TROON GOLF Ziyan Kong • Joseph McCay • Jingjing Shui • Liwei Hao
Troon Golf • one of the world’s leading luxury-brand golf management and marketing firm • headquartered in Scottsdale, Arizona • has 197 golf courses worldwide, located in more than 25 countries and 30 American states.
Case Background • IT expense spiraling out of control • introduce the total cost of ownership • managers viewed hardware as one-time expense, didn’t recognize the hidden cost
Question1:Why does the TCO approach allow Troon management to refresh itshardware at the optimal cost level?
What is TCO? • TCO stands for Total Cost of Ownership • It is a technique to determine the complete cost • The initial and maintenance costs are considered • Additional Costs are also considered to get the completely picture
Technical Support • • Administration • • Training • • System Retirement • The costs are estimated on a per user basis for each possible component. • Best comparison of bang for your buck on when looking at net return. • Allows managers to see how the complete IT costs break down
What Happened at Troon? • Their IT expenses were exploding out of control • VP for technology, Cary Westmark, applied TCO to analyze the situation • From the information given we can surmise: • • IT Expenses were calculated using just initial investment and maintenance • • As time went on, additional costs added up • • No method to determine the correct time to replace IT components
What’s in it for Troon? • VP for technology, Cary Westmark, set in place new methodology • Now managers are able to compare Apples to Apples • • The cost of each component per user in now known • • This information can be tracked • • Comparisons of existing IT components vs. new component is easily done
Managers can now see • • The cost of the current technology • • The cost of replacing the current technology • • When the current technology cost exceeds replacing it • TCO is the tool that enabled Troon to find the optimum replacement times. • -Pearlson, Keri E. Managing and Using Information Systems: • A Strategic Approach, 5th Edition. John Wiley & Sons, 07/2012. VitalBook file.
Question2:Why, in your opinion, were IT expenses spiraling out of control before the TCO system?
ITexpenses increased faster and faster, because the business in the modern always generates much more data and information. • Bythis way, IT system needs more funds and specialists to keep whole system running. As a result, the cost of IT was spiraling out of control.
What are examples of the hidden costs of operating and maintaining the hardware?
Hidden cost approximately has five factors: • Technology import • Employer training • Technical support • Welfare costs • System maintenance
Obviously, to implement TCO will be spent a lot for itself. • However, the benefits of the system should be much more than its cost in the beginning.
Question3:If you were the head of marketing for Troon, what benefit would you receive from Mr.Westmark’sdecision to implement TCO?
Why marketing can get benefit? • Your sales and marketing materials must explain the total cost of ownership. • Don’t make the mistake of thinking your prospects have a full understanding. • Make sure that message is crystal clear to customer.
Use the TCO Part of Your Marketing Strategy • It’s either time or money…or both!
Safest Option: "Let me give you a thumbnail update of El Macero CC after 1 year: 1. Our course is in much better condition.2. We are saving about $20,000 a month in expenses compared to last year.3. Our management (all replaced at our choice over the last year) is much better.4. Our employees are much more cordial and friendly.
5. We are saving just in "food and beverage" (compared to last year) enough to pay for two Troon Golf management fees.6. Our recent survey found that 96% of our members thought Troon was doing a good job.7. We have added 31 proprietary members and 19 social members this year. One of our best years ever. Especially in a recessionary year. One of the easiest years ever for a club board, and especially a Club President." -Bill Kidd, Club President at El Macero Country Club