Cost of ownership model for a CRM system

So Young Sohn, Ji Soo Lee

Research output: Contribution to journalArticle

15 Citations (Scopus)

Abstract

A procurement decision about a CRM system is heavily influenced by the initial purchase cost rather than the effect of the operating cost and utilization over the lifetime. In this paper, we propose a Cost of Ownership (COO) model for a CRM system which takes into account not only the initial cost, but also the operation cost, and the opportunity cost due to customer mismanagement over a life-cycle. In particular, the opportunity cost due to customer mismanagement, which is related to the performance of the CRM system, is used as a key cost factor to reflect the financial impact of the system. We employ an engineering economy model to compare various systems with different life spans. A numerical example is given for comparison of the COO of alternative systems along with sensitivity analysis for an optimal procurement decision.

Original languageEnglish
Pages (from-to)68-81
Number of pages14
JournalScience of Computer Programming
Volume60
Issue number1
DOIs
Publication statusPublished - 2006 Mar 1

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All Science Journal Classification (ASJC) codes

  • Software

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