2006/01/09
Comments on Pete Lindstrom's ROSI post
I'm short on time, but I did want to do a quick post about Pete Lindstrom's post on ROSI. He makes a good point about effieciencies. But there are three ways a company creates value:
Reduce costs faster than reducing revenue
Increase revenues
Reduce your weighted average cost of capital.
So, to add to Pete's list of ways to justify investment in security, I add:
4. You agree that projects that are riskier are worth less than projects that are not, all other iterms being equal and thus it makes sense to invest more in a project to reduce the risk.
In general, this is why I prefer EVA or NPV to ROI measures: they do a better job of including the drivers of value.
Past posts about ROI, economics and information security are here.
So, to add to Pete's list of ways to justify investment in security, I add:
4. You agree that projects that are riskier are worth less than projects that are not, all other iterms being equal and thus it makes sense to invest more in a project to reduce the risk.
In general, this is why I prefer EVA or NPV to ROI measures: they do a better job of including the drivers of value.
Past posts about ROI, economics and information security are here.
- Category(s)
- Security and Economics
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- http://www.wikidsystems.com/WiKIDBlog/87/tbping
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