Garner Technology

Part of the business case for any new IT solution should be a determination of the per transaction cost of the completed system.  Transaction costs can be used as a comparative between different solutions to determine better value but more importantly, it can be used as a way to justify replacing an existing workflow (whether a manual or automated process) with a new one.  It can be an especially sobering statistic for those that have one particular solution in mind without consideration of alternatives.  I recall one client had a particular solution in mind for tracking permits but when we looked at the per transaction cost the solution was going to cost several orders of magnitude more than the existing system.

In general, transaction cost is determined by:

1) Adding up the cost of the entire system (including salaries) over the life of the system.

2) Project the total number of transactions the system will see

3) Divide total cost by the total number of transactions

Of course, just because a solution comes in at a lower transaction cost doesn’t necessarily mean it will be the right choice.  There are more intangible factors to consider such as quality of support,  availability of training, or even the user experience.  However, a comparision of transaction costs can go a long way to guiding you to the right decision for your organization.