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Cost Benefit Analysis, or CBA, is a relatively simple and widely used technique for deciding whether to make a change (In this case to upgrade an existing system or purchase your initial system solution). As its name suggests, you simply add up the value of the benefits of a course of action, and subtract the costs associated with it.

Costs are either one-off, or may be ongoing. Benefits are most often received over time.

One of the most difficult elements of a CBA is to ensure that all of the costs and all of the benefits are properly identified. Accurate costs must be obtained and verified. Be aware that many benefits are intangible and the future cost savings are difficult to get a handle on.

These are all questions that people have to answer, and answers that people have to defend.

Costs to implement a product such as TPSquared are more easily identified then the savings to be gained.

Costs can be categorized as follows:

     A) Direct software purchase cost
     B) Direct hardware purchase costs
     C) Installation, (Include both hardware & software) and training costs
     D) Data conversion costs
     E) Other outside consultant fees (Accounting)
     F) Other indirect software costs (Software required because of new hardware)
     G) Other indirect hardware costs such as memory chips, upgrades, cabling, etc.
     H) On-going support costs

Benefits, tangible and Intangible:

     A) Improved business processes (leading to an annual cost decrease),
     B) Increased staff moral from using the state of the art tools for running the business
     C) Immediate staff reductions and/or paid hours
     D) Less overtime hours paid
     E) More informed decision making leading to additional cash flows
     F) Better inventory management. Providing a higher ROI, (Return on Investment)

In many cases the costs associated with this type of investment are immediate and the savings will most
likely occur over time, and at best, are highly subjective. However, as a business owner we must make these
evaluations to the best of our abilities and move forward. A second opinion, such as an independent
accountant, can be beneficial.

Cost Benefit Analysis is a powerful, widely used and relatively easy tool for deciding whether to make a change.
First work out how much the change will cost to make. Then calculate the benefit you will gain from it. Where costs or benefits are paid or received over time, work out the time it will take for the benefits to repay the costs.

Some features you will be able to take advantage of with TPSquared will lead to the following and should
be taken into consideration in your CBA:

Counter Support:
Less time required to complete each sale.
Less time required to answer customer questions regarding price, availability and delivery schedules.
Fast preparation of quotations and their subsequent conversion to valid orders.

Translation = Fewer staff to conduct like business. Delayed hiring as the business grows. Fewer paid overtime hours. Less training time for new employees. Faster to productivity ratio.

Inventory Management:
Immediate insight on sales history. Immediate insight on in-transit inventory. Highly reliable cost of goods sold information, where appropriate. Immediate and accurate Cost of goods sold calculations. Pre-receipt preparation of scheduled receivings and single click booking upon arrival.

Translation = Better inventory management. Less cash used on low margin items. Improved availability on high margin, in demand inventory. Immediate reporting on items not meeting minimum margin targets. Better time management and faster entry of received goods.

Accounting:
Less man power required to enter transactions such as cash receipts and payables. Automatic preparation of general ledger entries. Your typical retail/wholesale nursery/garden center operation grossing 10m - 15M annually can function just fine with a single accounting clerk. Extremely accurate A/R preparation.

Translation = Improved accuracy with fewer paid hours. Delayed hiring as the business grows. More accurate and timely A/R statement preparation equals faster cash collections. Less money spent on accounting fees.

Payroll:
Easy to use and accurate payroll computations. All state and Federal documents prepared. More timely payroll preparations.

Translation = In house payroll can substantially reduce that cost. In most cases with less than a 4 month payback over popular payroll services. Less lead time to preparation means more up to date transactions which result in greater employee satisfaction.

Summary:

The features listed above are only the tip of the iceberg. Actual benefits are almost limitless dependent on the use of available features at each installation. We would be glad to help you identify those features as related to your business. Just give us a call.

The payback time is often known as the break even point. Sometimes this is more important than the overall benefit a project can deliver. The break even point can be found graphically by plotting costs and benefit value on a graph. Break even occurs at the point the two lines cross.