I'm working on New Century project in my book "Systems Analysis and Design" and I am stuck on this accounting-like question. Please help and thank you.

Background

Based on your earlier recommendations, New Century decided to continue the systems acquisition/development process for a new information system. Now, at the end of the systems analysis phase, you are ready to prepare a system requirements document and give a presentation to the New Century associates. Many of the proposed systems advantages were described during the fact-finding process. Those include smoother operation, better efficiency, and more user-friendly procedures for patients and New Century staff.

You also must examine tangible costs and benefits to determine the economic feasibility of several alternatives. If New Century decides to go ahead with the development process, the main options are to develop the system in-house or purchase a vertical package and configure it to meet New Centurys needs basic office needs. You have studied those choices and put together some preliminary figures.

You know that New Centurys current workload requires a maximum total of six hours of office staff overtime per week at a base rate of $20 per hour. In addition, based on current projections, New Century will need to add another full-time clerical position in about six months. Neither the overtime nor the additional job will be needed if New Century implements the new system. The current manual system also causes an average of three errors per day, and each error takes about 20 minutes to correct. The new system should eliminate those errors.

You estimate that by working full-time, a team of 4 or 5 could complete the in-house development project in about 12 weeks. If you design the new system as a database application, you can expect to spend about $2,500 for a networked commercial package.

Your consulting rate, which New Century agreed to, is $35 per person/per hour. After the system is operational and the staff is trained, New Century should be able to handle routine maintenance tasks without your assistance.

As an alternative to in-house development, a vertical software package is available for about $35,000. The vendor offers a lease-purchase package of $5,000 down upfront, with by three annual installments of $10,000 each. If New Century buys the package, it would take you about 4 weeks to configure, install, and test it, working full-time. The vendor provides free support during the first year of operation, but then New Century must sign a technical support agreement (SLA- Service Level Agreement) at an annual cost of $700. Although the package contains many of the features that New Century wants, most of the reports available in the packages are pre-designed but it would be possible to modify their layouts during the installation.

The Wellness Training System should take your team about 3 weeks to develop and is already justified based on expected new patient/business account leverage the system should provide and is separate from the basic office system package acquisition discussed above. If you design the new system for wellness training as a database application, you can expect to spend about $2,500 for a networked commercial package.

No matter which approach is selected for the new office system, New Century probably will need you to provide about 10 hours of initial staff accounting process training and support each week for the first three months of operation. After the new office system is operational, it will need routine maintenance, file backups, and updating. These tasks will require about four hours per week and can be performed by a clinic staff member. In both cases, the necessary hardware and network installation will cost about $12,500.

In your view, the useful life of the system will be about five years, including the year in which the system becomes operational. You are scheduled to deliver a presentation to New Century next week, and you will submit a system requirements document at that time.

Tasks

1. Provide an overview of the proposed system, including costs and benefits, with an explanation of the various cost-benefit types and categories.