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EXECUTIVE SUMMARY
VINSUN infra engineering has been providing electrical and civil services across India since 2000.
The managing director Mr. Sunil Satav has identified the challenge faced by the organization due to
absence of any data compilation and data-storage software. This has led to inefficiency in the system
with outdated data being used (e.g. the older data led to acceptance of the project which actually had
the negative NPV). This incidents have become the regular occurrences which has started to pester
Mr. Satav.
Ms. Ruchira Kulkarni, VINSUNs CIO has proposed the use of ERP software to take care of the
challenges faced by the growing company. The two options available are ERP on cloud and ERP on
premise, with each option having its own advantage. She has also identified couple of vendor viz.
Codeautomations and Bluechip Corporations with the latter having many successful
implementations across the industry.
Seniors managers (Mr. Rajesh Lokhande and Mr. Subhash Deshmukh) are taking the option of
installing the ERP system negatively, citing various reasons like lack of training, not having a technosavvy employee structure, IT cost incurred, change in business process affecting the business, time
for acceptance of new system, cultural barriers, etc. On the other hand, Ms. Kanika Sharma (the
project manager) is supportive of the ERP system and prefers ERP on cloud with the plausible
reason of transferring the operational risk to the service provider and reaping the benefits at the
early stages.
Following are the sub-topics which clearly makes out the clear differentiation between the 2
platforms if VINSUN decides to go for ERP system.
ERP ON PREMISE
PROS
1. NO NEED FOR INTERNET CONNECTION ERP on premise works on intranet
and hence the connectivity and speed has no effect on the operations of ERP.
2. DATA SECURITY Since it is on premise, data is secured by the companys firewall
mechanism as against on-cloud platform where data is kept in the hands of service provider.
3. CUSTOMIZATION ERP can be heavily customized to suit the needs of the company as
every control on the features is transferred on to the buyer once the ERP is bought.
4. LONG TERM ADVANTAGE Over the long term, if VINSUN goes for integration, the
size of organization will increase dramatically. In such case, it is wiser to use ERP on premise
as data security and use-as-you-wish feature will be an advantage.
CONS
1. HUGE INITIAL INVESTMENTS The price of an ERP system is quite high,
especially, for an organization like VINSUN who has mere 60 employees.
2. TRAINING OF EMPLOYEES More the customization of the ERP system more is the
training required to shun the repulsive attitude of employees towards the ERP.
3. MAINTENANCE COST Entire maintenance cost will be bore by the IT department
(or will be covered under IT expenses) of the company.
4. BUSINESS DISRUPTION As the complete ERP is designed by the company, the
testing, training and bug clearing makes business disruption imminent. Thus, the loss of
working hours is comparatively very high for this platform.
ERP ON CLOUD
PROS
1. INITIAL INVESTMENT LOW As no infrastructure is required for ERP (entire cost
borne by service provider), only expense is the contractual cost and the first installment.
2. NO SEPARATE ERP TEAM Separate ERP rolling team is not needed in this platform
and the higher managers can focus their energy on their activities.
3. STANDARD, TRIED AND TESTES FEATURES As the features provided by this
platform is standard and been used for many times. The bugs and errors in the ERP would
be less.
4. BUSINESS DISRUPTION LOW As the ERP is ready to use at any moment the loss of
business hours is less. Thus, there is low business disruption.
5. ACCESSIBILITY Work can be done from anyplace, anywhere as ERP available on
cloud.
CONS
1. DATA SECURITY AND PRIVACY Keeping the data secure and private is the major
concern in this platform. As the Trust on the service provider is the only firewall available,
competitive advantage can be lost if the data is leaked out to the competitors.
2. HIGH RECURRING COST The installments paid is quite high. Over the long term,
the ERP on premise is much more profitable after the break even is reached. Hence, a
costlier option by Cost-Benefit Analysis.
3. INTERNET REQUIRED Speed and Connectivity affect the usage of ERP, as no
connectivity or low speed means no ERP and hence no work.
ON-CLOUD OR ON-PREMISE?
Cost analysis has been done in the excel sheet attached and following is the summary of the results
obtained.
a. Initial Investments for each option
ERP ON PREMISE
BLUECHIP CORPORATIONS
CODEAUTOMATIONS
ERP ON CLOUD
CODEAUTOMATIONS
2692276.7
1189476.7
476925.8
255558.7
112758.7
52447.8+1.1*DS(t-1)