There is a saying that “every organisation pays for training whether it has a program or not.” Peter Drucker has stated the “only meaningful economic resources” is knowledge. Return on investment can be defined as the amount of money gained or lost on an investment relative to the amount of money invested.

Review pages 37 - 82, then complete the tasks that follow.

Task 2 - Cost-benefit analysis

1.       Review below costs, then construct a cost-benefit analysis for the implementation of a new computer-based contact management and sales processing system. (10)

2.       Trainers often forget to consider the intangible costs of training.  Explain the statement and how to prevent this mistake. (5)

Costs:

New computer equipment:

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    • 10 network-ready PCs with supporting software @ R2,450 each
    • 1 server @ R3,500 
    • 3 printers @ R1,200 each 
    • Cabling & Installation @ R4,600 
    • Sales Support Software @ R15,000 

Training costs:

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    • Computer introduction - 8 people @ R400 each 
    • Keyboard skills - 8 people @ R400 each 
    • Sales Support System - 12 people @ R700 each 

Other costs:

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    • Lost time: 40 man days @ R200 / day 
    • Lost sales through disruption: estimate: R20,000 
    • Lost sales through inefficiency during first months: estimate: R20,000 

Benefits:

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    • Tripling of mail shot capacity: estimate: R40,000 / year 
    • Ability to sustain telesales campaigns: estimate: R20,000 / year 
    • Improved efficiency and reliability of follow-up: estimate: R50,000 / year 
    • Improved customer service and retention: estimate: R30,000 / year 
    • Improved accuracy of customer information: estimate: R10,000 / year 
    • More ability to manage sales effort: R30,000 / year