STRATGEIC PLANNING
ASSESSMENT ACTIVITY: COST BENEFIT ANALYSIS
A Sales director is considering whether to implement a new computer based contact management and sales processing system. The Sales directors department has only a few computers, and his Sales team is computer illiterate.
The Sales director is aware that computerized sales forces are able to contact more customers and provide a higher quality of reliability and service. Furthermore the systems are more able to meet deadlines, commitments and work more efficiently.
The Sales Directors Cost and Benefits are as follows:
COSTS
New Technology:
- 10 Network ready PCs with supporting software @ $2450 per unit
- 1 mainframe server @ $3500
- 3 printers @ $1200 per device
- Installation and cabling $4600
- Sales Support Software $15000
New Technology Induction and Staff Training:
- Computer Induction and familiarization training for 8 PAX @ $400 per staff member
- Typing and Keyboard skills Training for 8 PAX @ $400 per staff member
- Sales Support Software System operation Training for 12 PAX @ $700 each
Other Overheads/Costs:
- Lost Sales due to Training disruptions $20000
- Productivity and man hours lost 40 PAX @ $200 a day
- Lost sales opportunities through inefficiency during first months operation estimate $20000
BENEFITS
- Tripling of Mail shot capacity estimate earnings $40000 per annum
- Ability to sustain telesales campaigns estimate $20000 per annum
- Improved efficiency and reliability of follow up estimate $50000 per annum
- Improved customer service and retention estimate $30000 per annum
- Improved accuracy of customer information estimate $10000 per annum
- Ability to manage further sales effort estimate $30000 per annum
YOUR TASK IS AS FOLLOWS
1. Complete a Cost Benefits Analysis using the above figures and estimates and review if the change to the new system is worth completing
2. Calculate an estimated Payback period for the change if it is to proceed and be implemented.