Database Reference
In-Depth Information
Chapter 3
CRM evaluation
This chapter outlines the concepts and criteria for evaluating the CRM package most suitable to
the requirements of a company. Managers must initially make a careful decision on the functional
requirements that are desired and the characteristic features and facilities expected of the CRM
system as a whole. Managers can then make an objective selection of the best CRM to deploy,
considering the various factors described in this chapter.
3.1 Capital Budgeting Models
The business case of the cloud computing project should contain the cost-benefit analysis. The
evaluation point is to justify that the benefits have outweighed the costs. In this subsection, six
capital budgeting models will be examined briefly. These models are
◾
he Payback method
◾
The Accounting Rate of Return on Investment (ROI)
◾
The Net Present Value (NPV)
◾
The Cost-Benefit Ratio
◾
The Profitability Index
◾
The Internal Rate of Return (IRR)
◾
The Economic Value Added (EVA)
3.1.1 Payback Method
The payback method calculates the number of years it will take before the initial investment of
the project is paid back. The shorter the payback time, the more attractive a project is as it reduces
the risk of longer-term payouts. The method is quite popular due to its simplicity; the weakness
of the method is it ignores the time value of money:
Original Investment
Annual NetCashFlow
Number of YearstoPay Back
=
93
