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MGT 542E Management Information System

2011-04-26

Earn Real Profit
Cloud 9 (Team # 9)

Why ‘Integrated IT system’ is needed?
1) The San Diego City Schools aspect : SDCS has a vision that Schools will be safe, attractive neighborhood learning centers supporting learning and interaction for citizens of all ages. So It is essential that unified form of information sharing & Efficient business processes settlement to achieve the vision which 2) Government aspect and IT company aspect - Government has a strong willingness to invest to achieve public sector services efficiency. - IT companies begin to introduce a product to education market. (ex) SAP, ORACLE) So, the price of Integrated IT system will be falling and the service quality will be rising. Under these circumstance if the introduction of Integrated IT System for the first time in education area, it could become standard in the field and have the strong bargaining power between the vendors.

Alternatives
1) Selecting alternatives : ‘In-house’ vs ‘Adopt entire ERP system’
Criteria Data Compatible & Extendable Maintenance Cost & Convenience Suitability with Work Suitability with Work in the long view System Upgrade Cost O O △ O ERP system O O O In-house system Detail It is important factor as SDCS moves toward integrated system - In-house : needed a lot of manpower & cost to maintain - ERP : conducted by professional service companies - In-house : can build the system as they want - In-house : can be lasted about for 3 years - ERP : can be extended by purchasing additional modules - ERP : can be upgraded

Above table shows that ERP system is more suitable IT system for SDCS. Furthermore, SDCS can have a strong bargaining power between ERP vendors as it is first case to adopt the system in education market. 2) Selecting module Considering the limited budget, efficiency and related experience, system has to be installed by phases. HR module is the most appropriate as first phase. Because HR module is very common and used widely not only business field but also public sectors for management. So small changes are expected to customize. And As minimize the routine work, employees can concentrate on valuable work like new educational service.

Financial analysis
If the ‘soft benefit’ is not considered, this project can’t produce profit. But it’s clear, HR module can improve the recruiting process (+$320,000) & data accessibility (+$120,000=400,000X30%) thus these effect have to be reflected the financial analysis. Consequently, the result is as follows.

398 440 1.838 6.838 6. many people must be in the project in order to analyze and design the process.1 finance. To do this. the implementation period would take longer and also more budget needs 4) Consideration for the implementing The implementing people don’t know everything. the all cost savings effect will be underestimated (70%) due to stabilization period Issues for Successful Implementation 1) Selecting ERP Vendor : estimate major players Criteria Position strong functionality Flexibility Etc SAP No. a certain portion of budget has to be allocated to training. But we can consider using the amount reduced from software license payment for more investment in education.786 4.018 6.820 1. but also inform them about the system so their repulsions could be reduced.MGT 542E Management Information System Soft Benefits NOT considered NPV : $(734. So training is needed. Among district employees.820 1. 3) Consideration at the beginning of the project The object and the direction should be set so almost no changes would be made.In the first year (‘04).398 440 1.Application Module : $1.820 1.304 (13.820 5.2 HR Relatively flexible They are carrying on strong promotion with relatively low product price Oracle would be supportive because they are more flexible and specialized in HR which can help successful implementation.820 5.838 6.800. Also.75%(=Tax rate) } .820 2. We need to tell users about not only how to use the system.304) 1.7% / IRR : 6. manufacturing Lack of flexibility .1% 2002 Yr -2 2003 Yr -1 2004 Yr 0 2005 Yr 1 2006 Yr 2 2007 Yr 3 2008 Yr 4 2009 Yr 5 System Status WACC Savings ① Cost Savings ② Soft Benefits Cost ① Installation Cost ② On-going Cost Financial Benefits Design  Implementation  Open  Stabilization 7.838 6. If there are too many changes.900 6. there is nearly no one who knows about ERP.216 / IRR : 8.398 440 1. By their participation.000 ( -10% by the first mover’s negotiation power effect) .820 1.018 6.820 5. Of course. so the users need to be involved in the ERP project in the first place.097.820 1.478 308 6.900 (6.398 440 1.200 ( To focus on the proce s s de s ign cons ulting in e a rly pha s e .Stability and integrity is very high ORACLE No. 2) Consideration before starting the ERP project We need to consider how well we can apply business processes effectively into the system.018 6.820 5. .0%(=Treasury bond rate) } + { 58%(=Equity ratio) X 8.820 1.838 6.018 * Assumptions . of Person Days : 9.820 5.WACC = { 42%(=Debt ratio) X 5. +15% ) .211) Year (unit : $thousands) 2011-04-26 Soft Benefits considered  NPV : $1.966 6.398 440 1. at the initial period. misunderstanding and distrust about ERP can be reduced.304 13.No.018 6. the business process must be reorganized in order to have a successful adoption.900) 13.2% = Cost of Debt + Cost of Equity 4.