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GROUP 7
 Line of business: providing electrical & civil services across India
 Incorporated in 2002
 Clients: production & services industries, telecom companies, commercial buildings,

institutional campuses, residences, hospitals etc.
 Challenges in terms of information overload
 Input cost calculations were not readily available, outdated
 Lack of data integration; redundancy and incompleteness of data
 Data back-up not being maintained properly
‘To find a way to access accurate information more rapidly’
Decision Point

Whether to implement ERP system or not?
 Pros
 Greater efficiency
 Allows focus on core activities
 Facilitates adoption of best practices
 Eliminates losses from outdated information

 Back-up can be accessed anytime

 Cons
 May be more costly than beneficial
 Employees’ resistance
 Implement ERP on premise (Bluechip corporation)
 Implement ERP on premise (Codeautomations)
 Implement ERP on cloud (Codeautomations)
 Bluechip
 Pros: Track record of successful implementation, customization options
 Cons: Services offered only on premises, cost way over the budget

 Codeautomations
 Pros: Cost effective, both on cloud & premise

 Cons: Start-up company, risk of failure
 A few key managers are sceptical about the results associated with the roll-out
 There is no measure to quantify the returns yet
 Budget constraint: 3% of sales = 13,53,000
 If approved, choice of cloud or premises is difficult because
 Cloud database could compromise security
 Premise database results in additional costs
COST OBJECT

PER UNIT COST # OF UNITS

TOTAL COST

HARDWARE
INITIAL COST

WORKSTATION
WORKSTATION UPS
LAPTOP
SERVER
BACK-UP SERVER
SERVER UPS SYSTEM

34950
3715
66244
100000
100000
3875

6
6
2
1
1
2

209700
22290
132488
100000
100000
7750
572228

INITIAL COST

ERP APPLICATION SOFTWARE
CONSULTING
DEPLOYMENT COST
TRAINING

120000
80000
520000
180000

8
1
1
1

960000
80000
520000
180000
1740000

INITIAL COST

ROUTER
NETWORK INFRA SET-UP

15479
120000

1
1

15479
120000

SOFTWARE

NETWORK

INITIAL ROLL-OUT COST

2447707

HARDWARE ONGOING MAINTAINANCE COST
SOFTWARE ONGOING MAINTAINANCE COST
NETWORK
ROUTER MAINTAINANCE
NETWORK INFRA MAINTAINANCE
2 MBPS INTERNET LINE
TOTAL ONGOING COST

57222.8
172800
1547.9
12000
11988
255558.7
COST OBJECT

PER UNIT COST

# OF UNITS

TOTAL COST

HARDWARE
INITIAL COST

WORKSTATION
WORKSTATION UPS
LAPTOP
SERVER
BACK-UP SERVER
SERVER UPS SYSTEM

34950
3715
66244
70000
70000
3875

6
6
2
1
1
2

209700
22290
132488
70000
70000
7750
512228

SOFTWARE
INITIAL COST

ERP APPLICATION SOFTWARE
INSTALLATION COST

30000
200000

8
1

240000
200000
440000

INITIAL COST

ROUTER
NETWORK INFRA SET-UP

15479
120000

1
1

15479
120000

NETWORK

INITIAL ROLL-OUT COST

1087707

HARDWARE ONGOING MAINTAINANCE COST
SOFTWARE ONGOING MAINTAINANCE COST
NETWORK ROUTER MAINTAINANCE
NETWORK INFRA MAINTAINANCE
2 MBPS INTERNET LINE
TOTAL ONGOING COST

51222.8
36000
1547.9
12000
11988
112758.7
COST OBJECT

PER UNIT COST # OF UNITS

TOTAL COST

HARDWARE
INITIAL COST

WORKSTATION
WORKSTATION UPS
LAPTOP

34950
3715
66244

6
6
2

209700
22290
132488
364478

INITIAL COST

ROUTER

15479

1

15479

HARDWARE
SOFTWARE
STORAGE
NETWORK

ONGOING MAINTAINANCE COST
ONGOING MAINTAINANCE COST
DATA STORAGE COST
ROUTER MAINTAINANCE
2 MBPS INTERNET LINE

36447.8
192000
60000
1547.9
11988

NETWORK

INITIAL ROLL-OUT COST

379957

TOTAL ONGOING COST

301983.7
 Initial roll-out cost of Bluechip’s quotations is way over the budget (i.e. 13,53,000)
 Cheapest option is to take Codeautomations’ services on cloud

But wait, what about the ongoing
costs?
ON PREMISE

ON CLOUD

YEAR

COST
0
1
2
3
4
5

PVF (0.12,N)
1087707
112759
112759
112759
112759
112759

PRESENT VALUE OF COSTS OVER 5 YEARS

PRESENT VALUE
1
1087707
0.8929
100682.5111
0.7972
89891.4748
0.7118
80261.8562
0.6355
71658.3445
0.5674
63979.4566
1494180.643

YEAR

COST
0
1
2
3
4
5

PVF (0.12,N)
379957
301984
307984
314584
321844
329830

PRESENT VALUE
1
379957
0.8929
269641.5136
0.7972
245524.8448
0.7118
223920.8912
0.6355
204531.862
0.5674
187145.542

PRESENT VALUE OF COSTS OVER 5 YEARS

1510721.654
From the financial point of view, Codeautomations’ service on premise is the cheapest
in the long term
However we still need to consider other factors such as organisational acceptance &
risk of failure
Vinsun infra engineering: Case on ERP

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Vinsun infra engineering: Case on ERP

  • 2.  Line of business: providing electrical & civil services across India  Incorporated in 2002  Clients: production & services industries, telecom companies, commercial buildings, institutional campuses, residences, hospitals etc.
  • 3.  Challenges in terms of information overload  Input cost calculations were not readily available, outdated  Lack of data integration; redundancy and incompleteness of data  Data back-up not being maintained properly
  • 4. ‘To find a way to access accurate information more rapidly’ Decision Point Whether to implement ERP system or not?
  • 5.  Pros  Greater efficiency  Allows focus on core activities  Facilitates adoption of best practices  Eliminates losses from outdated information  Back-up can be accessed anytime  Cons  May be more costly than beneficial  Employees’ resistance
  • 6.  Implement ERP on premise (Bluechip corporation)  Implement ERP on premise (Codeautomations)  Implement ERP on cloud (Codeautomations)
  • 7.  Bluechip  Pros: Track record of successful implementation, customization options  Cons: Services offered only on premises, cost way over the budget  Codeautomations  Pros: Cost effective, both on cloud & premise  Cons: Start-up company, risk of failure
  • 8.  A few key managers are sceptical about the results associated with the roll-out  There is no measure to quantify the returns yet  Budget constraint: 3% of sales = 13,53,000  If approved, choice of cloud or premises is difficult because  Cloud database could compromise security  Premise database results in additional costs
  • 9. COST OBJECT PER UNIT COST # OF UNITS TOTAL COST HARDWARE INITIAL COST WORKSTATION WORKSTATION UPS LAPTOP SERVER BACK-UP SERVER SERVER UPS SYSTEM 34950 3715 66244 100000 100000 3875 6 6 2 1 1 2 209700 22290 132488 100000 100000 7750 572228 INITIAL COST ERP APPLICATION SOFTWARE CONSULTING DEPLOYMENT COST TRAINING 120000 80000 520000 180000 8 1 1 1 960000 80000 520000 180000 1740000 INITIAL COST ROUTER NETWORK INFRA SET-UP 15479 120000 1 1 15479 120000 SOFTWARE NETWORK INITIAL ROLL-OUT COST 2447707 HARDWARE ONGOING MAINTAINANCE COST SOFTWARE ONGOING MAINTAINANCE COST NETWORK ROUTER MAINTAINANCE NETWORK INFRA MAINTAINANCE 2 MBPS INTERNET LINE TOTAL ONGOING COST 57222.8 172800 1547.9 12000 11988 255558.7
  • 10. COST OBJECT PER UNIT COST # OF UNITS TOTAL COST HARDWARE INITIAL COST WORKSTATION WORKSTATION UPS LAPTOP SERVER BACK-UP SERVER SERVER UPS SYSTEM 34950 3715 66244 70000 70000 3875 6 6 2 1 1 2 209700 22290 132488 70000 70000 7750 512228 SOFTWARE INITIAL COST ERP APPLICATION SOFTWARE INSTALLATION COST 30000 200000 8 1 240000 200000 440000 INITIAL COST ROUTER NETWORK INFRA SET-UP 15479 120000 1 1 15479 120000 NETWORK INITIAL ROLL-OUT COST 1087707 HARDWARE ONGOING MAINTAINANCE COST SOFTWARE ONGOING MAINTAINANCE COST NETWORK ROUTER MAINTAINANCE NETWORK INFRA MAINTAINANCE 2 MBPS INTERNET LINE TOTAL ONGOING COST 51222.8 36000 1547.9 12000 11988 112758.7
  • 11. COST OBJECT PER UNIT COST # OF UNITS TOTAL COST HARDWARE INITIAL COST WORKSTATION WORKSTATION UPS LAPTOP 34950 3715 66244 6 6 2 209700 22290 132488 364478 INITIAL COST ROUTER 15479 1 15479 HARDWARE SOFTWARE STORAGE NETWORK ONGOING MAINTAINANCE COST ONGOING MAINTAINANCE COST DATA STORAGE COST ROUTER MAINTAINANCE 2 MBPS INTERNET LINE 36447.8 192000 60000 1547.9 11988 NETWORK INITIAL ROLL-OUT COST 379957 TOTAL ONGOING COST 301983.7
  • 12.  Initial roll-out cost of Bluechip’s quotations is way over the budget (i.e. 13,53,000)  Cheapest option is to take Codeautomations’ services on cloud But wait, what about the ongoing costs?
  • 13. ON PREMISE ON CLOUD YEAR COST 0 1 2 3 4 5 PVF (0.12,N) 1087707 112759 112759 112759 112759 112759 PRESENT VALUE OF COSTS OVER 5 YEARS PRESENT VALUE 1 1087707 0.8929 100682.5111 0.7972 89891.4748 0.7118 80261.8562 0.6355 71658.3445 0.5674 63979.4566 1494180.643 YEAR COST 0 1 2 3 4 5 PVF (0.12,N) 379957 301984 307984 314584 321844 329830 PRESENT VALUE 1 379957 0.8929 269641.5136 0.7972 245524.8448 0.7118 223920.8912 0.6355 204531.862 0.5674 187145.542 PRESENT VALUE OF COSTS OVER 5 YEARS 1510721.654
  • 14. From the financial point of view, Codeautomations’ service on premise is the cheapest in the long term However we still need to consider other factors such as organisational acceptance & risk of failure