ep_ex3


 
Exhibit 3  Examples of an IT ROI
 Calculation
1 Calculate the monetary value of IT initiative benefits
Outputs Benefits Monetary value
Increased productivity Increased profits from new customers (number of new customers (50) X average customer profitability ($1,200)) $60,000
Time savings (2 hours per week 3 50 work weeks in a year X average labor cost per hour ($40) X 100 employees) $400,000
Increased capacity utilization Cost savings $50,000
Improved quality Increased on-time deliveries reducing cost of grievances $10,000
Direct IT cost savings Reduced hours of system downtime (10 hours saved X average labor cost per hour ($40) X 100 employees) $40,000
Channel optimization, customer loyalty value creation Increased profits from existing customers (increased average existing customer profitability by $1,000X 310 customers) $310,000
  Total benefits $870,000
     
2 Calculate the total cost of IT initiative
Costs   Monetary value
Front-end direct costs of IT initiative Hardware, software, installation and configuration costs and overhead $350,000
Disruption costs related to human factors Hours lost because of IT training (5 hours per factors employee X average labor cost per hour ($40) X 100 employees) $20,000
Disruption costs related to organizational factors Technical disruptions, resulting in lost orders and lost customers (20 customers X average existing customer profitability ($1,200)) $24,000
Costs of risk mitigation Development and implementation of IT performance framework $6,000
  Total capital costs $400,000
Operating costs of IT initiative Direct IT operation costs, maintenance costs ($2,500 per month X 12 months) $30,000
  Total operating costs $30,000
     
3 Calculate the IT initiative of ROI

SPONSORED REPORT

CPEOs provide peace of mind around payroll services

The creation of these new IRS-certified service providers for small businesses clarifies some issues around traditional professional employer organizations.

QUIZ

8 sentences to help you master subject-verb agreement

When professionals prepare written material for readers inside their organization or outside, they should make sure that no errors distract from the message they need to convey. Take this short quiz for practice in subject-verb agreement.