Vinsun Case Analysis

 CASE ANALYSES – VINSUN (B2)

1. What are the pros and cons associated with each of the options being evaluated by VINSUN?

Kulkarni had shortlisted 2 companies, Bluechip Corporation and Codeautomations, to invite quotations from. She was considering ERP on premises and ERP on cloud. The pros and cons of these companies and the two methods are the following:

PROS:

 Bluechip provided a very versatile solution, which would meet the needs of the company effectively.

 Bluechip had successfully implemented many solutions in the past.

 Bluechip offered many customization models to include only required modules.

 The ERP on Cloud offered by Codeautomation requires a lower initial cost as compared with ERP on premises, because of lower requirement of installed hardware and software.

 The ERP on Premises offered by Codeautomation has lower annual cost after the initial investment.

CONS:

 Bluechip provided quotations only for ERP on premises, and did not provide any ERP on cloud services.

 Bluechip’s ERP on premises included fixed asset management and fleet management, which were surplus to current and near future requirements.

 The cost of customizing a Bluechip offering reduced the savings it would have allowed.

 The Bluechip product would be expensive, considering the IT budget of the company.

 Out-of-service elevators irritated customers and handicapped their businesses, affecting customer opinion of the quality of an OTIS elevator.

 The ERP on Premises requires expensive hardware installation, and multiple expensive software installations, and requires a substantial initial capital expenditure.

 The ERP on Cloud will incur substantial annual storage costs, and requires a substantial amount of IT budget dedicated to it every year.

2. Evaluate TCO over a period of five years for the options available to VINSUN.

The Total Cost of Ownership (TCO) for the 3 options available will be different. The TCOs are:

 Bluechip ERP on Premises: 3,330,334.50 units of currency

 Codeautomation ERP on Premises: 1,256,334.50 units of currency

 Codeautomation ERP on Cloud: 1,962,640.50 units of currency

The calculations for the above figures are tabulated below: Premises Cloud 34,950 34,950 34,950 3,715 3,715 3,715 66,244 66,244 66,244 1,00,000 70,000 70,000 1,00,000 70,000 70,000 3,875 3,875 3,875 3,08,784 2,48,784 2,48,784 9,60,000 2,40,000 - 7,80,000 2,00,000 17,40,000 4,40,000 - 15,479.00 15,479.00 15,479.00 1,20,000.00 1,20,000.00 1,20,000.00 1,35,479.00 1,35,479.00 1,35,479.00 Total Initial Costs 21,84,263.00 8,24,263.00 3,84,263.00 Ongoing Hardware 30,878.40 24,878.40 24,878.40 Ongoing Software 1,72,800.00 36,000.00 1,92,000.00 1,547.90 1,547.90 1,547.90 12,000.00 12,000.00 12,000.00 11,988.00 11,988.00 11,988.00 Total Annual Ongoing 2,29,214.30 86,414.30 2,42,414.30 Total Ongoing (5years) 11,46,071.50 4,32,071.50 12,12,071.50 Iaas (5 years) - - 3,66,306.00 TCO (5 years) 33,30,334.50 12,56,334.50 19,62,640.50 CodeAutomation Bluechip Initial Hardware Initial Software Network Costs Ongoing Network