By: Eran Ron
When examining the advisability of spending money in computerizing your business (including additions or upgrading), we should consider the immediate and future benefits in light of the money expense. In order to quantify the economic utility and the business or organization's expense, we should take into account the following parameters:
Parameters dealing with economic usefulness:
| a. |
The saving in work time and efficiency increase. You should check in which instances automation saves manual work time.
Examples:
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| b. |
Profit increase through the acquisition of a competitive edge for the company. If we compare two trade companies similar in all parameters (price, product quality and so forth), except that company A affords its clients the opportunity to monitor the status of their orders through the Internet, it's plausible we would find that company A's sales volume grows steadily compared to company B's sales. When analyzing this situation we must take into account the high increment in the use of the Internet in business. Customers using the Internet will therefore prefer company A, which gives them access to important information through the net.
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| c. |
Increase in business activity due to important information reaching managers and workers. The organization's managers will make better decisions with the help of centralized reports showing trends of customer behavior in relation to the kinds of products and services, the distribution of sales according to different segments (geographical area, time, season, preferred supplier or manufacturer, and so on) as well as reports integrating information about purchases from the company's suppliers.
Workers in a lower level can also benefit from detailed reports. For example: a salesman can ask for a report on the purchases of a particular client for the last two years, and so be able to offer him additional products and services. |
The money expenditure:
| a. |
Cost of computerizing - in this segment you should consider all the components of the cost, and not only the initial investment in the application or software bought. In most cases, these components include:
1. The cost of the software or hardware bought. 2. The cost of installation or assimilation (if not included in (1)). 3. The cost expected due to the need to update equipment or other applications. For example, buying a new version of a program might cause another expense because of the need to update the operating system and the hardware to fit the new software. 4. Support and training after the initial assimilation. 5. Cost of service or maintenance after the guarantee expiration. |
| b. |
Costs related to reorganization in the business after the modification in the work procedures. For example: the need to transfer workers and changes made in different departments after implementing an application requiring a new work system.
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To summarize, some general recommendations:
| a. |
As seen, it is possible to make a kind of balance that includes economic advantages versus required expense in order to decide upon any purchase related to the computerization of your business and its worth.
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| b. |
While deciding on any purchases related to the computerization of your business or organization, you should examine the effect of the new software or hardware upon the existing system components (hardware and software).
Before ordering any computer program, you should give the supplier the list of programs used in the business, or the versions of these programs and the operating system. Sometimes the need will arise to upgrade the operating system or to banish the use of a previous application, which might clash with the ordered software. In hardware, if there is a problem it will often be the compatibility or incompatibility of devices as screen card and usually there is no impediment to upgrade to newer generation hardware. |
| c. |
Beyond the above considerations, you should take into account the changes you plan to make in the future at your business. For example: if you are planning to expand your business, you should ascertain while purchasing an operating system and relevant software that they support the right number of users for your expansion plan, with some "spare room"' and not only the current number of users.
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This condensed article does not substitute professional counseling. Ó 2000 All rights reserved to A.P.P.T. Global Information. The authorization to distribute this article is given providing it is distributed in full, including mention of the author's identification. Web Site: g1948.com |
