Real-Life Math
You are a CIO at a company that is thinking about purchasing a new type of imaging software. You are looking at 2 software systems. Currently, you are using software called Danga. Some people in your office tell you that new software called Cat is better.
In order to get Cat up and running, you would have to purchase new computers with the Cat software. But to continue to use Danga, you will need to upgrade the software on each computer. Danga is very expensive.
"The type of skills you will need are business math and accounting," says Janice Sisson. She is a director of information technology. "You have to make budgets, costing decisions and understand business strategies."
As the CIO, you have to look at the economics and the efficiency of each computer software type. First, you calculate which software is the most economical for your company to purchase:
This is what you will need to upgrade the Danga software on 10 computers:
Cost to upgrade Danga software: $1,050 per computer
In 2 years, you will need to upgrade again for an additional $200 per computer
This is what you will need to purchase new Cat software and computer systems:
Cost to purchase new computers: $1,200 each
Cost to purchase new software: $250 each
You won't need to upgrade the computers for another 4 years.
- After 2 years, how much will you have spent on the Danga computer system?
- After 2 years, how much will you have spent on the Cat computer system?
- Which system will cost less after 2 years?