Competitive forces model & Calculating the total cost of ownership (TCO) of technology assets To make good infrastructure investments

Competitive Forces Model for IT Infrastructure Investment

The competitive forces model can be used to determine how much to spend on IT infrastructure and where to make strategic infrastructure investments, starting out new infrastructure initiatives with small experimental pilot projects and establishing the total cost of ownership of information technology assets.this model has six components

 

·         Market Demand for Your Firm’s Services

Make an inventory of the services you currently provide to customers, suppliers, and employees. Survey each group, or hold focus groups to find out if the services you currently offer are meeting the needs of each group.For example, are customers complaining of slow responses to their queries about price and availability? Are employees complaining about the difficulty of finding the right information for their jobs? Are suppliers complaining about the difficulties of discovering your productionrequirements?

·         Your Firm’s Business Strategy

 Analyze your firm’s five-year business strategy, and try to assess what new services and capabilities will be required to achieve strategic goals.

·         Your Firm’s Information Technology (IT) Strategy, Infrastructure, and Cost

Examine your firm’s information technology plans for the next five years, and assess its alignment with the firm’s business plans. Determine total IT infrastructure costs. You will want to perform atotal cost of ownership analysis (see the discussion later). If your firm has no IT strategy, you will need to devise one that takes into account the firm’s five-year strategic plan.

·         Information Technology Assessment

 Is your firm behind the technology curve or at the bleeding edge of information technology? Both situations are to be avoided. It is usually not desirable to spend resources on advanced technologies that are still experimental, often expensive, and sometimes unreliable. You want to spend on technologies for which standards have been established and IT vendors are competing on cost, not design, and where there are multiple suppliers. However, you do not want to put off investment in new technologies or allow competitors to develop new business models and capabilities based on the new technologies.

·         Competitor Firms’ IT Services

 Try to assess what technology services competitors offer to customers, suppliers, and employees. Establish quantitative and qualitative measures to compare them to those of your firm. If your firm’s service levels fall short, your company is at a competitive disadvantage. Look for ways your firm can excel at service levels.

·         Competitor Firm IT Infrastructure Investments

Benchmark your expenditures for IT infrastructure against your competitors. Many companies are quite public about their innovative expenditures on IT. If competing firms try to keep IT expenditures secret, you may be able to find IT investment information in public companies’ annual reports to the federal government when those expenditures impact a firm’s financial results. Your firm does not necessarily need to spend as much as, or more than, your competitors. Perhaps it has discovered much less expensive ways of providing services, and this can lead to a cost advantage. Alternatively, your firm may be spending far less than competitors and experiencing commensurate poor performance and losing market share .

     

      This model is similar to"Porter's model"      .

in this video explain of  Porter's Five Forces as it applies to the retail industry.

 

Total Cost of Ownership of Technology Assets

 The TCO model can be used to analyze these direct and indirect costs to help firms determine the actual cost of specific technology implementations.
The total cost of owning technology resources includes not only the original cost of acquiring and installing hardware and software, but it also includes the ongoing administration costs for hardware and upgrades, maintenance, technical support, training, and even utility and real estate costs for running and housing the technology

References:

  https://sites.google.com/site//mis_project

http://mhaliff.blogspot.com/2011/12/cost-benefit-ratio-of-purchasing-it.html

http://www.business-case-analysis.com/total-cost-of-ownership.htm

 

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Question

Used to analyze these direct and indirect costs to help firms determine the actual cost to specific technology implementations

1. Total Cost of Ownership (TCO)
2. Web Hosting Service
3. Simple Object Access Protocol
4. Software as a Service (SaaS)

 

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