Profitability Analysis for Software Solutions in Customs Management - Development of a Calculation Approach
Deciding whether an investment in digitalization is justified, requires careful considerations. What values are important to deliberate whether an investment is reasonable and which values must be included in a profitability analysis in order to justify their benefits in financial terms?
Jud Raphael & Umbricht Eliana, 2020
Bachelor Thesis, AEB Schweiz AG
Betreuende Dozierende: Ueli Gygli
Keywords: economic efficiency, profitability analysis, software solutions, customs management, preference calculation digitalization , cost and benefit evaluation, cost model, financial appraisal techniques
The client, a well-known software provider for the logistics industry, would like to transparently show their software’s benefits to potential customers. The client struggles to present the benefits a software provides in monetary terms, leaving a potential customer with unanswered questions. The aim of the thesis was to develop an approach in form of a calculation tool that offers the client a way to show their potential customers what benefits and risks there are when investing in a software solution. For the thesis, the focus was on two defined software solutions.
In order to effectively deliver the desired results, the authors divided the thesis into two parts: a theoretical part and a practical part. For the theoretical part, thorough desk research of the topics of customs clearance, digitalization, and economic efficiency was performed, which allowed for a proper development of the calculation approach. The latter contains a procedure for determining the economic efficiency of the software solutions. More precisely, a cost model in Excel was developed. With the help of the established cost model the evaluation for two sample customers was performed.
Research has shown that the four main key performance indicators are net present value, internal rate of return, return on investment, and discounted payback period. These values were used to display whether an investment in one of the software solutions was economically efficient or not. The results from the four key performance indicators of the developed Excel tool dis-played interesting outcomes for both sample customers. While both software solutions were considered profitable for one company, the results for the other sample customer lacked conviction.
In sum, not every software solution is appropriate for every company and investment consideration should be carefully looked into. Automation in processes do not necessarily mean that one is more economic efficient considering the costs that occur.
With the Excel tool, the client is in possession of a valuable tool that can be deployed when consulting interested customers. The tool provides a certain level of transparency to the potential customer and therefore increases trust between the two parties.
Studiengang: Business Administration International Management (Bachelor)
Fachbereich der Arbeit: Wirtschaftsinformatik & IT-Management