␡
- Applications and ROIs
- Why ROIs Matter
- The Business Case
- Cash Flow ProjectionsThe Business CaseWhy ROIs Matter
- Payback Time
- Breakeven Time
- Net Present Value
- Breakeven Time
- Internal Rate of ReturnBreakeven Time
- Summary of the Terms
- An Example
- Incorporating MMFs into the Financial Case
- Comparing the MMF-based ROI with the Classic ROI
- Taking the Risks into Account
- The Impact of MMF Ordering
- Summary
- References
This chapter is from the book
The Business Case
Ultimately the calculation of ROI compares the financial impact of different options over time. The time context is essential. Without it, an ROI is meaningless. Typically it starts with a question of the form,
“Should we spend $1,000,000 to develop part of the system over two years or $1,500,000 to develop all of the system over three years?”
The answer to a question such as this emerges from the construction of a business case. A business case is best described as a financial story based on facts, structured assumptions, and logic. It provides a vehicle by which the financial impact of the options can be examined and conclusions drawn.