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Erp Software- ongoing Maintenance Cost Benefit Analysis

Essay by   •  January 10, 2016  •  Research Paper  •  1,502 Words (7 Pages)  •  1,403 Views

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ERP ASSIGNMENT 2

Titled:

“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                         36320

Table of Contents

Case 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 overview

Problem Statement

Henderson 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 vendor
  • Research 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)

Political

  • There is pressure on local govt. to increase taxes
  • Rising unemployment
  • Needs to invest heavily on infrastructure and IT

Economical

  • Decrease in money supply because of decreasing tax base
  • Rising labour costs
  • Decreasing revenues yet increasing govt. expenditure

Social

  • Non availability of skilled manpower and high unemployment
  • Increasing number of immigrants mostly illegal
  • Lack of quality and affordable healthcare

Technological

  • Increasing infrastructure needs especially in IT sector
  • Clerical jobs need to be outsourced to third party for better efficiency

Key Issues

  • Lowering the existing high costs and govt. spending needs to be cut down
  • Existing vendors were not responsive and hence they were facing issues resulting in escalating costs
  • System designed must be flexible to future changes and altercations in local laws

Alternatives

  • Commit to oracle fusion and negotiate a long term maintenance contract with the vendor
  • Research alternate support models with lower cost, yet maintain current support levels
  • Evaluate other ERP vendors to replace PeopleSoft.

Evaluation of alternatives

Now we are going to critically evaluate all the alternates to choose the optimal

Alternative 1

“Commit to oracle fusion and negotiate a long term maintenance contract with the vendor”

Positive

  • Wide array of tools and applications to choose from
  • Commitment towards data transmission as part of upgrade
  • Easy to customize according to business needs
  • Respected brand in ERP domain
  • Users are familiar to existing system and hence less cost of training

Negatives

  • Considerable higher cost in long run
  • Customized reporting programs may not be transformed
  • Complexity in usage
  • Poor 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”

Positive

  • Better quality of support and maintenance
  • Resolution of issues is prompt and takes less time
  • Comparatively lower long term costs
  • The vendors implementing the ERP package can be selected by the city administration
  • The contract terms with the vendors can be negotiated
  • Less system downtime

Negatives

  • High set-up cost compared to other alternatives
  • The personnel using the system needs to be trained resulting in additional cost
  • Compatibility issues with other existing systems

Alternative 3

“Evaluate other ERP vendors to replace PeopleSoft.”

Positive

  • May provide lower total cost of ownership than oracle or maintenance outsourcing
  • Provides opportunity to find a closer match of software to business operations
  • Tier II provider may suit local needs of business
  • Tier II provider may cost significantly less than Oracle

Negatives

  • Requirement of large new implementation project and updates to IT infrastructure
  • Requires major retraining effort
  • Implementation may consume a lot of time
  • Comparatively higher set-up cost
  • There is a risk of project not getting implemented properly

Financial analysis

Alternative 1

Alternative 2

Alternative 3

Total cost in 3 years

Oracle fusion

Accenture

TomorrowNow

LegacyMode

Sunguard Bitech

GEMS

780000

450000

390000

303000

725400

983000

Parameter for selecting chosen alternative

  • Lower cost of chosen alternative
  • Minimum technical skill up-gradation is required
  • Robust to future up-gradation
  • Caters to all business requirements
  • Optimal technical framework out of available options

Choosing most optimal alternative

Alternative 1

Alternative 2

Alternative 3

Lower cost of chosen alternative

Low (1)

Med (2)

High (3)

Minimum technical skill up-gradation is required

Low (1)

High (3)

Med (2)

Robust to future up-gradation

Low (1)

Med (2)

High (3)

Caters to all business requirements

High (3)

Med (2)

Low (1)

Optimal technical framework out of available options

High (3)

Med (2)

Low (1)

TOTAL SCORE

9

11

10

...

...

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