Erp Software- ongoing Maintenance Cost Benefit Analysis
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[pic 1]ERP ASSIGNMENT 2Titled:“ERP software- Ongoing maintenance Cost benefit Analysis”Submitted To: Submitted by: Prof. Shirish Jeble Anurag Lall Atul Kumar 36134 Devashish Belsare Digvijay Singh Chauhan 36153 Kushagra Tayal 36187 Nikhil Gokarn Tapas Das 36320Table of ContentsCase overview Problem Statement Identification of key issues (chosen framework- PESTEL) Political Economical Social Technological Environmental Legal Key Issues Alternatives Evaluation of alternatives Alternative 1 Positive Negatives Alternative 2 Positive Negatives Alternative 3 Positive Negatives Financial analysis Parameter for selecting chosen alternative Choosing most optimal alternative Evaluation for vendors for Alternative 2 Qualitative comparison Quantitative comparison Steps for Implementation phase for Alternative 2 Risk analysis and mitigation Contingency/ B-Plan Case overviewProblem StatementHenderson the CIO city of big valley California needs to take a decision considering the following alternatives
Commit to oracle fusion and negotiate a long term maintenance contract with the vendorResearch alternate support models with lower cost, yet maintain current support levels Evaluate other ERP vendors to replace PeopleSoft.Identification of key issues (chosen framework- PEST)PoliticalThere is pressure on local govt. to increase taxesRising unemployment Needs to invest heavily on infrastructure and ITEconomicalDecrease in money supply because of decreasing tax baseRising labour costsDecreasing revenues yet increasing govt. expenditureSocialNon availability of skilled manpower and high unemploymentIncreasing number of immigrants mostly illegalLack of quality and affordable healthcareTechnologicalIncreasing infrastructure needs especially in IT sectorClerical jobs need to be outsourced to third party for better efficiencyKey Issues Lowering the existing high costs and govt. spending needs to be cut downExisting vendors were not responsive and hence they were facing issues resulting in escalating costsSystem designed must be flexible to future changes and altercations in local lawsAlternatives Commit to oracle fusion and negotiate a long term maintenance contract with the vendorResearch alternate support models with lower cost, yet maintain current support levels Evaluate other ERP vendors to replace PeopleSoft.Evaluation of alternativesNow we are going to critically evaluate all the alternates to choose the optimalAlternative 1“Commit to oracle fusion and negotiate a long term maintenance contract with the vendor”PositiveWide array of tools and applications to choose fromCommitment towards data transmission as part of upgradeEasy to customize according to business needsRespected brand in ERP domainUsers are familiar to existing system and hence less cost of trainingNegativesConsiderable higher cost in long runCustomized reporting programs may not be transformedComplexity in usagePoor quality of support services (As given in the case that they are unresponsive at times)Alternative 2“Research alternate support models with lower cost, yet maintain current support levels”PositiveBetter quality of support and maintenanceResolution of issues is prompt and takes less timeComparatively lower long term costsThe vendors implementing the ERP package can be selected by the city administrationThe contract terms with the vendors can be negotiatedLess system downtimeNegativesHigh set-up cost compared to other alternativesThe personnel using the system needs to be trained resulting in additional costCompatibility issues with other existing systemsAlternative 3“Evaluate other ERP vendors to replace PeopleSoft.”PositiveMay provide lower total cost of ownership than oracle or maintenance outsourcingProvides opportunity to find a closer match of software to business operationsTier II provider may suit local needs of businessTier II provider may cost significantly less than OracleNegativesRequirement of large new implementation project and updates to IT infrastructureRequires major retraining effortImplementation may consume a lot of timeComparatively higher set-up costThere is a risk of project not getting implemented properlyFinancial analysisAlternative 1Alternative 2Alternative 3Total cost in 3 yearsOracle fusionAccentureTomorrowNowLegacyModeSunguard BitechGEMS780000450000390000303000725400983000Parameter for selecting chosen alternativeLower cost of chosen alternativeMinimum technical skill up-gradation is requiredRobust to future up-gradationCaters to all business requirementsOptimal technical framework out of available optionsChoosing most optimal alternativeAlternative 1Alternative 2Alternative 3Lower cost of chosen alternativeLow (1)Med (2)High (3)Minimum technical skill up-gradation is requiredLow (1)High (3)Med (2)Robust to future up-gradationLow (1)Med (2)High (3)Caters to all business requirementsHigh (3)Med (2)Low (1)Optimal technical framework out of available optionsHigh (3)Med (2)Low (1)TOTAL SCORE91110