How do we modernize? Bauer Industries (BI) is a manufacturer and wholesale distributor of jewelry-making machinery and components. The company has 200 employees and approximately 2500 products. The current inventory of automated systems is small for a company of its size. Applications include order entry, inventory control, and general accounting functions, such as accounts payable, accounts receivable, payroll, and financial reporting. BIs applications currently run on a Dell PowerEdge 1850 midrange server running Windows Server 2003. Dedicated character-based video display terminals are used to interact with application programs executing on the server. The server has two mirrored 146 GB boot disks and is directly connected to a Dell MD1000 1.2 terabyte RAID-5 storage array. BI has grown rapidly over the past decade. Increased transaction volume has strained existing computer hardware capability. Typical order-entry response time is now 30 to 60 seconds compared with 2 to 5 seconds a few years ago. The order-entry system consumes all memory and CPU capacity during daytime hours. To reduce order- entry response time, all nonessential processing has been moved to nighttime hours. The server is configured with two CPUs and 8 GB of primary storage, and no further hardware enhancements are possible. BI management realizes the seriousness of the situation but isnt sure how to address it. Other factors, such as the following, complicate the decision:

An expected fourfold increase in business over the next 10 years

Relocation to new facilities in the next year

Plans to move the Web-based catalog and online order system, which are now contracted out, in house Managers goals to increase and modernize automated support of operating and management functions Management has identified four viable options to address the current problem:

1. Purchase one or more used or factory-refurbished PowerEdge 1850 systems (which are no longer manufactured), connect them with a high-speed network, and partition the application software among these systems.

2. Accept an offer from Dell to upgrade to a modern PowerEdge R700 server.

3. Develop a highly scalable hardware platform consisting of multiple PowerEdge R700 servers with virtualization using VMware or Windows Server 2012. Reimplement the existing catalog and ordering applications as modern Web-based applications.

4. Migrate some applications, such as accounting and payroll, to a cloud computing service.

* What problems would you anticipate in two to five years if Option 1 is selected? Option 2? Option 3? Option 4?

* In the past, the management has opted for the lowest-cost solutions. How can you justify the higher costs of Options 2 and 3? Will choosing Option 4 really save money over the long term?

* Which alternative(s) would you recommend to management? Why?