Opulent Telecommunications is a large multinational telecommunications company with worldwide revenues of US$45 billion. Its Australian subsidiary (Opulent Telecommunications (Australia) Pty Ltd) has a revenue of A$6 billion, of which A$1 billion is attributed to retail operations. Opulent Telecommunications (Australia) has a sophisticated program management office that assesses project requests using a number of criteria and methodologies, including NPV, weighted scoring, ROl, payback and alignment with business objectives. Due to its size, Opulent's discount rate is 9.5%

Frill-less Communications is a mobile virtual network operator (MVNO) that uses the Opulent network. Frill-less Communications prides itself on providing superior customer service to its predominantly rural customer base. Frill-less Communications' annual revenue is A$12M (all of which is attributed to retail operations) and its operating profit is A$700k. Frill-less is a private company and has debts close to the borrowing limit set by its bank. Frill-less' discount rate is 11%

FedTech Pty Ltd markets a Customer Data Retention system that it designed to help companies comply with the Privacy Act 1998 (Cth) as amended from time to time.

FedTech has won numerous awards for its Customer Data Retention system, which is now regarded as the "Gold Standard". The Customer Data Retention system is so good that it has been shown to increase revenue from retail operations by 2% per annum in the years following the year of implementation. Importantly, FedTech will only supply its system to customers who also sign up to the maintenance agreement, as this is the way FedTech ensures that its systems around the country are updated in line with the frequent changes to the Privacy Act.

Both Opulent and Frill-less have contacted FedTech Pty to obtain a quotation for the installation and integration of the FedTech Customer Data Retention system. FedTech has responded to both organisations as follows:

Item

Opulent

Frill-less Communications

Telecommunications

Licence cost:

$10,000,000

$100,000

Integration cost:

$20,000,000

$250,000

Project Management cost:

$20,000,000.

$250,000

Annual maintenance cost:

10% of software licence

10% of software licence

cost.

cost.

Both Opulent and Frill-less use a 5-year time horizon for their financial analyses (i.e., years 0 through 5 inclusive). No additional revenue is expected in year 0.

1. As the CIO of Opulent do you proceed with the project? State the reasons for your decision. (3 marks)
2. As the CIO of Frill-less do you proceed with the project? State the reasons for your decision. (3 marks)

In the wake of recent events, the Federal Government decides to increase the fines associated with failing to protect customer personal information to a maximum of 4% total global revenue.

1. Does this change your decision as the CIO of Opulent to proceed with the project? Why or why not? (2 marks)
2. Does this change your decision as the CIO of Frill-less to proceed with the project? Why or why not? (2 marks)
3. How would you categorise this project given the government's intentions? Provide your reasons. (2 marks)

You are permitted to use project management and general office software to analyse the scenarios and upload relevant files or images as appropriate.

trequent charges to the Privacy AcL. has repsnded to bock ovganizatiors wa tolisws: clotalreverut c) Does this change your decisise as the Clo of Cpulest to procted with the preject? Why or why nat? (2 marki] e) How would you categorise this preject given the governmest's intentenc? Provide your reapens. Q macks. trequent charges to the Privacy AcL. has repsnded to bock ovganizatiors wa tolisws: clotalreverut c) Does this change your decisise as the Clo of Cpulest to procted with the preject? Why or why nat? (2 marki] e) How would you categorise this preject given the governmest's intentenc? Provide your reapens. Q macks