Hickory Furniture Manufacturing Company

Summary Analysis^[1]

3.         As a purchasing analyst for Hickory Furniture Manufacturing Company I have analyzed three different accounting systems to replace the company’s existing accounting system. The three vendor options that are available is an custom built outsourced software, an vendor provided business software application hosted at the company headquarters, or an Software-As-A-Service/Cloud/or Application Service Provider (ASP) solution.

The vendor Eclipse Business Systems offers custom built outsourced software which essentially is internally developed function specific software that is tailored to meet the particular needs of the inquiring company whose resources have been subcontracted outside of their organizational structure. This option would include hosting the software on company owned equipment at the company headquarters which would allow Hickory Manufacturing to be the software intellectual property owner. This option would take at least 36 months to implement. This vendor has 9/10 key features covered by the software. This is also the most expensive option in the long run of 8 years totaling $1,600,000 in annual licensing fees. I do not recommend this option because it too expensive and has too much room for error such as staff not being current with technology, and not providing enough support like staff not being adequately trained if the software developer was to leave the organization.

The following vendor Accountrix Inc offers an implementation of a vendor provided business software application hosted at company headquarters. Essentially meaning that the software is externally developed and the intellectual property is retained by the company who contracts with the external vendor to produce software. This option would allow the software to be located at the company headquarters. This option would take at least 18 months to implement. This option is the least costly option of the three choices in the long run; totaling $1,480,000 in licensing fees over an 8 year span and covers 8/10 key features in the software. I would not recommend this option because the product functionality of the software is determined by the vendor, the organization will be forced to rely on the vendor’s technical support to resolve issues, and the vendor retains rights to the code.

The final vendor, Accounting Foundations LLC offers Cloud, SaaS, and ASP based solutions. Focusing more on Cloud software this specific computing offers convenient, on-demand, pay-as-you-go access that is provided using virtual servers. This particular option dictates that the vendor is the software intellectual property owner. This option would take 9 months to implement. This option is more costly than the previous business application, totaling $1,496,000 in licensing cost fees over the duration of 8 years. I would recommend this option despite it being more expense then the previous option and only covering 7/10 key features, the time saved on waiting makes up for the dollar loss; the opportunity cost of establishing a system quicker is more valuable than waiting an additional 9 months if the entire process runs according to schedule; not including preventive and rework costs associated with the adjustment and testing phases.