3. What are the advantages and disadvantages of the various options that Amelectserv is evaluating

ERP IMPLEMENTATION COSTS Berp Corporation: ON Premise Macrosoft ON Premise 4718 4719 Macrosoft Cloud 4.718 2080 1575 2 DOO 2250 2.250 2980 none none 1675 none 349 10.200 InitialHardware Network Costs Workstations UPS for Werkstations Laptops Server Back Server Server UPS Systems Router Network Infrastrutture set-up Total Ongoing Hardware Network Costs Hardware Maintenance Router Maintenance Network in structure Maintance 2MBPS internet line Totalt year) Total (5 years) 2700 14572 8.200 20.422 1287 40 109 of initial hardware cost 1620 264 3203 20 16 031 10 of inal hardware cost 10% of nidal router cost 10% of indtal infrastructure T 1831.20 0156 one rene 820 ,100 4 FRP Application Software Consulting Deployment Cost Training Installation Cost D Total 21.000 1.800 11,700 4050 one 39 150 500 NA NA NA NA 4500 NIA 9000 EURO r Ongoing Software Costs 1 n Software Maintenance Sevicing Fee Totalt year) Total 16 years) 3888 ore 3.30 10.440 6of instalenie obst. one 8104 4050 none 4120 ,320 21.800 T T Storage Costs Data Storage Costs Yearly) initial year yes 2 years 3 years 4 years 5 years none none none none none one none none 1360+ 10% per year 1360 1485 1633.5 1798.85 1978 535 2174 1395 then non none Total cost 5.140. data storage cost 16 17 68.572 7004 20 75.000 82.780 80 856 00040 104043 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. 6.4 Year Sales in millions of $(US) 2002 2003 0.9 2004 2005 2006 2007 2008 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. AD400 - CASE STUDY PAGE 1 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. inererore, rewrong anu and and meeting (see below) U UISLUSS this plien 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 the Company. 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. anu LU IUUALU punom 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 labor is 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