2. Analyze the TCO (Total Cost of Ownership) for a period of five years going forward). 3. What are the advantages and disadvantages of the various options that Amelectserv is evaluating?

AMELECTSERV ERP IMPLEMENTATION COMPANY BACKGROUND Amelectserv is an electrical service provider in the Northwest of the United States for more than ten years. The Company provides its services to mainly commercial clients that are in manufacturing, telecom, commercial office and residential buildings, corporate campuses, and hospitals. The founder and CEO, Kyle Offenwrong, began servicing senior living facilities in the Eugene, Oregon area. This work led to contacts for additional facilities in Salem and Portland Oregon. The growth of the Company continued as it gained a reputation with branches into local hospitals and then universities. As the reputation and sales increased, the Company moved into the Seattle/Tacoma area which resulted in even more growth (see Figure 1). In the previous five years the sales have almost tripled. Year Sales in millions of $(US) 2002 0.3 2003 0.9 2004 2.2 2005 4.3 2006 6.4 2007 8.3 2008 10.2 2009 14.8 2010 21.2 2011 30.9 2012 20.1 2013 40.0 2014 46.4 Figure 1 - Annual Sales of Amelectserv The extraordinary growth of the Company led to challenges in terms of information overload which made the management of information extremely challenging. In the previous month, in an effort to bid a new major project, Offenwrong found data to be not available when he needed it. The bid required that data be gathered from multiple systems with sometime conflicting data and the effort to gather the information for the bid was high. Even though the Company won the bid, some of the costs used in the calculations were not current, some by over a year. AD 400 --CASE STUDY PAC Analysis confirmed that the project will result in a net loss for the Company. He also realized that the Company needed to become more competitive if its growth was to be maintained. The Company's use of Microsoft Excel for operational systems and day-to- day work was also untenable. Over the last few years, use of Excel caused a great number of Excel files all over the Company, some were not even known to people other than the ones that created the files. Employees found a complete lack of data integrity, data redundancy, and incompleteness. Some data that was known to exist was unable to be found. Backups of operational data were not maintained. Therefore, Offenwrong called an all-hands meeting (see below) to discuss this problem and the possible solution of implementing an Enterprise Resource Planning (ERP) system on the premises or on the cloud. Some employees are enthusiastic and some have reservations. THE PROBLEM The first problem faced by the company is convincing employees to implement change in the current data management system of the company. This particular problem has emerged due to the resistance of change and satisfaction with the existing situation of pany. Furthermore, the major dilemma faced by the Company includes the selection of the various options to improve the IT systems to allow information to be quickly and easily available to the Company to make decisions regarding the different projects. The company faces with three options, adopt ERP on cloud, ERP on premise, or adopt a customized solution. Also, the Company faces another problem of choosing the company for implementing the ERP system. There are two companies: Berp Corporation and Macrosoft which have proposed the quotations for the implementation of ERP. Berp Corporation is an experienced and a major ERP solution provider, whereas, Macrosoft is a start-up firm with limited experience in ERP implementations but is less costly than Berp Corporation Moreover, due to the huge investment needed in the implementation of ERP, the company needs to make a right decision to avoid any type of failure which may result in decreased profitability for the company. ALL HANDS MEETING NOTES An all-hands meeting was held to discuss the problems associated will the current systems and to formulate a plan going forward. Kyle Offenwrong (CEO) - Growth rate, especially in the last years, has been tremendous The company's need for processing and storing Information is growing at the same rate. The current information management systems are dependent on personnel. All systems are running on local machines and the data are manually entered and extensive laboris required for searching and reporting the data. The workstations we use are not connected to each other which requires information to be obtained from multiple AD400 - CASE STUDY PAGE 2 workstations and systems to be collated into usable reports. This worked in our early years when the company was small but growth has made this too complex. Continued growth will increase this level of complexity and reduce efficiency. We require a more! efficient solution that is scalable. Jim Techy (CIO) - Implementing an ERP system is the solution to the company's problems. An ERP will allow us to focus on our core work and not IT systems. It will also allow us to obtain real-time data from the system. The ERP's use of a database will eliminate redundant data that we currently have on the multiple un-connected workstations. This will eliminate the problem of redundant data that sometimes is inconsistent across systems. The ERP will also implement industry best practices. Paul Morris (Project Manager) - An ERP system is helpful in some cases but there are many examples where companies have invested many many hours and much money in an ERP implementation and ended up with nothing or a system that never works. In some notable cases, this has resulted in an actual decrease in efficiency. Many of our employees and users are not technically sophisticated so training them on an ERP will be very difficult. Are we sure we can successfully implement an ERP system? Ann Maples (Assistant Manager) - Agrees that there are many problems with the existing system but implementing an ERP system will dramatically change the way the Company works. It may make us terribly unproductive. Many, if not all of our business processes will change and that will require significant time to learn the new business processes and the new system. Even more time will be required to allow everyone to get comfortable with them. A customized solution is a better one. It should be exactly like our existing! systems but more automated. This will not require any business processes to change and therefore will be a less risky option. Pam Majors (Project Manager) - Even though we are all comfortable with the current system and therefore want a customized solution that mimics the current system, there! are reasons to not do that. An ERP system could be a game changer. Once the company becomes comfortable with it, we can then reap the benefits from it as many other companies have throughout the world. The best solution would be a cloud solution that allows us to forgo a huge initial investment and start on solutions immediately. This has! the additional benefit of transferring the risk to the service provider. ERP IMPLEMENTATION COSTS Berp Corporation: ON Premiel Macrosoft ON Promise 4.718 Initial Hardware Network Costs Macrosoft Cloud 2900 2,980 2.250 Workstations UPS for Werkstations Laptops Server Backup Server Server UPS Systems Router Network Infrastructure Set-up 2980 155 1575 174 2.250 174 348 18.200 29.422 2700 none Total: - 14572 107 of initial hardware 128740 348 10% of initial hardware con 10% of in router cost 10% of inal infrastructure $22 Monthly 1 .831.20 9156 one none 820 4.100 264 3.205. 20 16.031 I 1 5.400 NA 21.600 1.800 11,700 4050 none 39.150 T longing Hardware Network Costs Hardware Maintenance Router Maintenance Network Infrastructure Maintence MBPS Internet line Total (1 year) Total (5 years) the Software Costs ERP Application Software Consulting Deployment Cost Training Installation Cost Total: Ongoing Software Coats Software Maintenance Sevicing Fee Totalt yearl Total (years) Storage Costs Data Storage Costs/Yearly til year year 2 years 3 years 4 years years NA 4500 9900 3.588 none 3,883 19, 440 15% of initial license cost none 810 4 080 none none none none 1350-10% per year 1350 1485 none none none none none none none non non 1796 85 1976 535 TI / / 24.472 550 8/ Total cost Initial cost Yearly cost years 2 years years years 5 years 7 22.049 5,666 82,760 89,856 96,849 104043 2.641.20 27,113 29.784 32.300 35.037 37678 29.85 AMELECTSERV ERP IMPLEMENTATION COMPANY BACKGROUND Amelectserv is an electrical service provider in the Northwest of the United States for more than ten years. The Company provides its services to mainly commercial clients that are in manufacturing, telecom, commercial office and residential buildings, corporate campuses, and hospitals. The founder and CEO, Kyle Offenwrong, began servicing senior living facilities in the Eugene, Oregon area. This work led to contacts for additional facilities in Salem and Portland Oregon. The growth of the Company continued as it gained a reputation with branches into local hospitals and then universities. As the reputation and sales increased, the Company moved into the Seattle/Tacoma area which resulted in even more growth (see Figure 1). In the previous five years the sales have almost tripled. Year Sales in millions of $(US) 2002 0.3 2003 0.9 2004 2.2 2005 4.3 2006 6.4 2007 8.3 2008 10.2 2009 14.8 2010 21.2 2011 30.9 2012 20.1 2013 40.0 2014 46.4 Figure 1 - Annual Sales of Amelectserv The extraordinary growth of the Company led to challenges in terms of information overload which made the management of information extremely challenging. In the previous month, in an effort to bid a new major project, Offenwrong found data to be not available when he needed it. The bid required that data be gathered from multiple systems with sometime conflicting data and the effort to gather the information for the bid was high. Even though the Company won the bid, some of the costs used in the calculations were not current, some by over a year. AD 400 --CASE STUDY PAC Analysis confirmed that the project will result in a net loss for the Company. He also realized that the Company needed to become more competitive if its growth was to be maintained. The Company's use of Microsoft Excel for operational systems and day-to- day work was also untenable. Over the last few years, use of Excel caused a great number of Excel files all over the Company, some were not even known to people other than the ones that created the files. Employees found a complete lack of data integrity, data redundancy, and incompleteness. Some data that was known to exist was unable to be found. Backups of operational data were not maintained. Therefore, Offenwrong called an all-hands meeting (see below) to discuss this problem and the possible solution of implementing an Enterprise Resource Planning (ERP) system on the premises or on the cloud. Some employees are enthusiastic and some have reservations. THE PROBLEM The first problem faced by the company is convincing employees to implement change in the current data management system of the company. This particular problem has emerged due to the resistance of change and satisfaction with the existing situation of pany. Furthermore, the major dilemma faced by the Company includes the selection of the various options to improve the IT systems to allow information to be quickly and easily available to the Company to make decisions regarding the different projects. The company faces with three options, adopt ERP on cloud, ERP on premise, or adopt a customized solution. Also, the Company faces another problem of choosing the company for implementing the ERP system. There are two companies: Berp Corporation and Macrosoft which have proposed the quotations for the implementation of ERP. Berp Corporation is an experienced and a major ERP solution provider, whereas, Macrosoft is a start-up firm with limited experience in ERP implementations but is less costly than Berp Corporation Moreover, due to the huge investment needed in the implementation of ERP, the company needs to make a right decision to avoid any type of failure which may result in decreased profitability for the company. ALL HANDS MEETING NOTES An all-hands meeting was held to discuss the problems associated will the current systems and to formulate a plan going forward. Kyle Offenwrong (CEO) - Growth rate, especially in the last years, has been tremendous The company's need for processing and storing Information is growing at the same rate. The current information management systems are dependent on personnel. All systems are running on local machines and the data are manually entered and extensive laboris required for searching and reporting the data. The workstations we use are not connected to each other which requires information to be obtained from multiple AD400 - CASE STUDY PAGE 2 workstations and systems to be collated into usable reports. This worked in our early years when the company was small but growth has made this too complex. Continued growth will increase this level of complexity and reduce efficiency. We require a more! efficient solution that is scalable. Jim Techy (CIO) - Implementing an ERP system is the solution to the company's problems. An ERP will allow us to focus on our core work and not IT systems. It will also allow us to obtain real-time data from the system. The ERP's use of a database will eliminate redundant data that we currently have on the multiple un-connected workstations. This will eliminate the problem of redundant data that sometimes is inconsistent across systems. The ERP will also implement industry best practices. Paul Morris (Project Manager) - An ERP system is helpful in some cases but there are many examples where companies have invested many many hours and much money in an ERP implementation and ended up with nothing or a system that never works. In some notable cases, this has resulted in an actual decrease in efficiency. Many of our employees and users are not technically sophisticated so training them on an ERP will be very difficult. Are we sure we can successfully implement an ERP system? Ann Maples (Assistant Manager) - Agrees that there are many problems with the existing system but implementing an ERP system will dramatically change the way the Company works. It may make us terribly unproductive. Many, if not all of our business processes will change and that will require significant time to learn the new business processes and the new system. Even more time will be required to allow everyone to get comfortable with them. A customized solution is a better one. It should be exactly like our existing! systems but more automated. This will not require any business processes to change and therefore will be a less risky option. Pam Majors (Project Manager) - Even though we are all comfortable with the current system and therefore want a customized solution that mimics the current system, there! are reasons to not do that. An ERP system could be a game changer. Once the company becomes comfortable with it, we can then reap the benefits from it as many other companies have throughout the world. The best solution would be a cloud solution that allows us to forgo a huge initial investment and start on solutions immediately. This has! the additional benefit of transferring the risk to the service provider. ERP IMPLEMENTATION COSTS Berp Corporation: ON Premiel Macrosoft ON Promise 4.718 Initial Hardware Network Costs Macrosoft Cloud 2900 2,980 2.250 Workstations UPS for Werkstations Laptops Server Backup Server Server UPS Systems Router Network Infrastructure Set-up 2980 155 1575 174 2.250 174 348 18.200 29.422 2700 none Total: - 14572 107 of initial hardware 128740 348 10% of initial hardware con 10% of in router cost 10% of inal infrastructure $22 Monthly 1 .831.20 9156 one none 820 4.100 264 3.205. 20 16.031 I 1 5.400 NA 21.600 1.800 11,700 4050 none 39.150 T longing Hardware Network Costs Hardware Maintenance Router Maintenance Network Infrastructure Maintence MBPS Internet line Total (1 year) Total (5 years) the Software Costs ERP Application Software Consulting Deployment Cost Training Installation Cost Total: Ongoing Software Coats Software Maintenance Sevicing Fee Totalt yearl Total (years) Storage Costs Data Storage Costs/Yearly til year year 2 years 3 years 4 years years NA 4500 9900 3.588 none 3,883 19, 440 15% of initial license cost none 810 4 080 none none none none 1350-10% per year 1350 1485 none none none none none none none non non 1796 85 1976 535 TI / / 24.472 550 8/ Total cost Initial cost Yearly cost years 2 years years years 5 years 7 22.049 5,666 82,760 89,856 96,849 104043 2.641.20 27,113 29.784 32.300 35.037 37678 29.85