blog activity 6 #

Welcome to week 8 activity !

ROI is a similar measure to ROCE but is used to appraise the investment decisions of an individual department. ROI = (controllable profit/capital employed) × 100 (Kaplan Financial Knowledge Bank, 2012). While ROI models use expected cash flows and costs in their calculations, they do not factor in the likelihood of those returns and costs will match predictions (Oscar, 2014).

IBM Accelerated Value Program ROI case study - Cisco Systems

Cisco’s consumer division used the IBM Accelerated Value Program to support its consumer-facing Web site. The ability of the program to help Cisco resolve incidents 40 percent faster also increased the productivity of internal support staff. Cisco Systems designs, manufactures, and sells Internet protocol (IP)-based networking products and other products and services related to the communications and information technology industry worldwide (Nucleus Research Report, 2012).

Because most customers’ primary interaction with Cisco is through its Web site and all support is through the site, the ability to access information when they need it and get a high level of responsiveness from Web-based interactions has a clear impact on Cisco’s brand image and reputation (Nucleus Research Report, 2012).

Cisco’s consumer division focused on delivering ongoing innovation and improved customer experience through its web site. The cost benefit ratio was at 1:2.4. Customer experience has improved. The IBM program team’s expertise and proactive performance-tuning efforts has enabled Cisco to ensure its consumer customers can rapidly access the information and services they need, reinforcing Cisco’s brand image as a high-end experience-focused vendor. The support staff productivity has increased (Nucleus Research Report, 2012).

So,Return on investment models are powerful albeit incomplete tools for analyzing and evaluating opportunities.
Tank you for reading and please leave your comment !!

 

References:

Kaplan Financial Knowledge Bank. (2012). Return on Investment (ROI). Retrieved on 13^th September 2014 from; http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Return%20on%20Investment%20%28ROI%29.aspx.

Nucleus Research Report. (2012). IBM Accelerated Value Program ROI case study - Cisco Systems. Retrieved on 13^th September 2014 from http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&cad=rja&uact=8&ved=0CDkQFjAD&url=http%3A%2F%2Fwww.ibm.com%2Fsoftware%2Fsupport%2Facceleratedvalue%2Fm131-IBM-AVP-ROI-case-study-Cisco.pdf&ei=0TcUVO_5FbLH7Ab7moDICQ&usg=AFQjCNG4s-d7F36OtzmSh3de54k74bndQg&bvm=bv.75097201,d.ZGU.

Oscar, G. (2014). Strengths & Weaknesses of Return on Investment: Demand Media. Retrieved on 13^th September 2014 from; http://smallbusiness.chron.com/strengths-weaknesses-return-investment-3420.html.