Enterprise Resource Planning Software-On Going Maintenance Cost Benefit Analysis Case Solution

Introduction

 This case study is about the City of Big Valley located in the city of California. The chief information officer of the city is Bob Henderson. The population of the city is exceeding 5,000,000. The chief information officer of the city is concerned about the Enterprise Resource Planning (ERP) applications. The chief officer had been using the financial and human resource application of PeopleSoft, therefore; the chief officer had established a good relationship with PeopleSoft.

The chief officer is now considering the Enterprise Resource Planning (ERP) applications because Oracle has completely acquired PeopleSoft. He was satisfied with the software application of ERP provided by PeopleSoft, but after the acquisition the product has changed its vision to Oracle Fusion.

Some other softwares are used by the information services department in order to operate some operations such as permitting code enforcement, activity tracking, separate management services for their airport and Kronos time. All these softwares were provided by PeopleSoft. The company has to decide the Enterprise Resource Software for PeopleSoft, as they mainly provided human resources and financial solutions. There are 70 employees working in the information services department and the department had recently spent $2 million to upgrade PeopleSoft, therefore, it is a crucial decision for him whether he should continue its relationship or switch to another vendor.

The City of Big Valley

The City of Big Valley is a metropolitan city and it is located in the central part of California. The population of the city has exceeded from 500,000 residents. The average annual median income of a family in the city was $ 430,704. The annual median income of the male is $ 387,348, and the annual income of the median female is $ 318,612.  The per capita income of the city was $ 15,010. The per capital income is calculated by dividing total GDP by the total population of the city. It is analyzed that in the city there were 26.2% of the population was living below the poverty line in which 20.5% were families.

After analyzing the complete demographics of the city, it is assured that the city of Big Valley cannot afford the costly solutions. The management of the city has to be careful if applying the Enterprise Resource Software, it should be cost efficient because the people of the city are not wealthy as even more than 25% of the people are living their lives below the poverty line. Therefore, the management of the city should be cost efficient in providing the services to the residents of the city.

Enterprise Resource Planning Software-On Going Maintenance Cost Benefit Analysis Case Solution & Answer

Problem Statement

The core problem issue is that Chief information officer wants to decide whether to use Oracle Enterprise Resource Software (ERP) application or give the contract to another vendor who can provide excellent service with low cost. Previously, PeopleSoft was providing Enterprise Resource Planning (ERP) application, but afterwards PeopleSoft was acquired by Oracle in 2005. Therefore, the chief information officer has to decide to continue the relationship after acquisition or switch to another vendor.

The major issue is that the acquisition of PeopleSoft has changed the management of the company, therefore; the new management is considering possible upgrades which will require the chief officer to increase the maintenance budget from $ 3.3 million. The chief information officer had recently spent a significant amount of $ 2 million on the upgrading of PeopleSoft applications.

The third major issue faced by the department was related to the support services implementation. Oracle was forcing the information services department to switch its current application of PeopleSoft to Oracle Fusion. Oracle Fusion is the upgraded format, but it will become a misery for the department as it will not only have cost implication but it will require the complete training of all 70 employees of the department and this will incur a lot of costs. The new application, Oracle Fusion is completely different than PeopleSoft and it will require a significant cost for the re-engineering to get in the line of practice of fusion……………………….

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Enterprise Resource Planning Software-On Going Maintenance Cost Benefit Analysis Case Solution
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