PCE: Generating Business Plans for New Products

Don Palese, International Business Machines and Elizabeth Wall Ralston, Inference Corporation

In determining whether to develop and market a new product, a crucial task is to estimate accurately life cycle costs and revenues in order to determine the anticipated profitability of the product. In the rapidly evolving computer hardware marketplace, the fast pace of new product introduction requires short planning cycles to keep up with the competition. In an effort to improve planning and estimating, IBM undertook to develop an interactive tool which would incorporate a number of business and cost estimation functions. This tool, the Product Cost Estimator (PCE), was deployed in the first half of 1994 and is currently providing substantial time savings and improved accuracy in the production of business plans and service cost estimates.

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