Required information PR 17-1 (LO 17-6) SlowRider Incorporated had a rudimentary business intelligence (BI) system. [The following information applies to the questions displayed below.] SlowRider Incorporated had a rudimentary business intelligence (BI) system. Analysts at SlowRider Incorporated pulled data from three different ERP systems, loaded the data into Excel spreadsheets, and emailed those spreadsheets to the senior managers each month. However, some managers complained that they didn't understand how to get the information they needed, others complained that the data were not accurate, and still others ignored the spreadsheets. SlowRider established a project team to look at acquiring a state-of-the-art business intelligence system. After several interviews with all the managers, the project team was ready to develop the business case. The project team estimated benefits of the new BI system as follows: 5 percent increase in sales through better-focused sales campaigns, which should increase gross margins by $200,000 in year 1 and $300,000 in years 2 and 3. 10 percent increase in inventory turnover through better purchasing, which should reduce inventory carrying costs by $100,000 in year 1 and $150,000 in years 2 and 3. The project team estimated costs over an expected 3-year life as follows: Cost Element Acquisition cost (new software and implementation) Operating cost (annual licenses, upgrades, support) Training Lost productivity during implementation Total Year 0 $ Year 1 Year 2 Year 3 400,000 $ 10,000 $ 50,000 $ 5,000 $ 50,000 $ 5,000 $ 50,000 $ 5,000 $ 20,000 $ 430,000 $ 55,000 $ 55,000 $ 55,000 After interviewing managers at other firms that have already implemented similar Bl systems, the project team then estimated that the initiative would have the following risks. Risk Description Managers will not use the Probability Mitigation Steps Top management support; system, resulting in: incentives to use the system Revenue growth of 3% 25% Inventory turnover increase of 5% 25%