Network World
Sunday, October 12, 2008
DNSstuff.com
Get information about your IP
IP Information
50+ On-demand DNS and network tools

Community

Navigation

Think ROI - Not Cost

I spend a lot of time helping clients with matters relating to budgets, not to mention the countless hours I spend on my own. Budgets are much more than just a serious pain; they are essential to success and one would indeed be crazy to run a business without diligent budget preparation and monitoring. But budgets are also just a tool and not the be-all and end-all of business operations. All too often, I hear about a wireless project (although the argument that follows below could apply to any purchase of goods or services) that is derailed because "there is no budget" or "it's just too much money"

I've found that it's almost always possible to get the money if one can satisfy three key constraints, which happen to surround essentially any purchase, as follows:

  • Cash flow - Do you have the cash? Can you get the cash? Can you manage the resulting cash flow? Money, despite the credit crunch, is still available, but you need to factor in the total cost of the money involved, including barrowing expense. Revolving lines of credit are wonderful things. Regardless, getting the money is usually easy.
  • Opportunity cost - Having the cash is one thing; putting to good and indeed the best use is quite another. Opportunity cost is an economic concept that compares the costs associated with a given choice with those of the next best option. As the next best option when it comes to wireless purchases is usually doing nothing at all, the analysis here is usually easy. Still, going through this part of the process forces one to establish key justifications for making the purchase in the first place.
  • ROI - And here we have the bottom line - return on investment. You need to be able to show that the investment produces hard-dollar savings or soft-dollar benefits, like productivity improvements. But even the most hardened CFO will yield to paying, for example, $1,000 per salesperson for a $10,000 return in terms of productivity can be demonstrated under a reasonable set of assumptions.

OK, this isn't going to work in absolutely every case. But a focus on the bottom line, rather than simply the raw dollars involved, will get you much farther down the road to the benefits of wireless.

Reply

The content of this field is kept private and will not be shown publicly.
  • Allowed HTML tags: <a> <em> <strong> <i> <b> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd> <blockquote> <br /> <br> <p>
  • Lines and paragraphs break automatically.
  • You can use BBCode tags in the text.
  • Web page addresses and e-mail addresses turn into links automatically.

More information about formatting options

CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

Latest software headlines from Network World:

Yahoo investor: Sell company to Microsoft for $22 a share

Kernel developers, Wall Street to come together

Favorite Firefox extensions

Zoho launches e-mail app with offline, mobile access

Red Hat looks to mainstream markets for growth

  1   2   3   4   5   6   7   8   9  10  next 

Advertisement: