Comments: Yet more evidence: your CISO needs an MBA

And Finally, she would also know, in her heart, that this is all bunk which is used to justify a decision that everyone knows make sense. Otherwise known as the cost of doing business.

Let us take the case of opening a bank branch in an area where a bank doesn't have any presence. A fat lot of good an ROI approach would do you in this case. But you will generate one to proove that it makes business sense to all the people that matter....

Ditto, CRM implementations etc. The only place this works is in cases where the cost savings/ revenue increases are direct and quantifiable. For example, investment in better machinery that can produce 20% more tin cans in a day, while savings 10% on electricity and 5% on material inputs...

Posted by Anonymous Coward2 at September 5, 2008 08:33 AM

AC2, you provide yet more evidence. The thing is, when you decide to open a bank branch, it will cost you money. The question then is, why not spend the money on something else?

Everything can be reduced to an estimate of how much this bank branch will earn you in the future, and how much it costs you to build. You do have that data, because you did it before. You can calculate how much this is worth, with the model.

Where the model then makes *more sense* is if you were to compare BB1 with BB2. If BB1 is in a more expensive neighbourhood, with the wrong clientele, then the estimates will show slower growth, more costs, less NPV. If BB2 has cheap rents and your target market, faster uptake and lower costs will factor back to better NPV. In this case, because the subjects of the model are very close, the differences can be shown clearly.

Or, you could just throw the money around and hope it works. Call it the cost of doing business. She knows what she wants, and everyone agrees! Hey, I've got a subprime for you to throw it into, you know you should....

Posted by Iang at September 5, 2008 09:10 AM
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