How to Establish a Budget and Buy New Information Technology

vThe traditional approach to technology purchases can be expressed as follows (with minor differences):
A. Create a budget
2. Make a list of needs
3. Review the technology demonstration
4. Get proposals from technology providers
5. Buy the lowest bidder if they meet the basic requirements
What is wrong with this picture? Let us study more in the beginning of the "Creating a budget."
Normally the budget is based on what the organization thinks they want to dedicate their new technology. This is the wrong place to start. Society must first determine what are the strategic and tactical advantages they want to buy their new techology to deliver. They must determine in advance how they expect their new investment in technology will help improve throughput, reduce inventories and investment demand on the other, and wait a moment or reduce operating costs. These objectives must be measurable and they must be sound. For example, organizations can say:
IMPROVED CONTAINER SURABAYA - Investing in CRM will help us in our market segment in a manner that will allow us to more targeted offers a win-win for our client base while providing us the opportunity to bid for new customers that will increase our market share. Overall, we expect both effects to add 4 million in revenues over two years and about $ 260,000 for a net profit before tax (PBT).
REDUCING SUPPLY / DEMAND INVESTMENT - The investment in improved warehouse management, inventory and replenishment of stocks (supply chain) technology will enable us to reduce the estimate of the global inventory of 2.5 million over two years. By reducing inventory, reducing pressure on demand for a new warehouse and production floor space. Thus, the demand for new capital investment also weakened. $ 2.5 million decrease in inventory FORECAST must save the company approximately $ 72,000 in carrying costs and $ 136,000 per year in operating costs in the second year after commissioning.
MAINTENANCE FEES ONLINE - improved accuracy and visibility of the enterprise-wide data provided by the new ERP (Enterprise Resource Planning) should reduce the need to add staff as revenue rose. Our interest is expected at 4.2 FTE (full time equivalents) over the next two years with an average cost of $ 78,000 FTE per year for a total profit of $ 3.28 million estimated over two years.
Summary of the estimated net benefits over two years:
Improved container $ 260,000
Reduce Inventory / INVESTMENT $ 208 000
REDUCE EXPENSES $ 3,280,000
Estimated TOTAL BENEFITS (2 YEARS) $ 3,748,000
After completing the analysis of this kind, the organization has been counted it hopes to gain from investment in new techologies. In addition, the management team are in far better position to determine the "requirements". List of requirements will no longer sections 300 or so mostly intended collected from current users who do little more than reaffirm things like "Must be able to print checks." Instead, the team is ready to focus on a relatively small number of things that may indicate their technology providers to help them achieve the company goals for improvement. Equally important, the management team is now ready to establish a significant budget based on realistic expectations and estimates of return on investment (ROI).