VINSUN Infra Engineering: ERP on Premise or on

Cloud

Q1. What are the pros and cons associated with each of the options being evaluated
by VINSUN?
-Following are the pros associated with Bluechip on Premise:

Bluechips ERP on premise solution seemed to be versatile.

It suited the companys need.
Bluechip had a track record of successful implementation.
It also had various customization options to produce a product that
include only the required module.

Following are the cons associated with Bluechip on Premise:

It was costly .It exceeded the annual IT budget of VINSUN.

It offered functions such as fixed asset management and fleet
management which the company didnt require in near future
The deployment cost which amounted to Rs 520,000 was too high.

Following are the pros associated with Codeautomations ERP on Premise:

The cost of server & backup server provided by code automation was
30% less than that of Bluechip server.
Cost of ERP application software provided by codeautomation was 25%
less than that of provide by Bluechip.

Following are the cons associated with Codeautomations ERP on Premise:

It was a startup company & lack of experience was ve point since a

small mistake could jeopardize his entire investment

Following are the pros associated with Codeautomations ERP on Cloud:

ERP on cloud would be accessible from anywhere through the internet.

Flexibility to work from virtually any location.
On balance sheet ,cloud seems to be less costly

Following are the cons associated with Codeautomations ERP on Cloud:

High security risk as companys data will be stored on service provider

database.
If any issues arise about the speed & connectivity of the internet, ERP
on cloud would not work properly.

Q2. Evaluate TCO over a period of five years for the options available to VINSUN.
-The total cost of ownership for the 3 available options for period of 5 years is as
follows:

Item

Workstation (x6)
Workstation UPS (x6 )
Laptops (x2 )
Server
Backup up server
Server UPS (x2 )
Initial Hardware cost
Hardware maintenance (yr 1)
ERP Software (x8)
Consulting
Deployment/ Installation cost
Training
Service Fee (x8 x12)
Data Storage Cost
Software Cost
Software maintenance (yr 1)
Network
Router
Infra set up
Router maintenance
Infra maintenance
Internet
Total network yr1
Total year 1 cost

Bluechip'
s on
Premise
ERP
209700
22290
132488
100000
100000
7750
572228
57222.8
960000
80000
520000
180000

Codeautom
ation
on
Premise
ERP
209700
22290
132488
70000
70000
7750
512228
51222.8

Codeautom
ation
on
Cloud ERP
209700
22290
132488

364478
36447.8

240000
200000
192000
60000
192000

1740000
172800

440000
36000

15479
120000
1547.9
12000
11988
161014.9
2703265.
7

15479
120000
1547.9
12000
11988
161014.9

15479
120000
1547.9
12000
11988
161014.9

1200465.7

813940.7

Five year cost

Hardware Initial
Hardware yearly
Maintenance rate (x5)
Software Initial
Software yearly Maintenance
rate (x5)
Data Storage Cost
(compound)
Network Router and
infrastructure setup
Router maintenance (x5)
Net Infrastructure
Maintenance ( X5 )
Internet (x 5 x12)
Total Cost of Ownership(Yr 5)

572228

512228

364478

286114

256114

182239

1740000

440000

960000

864000

180000

0
366306

135479

135479

135479

7739.5

7739.5

7739.5

60000

60000

60000

59940
3725501

59940
1651501

59940
2136182

From the above calculations codeautomation on premise ERP seems the best
option.

Q3. Given your analysis, suggest what Satav should do?

-Satav should go for premise solution provided by codeautomation. Following
are the reasons :

From the above calculations it is clearly visible that premise solution

provided by codeautomation is cheaper than other available options.
Premise solution by Bluechip exceeded the net IT budget of VINSUN.
ERP systems implementations have failed in many cases, so company
should not invest a large sum in such technology.
Most of the users of VINSUN were not technology savvy so it was
difficult tasks to shift to a new system. They were not sure of
implementing the ERP system successfully.
Premise ERP system is more secure as compared to ERP on cloud
system.