Page 475 - Operations Strategy

450 case study 13 • OntariO facilities equity management (Ofem)
exhibit 1 revenue projections for the three investment opportunities

Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
Back-end analysis 0 0 CS1m C$1.5 C$1.5 C$1.5
Front-end fingerprint recognition 0 0 0 C$0.5 C$1.5 C$1.7
Front-end iris recognition 0 0 0 C$0.3 C$1.5 C$2.5
Note: Figures are in C$ millions at today’s prices.

Even though Mirella Freni knew that revenue projections for any of the options were
uncertain, she had asked her marketing colleagues to come up with some kind of esti-
mate. This had not been a popular request. Marketing had declared that any estimate
would be highly problematic and could only be taken as a ballpark indication of future
revenue. Others in the division were openly sceptical of Marketing’s ability to forecast
levels of sales of its existing services, never mind services which were entirely new to
the market. Mirella, however, was determined that the decision should be based on
some quantifiable data.
When the estimates were received they surprised Mirella (see Exhibit 1).

‘It seems the more they (Marketing staff) thought about the possibilities of the front-end
options, the more enthusiastic they became. Personally, I find these estimates optimistic, but
my Head of Marketing is now saying that he is willing to stake his reputation on the figures.
But whatever one thinks of the estimates, we need to make a decision soon.’
(Mirella Freni, Head of Security Division)

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