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Cost Justification

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 In analyzing an EDMS project for cost justification the first step is to identify the expenditures. The second step is to evaluate the benefits. While the tactical, hard Dollar savings can be computed, the strategic benefits are harder to quantify.

Expenditures -

bulletHardware & Software
bulletNetwork (upgrade) & integration
bulletCustomization & Application Development
bulletPersonnel Training
bulletBack File Conversion
bulletConsultation fees
bulletDisaster Recovery Planning
bulletFurniture, facilities etc

Savings -

Tactical - Hard $savings

bulletInternal Rate of Return
bulletReduced Operating Costs -  material
bulletReduction in labor costs
bulletReductions in space, resource utilization
bulletProductivity improvement - cycle time reduction

Strategic -

bulletEnabling technology
bulletTake products to market faster
bulletCreates, renews competitive edge, improve market share
bullet

Regulatory compliance

Ultimately decisions to deploy are often based on tangible expense vs. savings. Cost justification,  based on return on investment and payback period, of EDMS projects not taking into account the strategic benefits often is attractive enough in most cases.
 

 

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Last modified: October 18, 2004