an appropriate metric should it increase or

This preview shows page 21 - 35 out of 45 pages.

Develop an Appropriate Metric Should it increase or decrease? Metrics: Money ($, £, ¥ ) Percentage (%) Numeric Values 21
Image of page 21
Process for Developing the MOV 4. Set a time frame for achieving the MOV When will the MOV be achieved? 22
Image of page 22
Process for Developing the MOV 5. Verify and get agreement from the project stakeholders Project manager and team can only guide the process 23
Image of page 23
Process for Developing the MOV 6. Summarize the MOV in a clear, concise statement or table MOV: The B2C project will provide a 20% return on investment and 500 new customers within the first year of its operation This project will be successful if _________________. 24
Image of page 24
Year MOV 1 20% return on investment 500 new customers 2 25% return on investment 1,000 new customers 3 30% return on investment 1,500 new customers Example MOV Using Table Format 25
Image of page 25
Project Goal ? Install new hardware and software to improve our customer service to world class levels Respond to 95% of our customers’ inquiries within 90 seconds with less than 5% callbacks about the same problem. versus versus 26
Image of page 26
A Really Good Goal I believe that this nation should commit itself to achieving the goal before this decade is out, of landing a man on the moon and returning him safely to Earth. John F. Kennedy John F. Kennedy May 25, 1961 May 25, 1961 27
Image of page 27
Developing the Business Case Step 3: Identify Alternatives Base Case Alternative Possible Alternative Strategies Change existing process without investing in IT Adopt/Adapt systems from other organizational areas Reengineer Existing System Purchase off-the-shelf Applications package Custom Build New Solution 28
Image of page 28
Developing the Business Case Step 4: Define Feasibility and Asses Risk Economic feasibility Technical feasibility Organizational feasibility Other feasibilities Risk focus on Identification Assessment Response 29
Image of page 29
Developing the Business Case Step 5: Define Total Cost of Ownership Direct or Up-front costs Indirect Costs 30
Image of page 30
Developing the Business Case Step 6: Define Total Benefits of Ownership Improving accuracy and efficiency Improving decision-making Improving customer service 31
Image of page 31
Developing the Business Case Step 7: Analyze Alternatives using financial models and scoring models Payback Payback Period = Initial Investment Net Cash Flow = $100,000 $20,000 = 5 years 32
Image of page 32
Developing the Business Case Break Even Materials (putter head, shaft, grip, etc.) $12.00 Labor (0.5 hours at $9.00/hr) $ 4.50 Overhead (rent, insurance, utilities, taxes, etc.) $ 8.50 Total $25.00 If you sell a golf putter for $30.00 and it costs $25.00 to make, you have a profit margin of $5.00: Breakeven Point = Initial Investment / Net Profit Margin = $100,000 / $5.00 = 20,000 units 33
Image of page 33
34 Return on investment (ROI) measures the gain or loss generated on an investment relative to the amount of money invested.
Image of page 34
Image of page 35

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture