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The Cost?Benefit Analysis (CBA) Process

he Cost?Benefit Analysis (CBA) Process 1.Determine/define project objectives 2.Document current processes 3. Estimate future requirements 4.Collect cost data 5.Choose at least three alternatives 6.Document CBA assumptions 7.Estimate costs 8.Estimate benefits 9.Discount costs and benefits 10.Evaluate alternatives 11.Perform sensitivity analysis Use a discount rate of 3%. Year Discount Factor i= 3.5% i=7.0% 1 0.966 0.935 2 0.934 0.873 3 0.902 0.816 4 0.871 0.763 5 0.842 0.713 Scenario Current annualized revenues for Jet Tech.com are $20m. Jet tech has decided ti implement a CRM system. For this to work for their current vlume and anticipated growth two options are being evaluated : (1) an in-house solution based on a 32-core server (IBM AIX edition costs $73,128 or Sun SPARC T3-2 costs $39,57) or (2) SaaS CRM suite from Salesforce.com. Jet Tech has 20 internet sales representatives. The software cost for the in-house solution is $5000 for system software and $499 per user for the CRM application. The software cost for the in-house solution is $5000 for system software and $499 per user for the CRM application. The software cost for the hosted solution is $699 per user. Maintenance for the software requires the one-tenth the time of an IT staff membe if it is hosted in-house, and free if hosted via a SaaS arrangement. The maintenance cost for hardware is one-tenth the time of an IT staff member for the Sun box and one-twentieth the time of an IT staff member for the IBM box. The salary for IT workers is $65K per year and the labor burden for employees is 35% of their salary. Assume that both ways of implementing the CRM system deliver the same increase in revenues of 9% (assume a 50% profit margin). Also, assume that the time horizon for evaluating the alternatives is 3 years. Repeat the analysis but change the last assumption to 5 years ad charge the same for in-house and SaaS software maintenance, do your results change? How sensitive is your answer to changes in the cost/user for the in-house solution? For the hosted solution? Compute payback, ROI, NPV. Consider status quo as the third alternative. Which choice should Jet Tech make ?
he Cost?Benefit Analysis (CBA) Process 1.Determine/define project objectives 2.Document current processes 3. Estimate future requirements 4.Collect cost data 5.Choose at least three alternatives 6.Document CBA assumptions 7.Estimate costs 8.Estimate benefits 9.Discount costs and benefits 10.Evaluate alternatives 11.Perform sensitivity analysis Use a discount rate of 3%.
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Assignment ID
44376
Discipline
CREATED ON
September 26, 2016
COMPLETED ON
September 27, 2016
Price
$40
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