Monday, July 18, 2005

WARNING: Laws at Play

ok, now that I just gave a couple data-points for justifying IdM projects, I have to put in a warning:

* The Law of Diminishing Returns is At Play

If your project is going to be multiple years in the making, be forewarned that a sharp financial leader will re-baseline the environment yearly. What does this mean? It means the savings from Year-1 cannot be applied to Year-2 ... and your job just got harder.

Example1: You implement password synchronization and save $1M in a $5M help-desk cost this year. Next year, the help-desk is a $4M problem as a result of re-baselining. Your $1M savings has already been realized, and now you need to figure out how to extend your initial investment to save more for Year-2.

Worse yet, your solution may not yeild as much savings as you thought ... in fact, it may be just the opposite.

Example2: Your new help-desk tool now costs $5ooK to operate yearly. Thus, in year-2 you now added $500K back to the help-desk, making it a $4.5M problem. In year-3 you're back to $5M, and in year-4 you're at $5.5M.

At that rate, you'll be faced with the problem of: Why didn't you just outsource this to Kuala Lumpur? You're fired.

1 Comments:

At 6:06 PM, Anonymous jonas bowen said...

When it comes to investing, many first time investors want to jump right in with both feet. Unfortunately, very few of those investors are successful. Investing in anything requires some degree of skill. It is important to remember that few investments are a sure thing – there is the risk of losing your money!

Before you jump right in, it is better to not only find out more about investing and how it all works, but also to determine what your goals are. What do you hope to achieve with your investments? Will you be funding a college education? Buying a home? Retiring? Before you invest a single penny, really think about what you hope to achieve with that investment. Knowing what your goal is will help you make smarter investment decisions along the way!

 

Post a Comment

<< Home