Overview:
There was a time when companies invested in computers for the sake of the technology. Management assumed that computerized systems were always more efficient. According to the Wall Street Journal, companies now demand to know the savings from all capital investments, including computer systems. Today, virtually all automation must be financially justified. Recent press indicates that attitudes may have even shifted to the opposite extreme in some companies. For example, a recent pull-out section in the Wall Street Journal on technology opens with: "It's the morning after. For the past ten years companies have been on a blind-faith buying binge investing well over $1 trillion in new computer systems to embrace the future and gain a competitive edge. Now, many of them are awakening with a hangover and wondering: What was it all for, and where did we go wrong?"*

As a potential user of bar code data collection technology, you should know that data collection in general, and bar coding in particular, is one of the best productivity investments your company can make. The more you analyze your organization's return on technology investments, the more senior management will believe in the automated data collection applications you are trying to implement. If you stop and think about it, the entire automated data collection industry exists because bar coding makes companies more productive. Since productivity is the key performance indicator for any industry, you should understand the basic financial measurements of productivity. This knowledge will give you a good intuitive feel about the financial benefits of your proposed bar code application.

WHY COST JUSTIFICATION

Cost justification is the process of determining the return on a productivity investment. The savings are measured and evaluated relative to the cost of the system, in present value terms.

This guide is designed to help you accurately analyze and justify your current and future bar code projects. The guide takes an investment analysis approach that explains how a bar code project makes economic sense.

Remember, good ideas must be explained to top management in language that they understand. Be aware that an approved project only gets you a "ticket to the dance." The real win occurs when the implementation takes place as planned and is considered a success. All involved share in the benefit from a successful project.