10-1, Troon Golf - Case Study Example

Troon Golf’s use of Total Cost of Ownership Since the tremendous growth of the technology, the inevitability of the IT department has been a challenge in reference to the increased expenses. In many industries, it has spiraled beyond control to a point of shut down. Without proper accounting control, it is possible that the expenses can spiral beyond control. This is an evident case in Troon Golf, a golf management and marketing firm. The use of Total Cost of Ownership has played a credential role in responding to the increasing IT expenses.

As defined by accountants, TCO is cost of assets measurements including the cost used in running and acquiring the assets (Shelly & Rosenblatt, 2011). The increasing difference in between IT cost and the purchase price forced the management to put in place TCO. At optimal level, the analysis of TCO supported the acquisition and planning decisions for the firm’s assets bringing a significant maintenance and operating cost over a significantly long usable life. Therefore, the use of TCO helped the firm in quantifying and measuring its costs.

Further, it impacted commercial negotiations through the expansion of narrow confines of the IT prices to a large area of opportunities thus eventually allowing management to refresh its hardware at the optimal cost level. Some costs in the firm are purely variable while others are fixed thus displaying no correlation to levels of output. Expenses in the firm spiraled out due the fact that the firm had long-term plans that make it impossible to account for hybrid expenses occurring. Whenever a firm does not estimate accurately the step fixed costs, it is possible that the expenses spiral will be dramatic.

Further still, the management of the firmed lacked enough experience and proper accounting skills thus estimation of costs was a problem until Cary Westmark intervened with a new idea. The firm should have decided to hire an independent consultant to ensure that costs are properly estimated. This is event since the firm’s support costs were seen to increase within the projected life of IT, which consequently led to the increase in the expenses. This means that were it not for the technology Vice President, Mr.

Westmark, who introduced TCO, the expenses would have continued to increase thus leading the firm to a shut down position. Example of hidden cost will include damage to machines by a worker and time lost by a worker, which could have been as a result of supervisor responding to a injury-causing incident. The cost incurred when hiring and training either a temporary of a permanent employee to replace an injured employee can also be an example of hidden cost. As the head of marketing for Troon, there are a number of benefits that would be realized after the introduction and implementation of TCO.

Obviously, no department within the firm would operate positively if the firm is incurring losses. With the current condition, it is possible to measure, document, and make communications regarding the value that my offering have to the customer in a manner of lower costs in relation to the next best option. To the marketing department, TCO will therefore be a powerful selling tool demonstrating tangible customer value creation for options that provide comparable benefits. This means that sales will increase and at the same time create a trusting, long-term buyer-seller relationship.

ReferencesShelly, G. B. & Rosenblatt, J. H. (2011). Systems Analysis and Design. London: Cengage Learning.Troon Golf Case Study. Slicing through IT Costs: Baseline Magazine, March 31, 2008.