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The Art of Business Management |
The Science of Information Technology |
| THE CAR ANALOGY- Return on Investment(ROI) | |
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A young, single person purchases a car, which is kept for 8 years. Four years after purchase the individual marries and, a year later, has a child. Six years later, the individual moves 400 miles away to a new job. |
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| Tactical Solution Calculations | Strategic Solution Calculations |
| — to meet immediate needs | — to meet long-term needs |
Extended Costs
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Extended Costs
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Extended Benefits
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Extended Benefits
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By comparing total benefit of ownership (TBO) versus total costs of ownership (TCO) over
the lifetime of the vehicle, and factoring possible change in driving habits, distances,
mileage, indicate that the sedan is the better choice.
However, if a buyer can’t see or sense a difference, they will rely on the costs in the left-hand table. It’s all he has. This does not mean the imported sports car is always a wrong choice. But given the long-term needs of the buyer, it is. As a first-car buyer, you’re not obligated to make the most sound decision. As a purchaser of business equipment and IT solutions, you are. |
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| Copyright © 2002 Mantos Consulting, Inc., revised 16 Oct 2002 (webmaster) |