Managing Information Technology

additional systems to translate from one packaged

system to the other packaged system. In addition

there will be costs of training the users, data conver-

sion, and the changeover to the new system. A good

rule of thumb for the total cost of installing a pur-

chased package would be twice the purchase price

of the software, which in this case would be

$440,000. I doubt that we could do it for any less,

and that compares with about $420,000 to build our

own systems, which includes all the costs involved,

such as training, conversion, and defining the needs

of our manufacturing people.

It will take at least a year to properly evaluate

and install a purchased system. This is less than the

2 years we will need to complete our own system,

but we will be installing and using components of

the new system as we complete them, so the time

advantage is not that great.

When asked what it would take to do a more
complete evaluation of the proposal to purchase the EMS
system, Collins replied:

We would need to spend about 6 months studying

our manufacturing area to determine what we are

doing now and what the new systems should do.

Then we would take some time to explore the

many packages that are available, and winnow

them down to the three or four most suitable.

Then we would invite the chosen vendors to sub-

mit proposals so we could study and evaluate

each of these proposals in detail and pick the best

one. Meantime, we would prepare a proposal for

building the new system that would describe the

proposed system in detail and include a plan for

its development including schedules of both time

and dollars. Finally, we would compare the best

proposal with the plan for building the system

448 Part III • Acquiring Information Systems

ourselves and decide which to do. That would

take at least a year and cost between $50,000 and

$90,000.

Decision Time

After his discussions with Moore and Collins, Baxter sat

down with his sister, Sue Barkley, to discuss what to do

about Moore’s proposal. “Sue,” Baxter began, “you were

able to get the second manufacturing software system we

bought up and running, but conditions in the shop were so

chaotic that we abandoned trying to use it. Why don’t we

go back and try it again?” Sue replied:

We recently considered trying again to use this system,

but the special computer we bought to run it died and

the software vendor has gone out of business, so we

were out of luck.

“Lucas claims that BMC is losing its reputation as a

world-class parts manufacturer because its systems are

inadequate, and therefore BMC must purchase a system

without delay,” Baxter said. “Do you believe that it is

critical that we get these new systems immediately?” Sue

thought a while before replying:

I don’t think that our customers care about our sys-

tems as long as we provide high-quality products at a

good price and deliver them when they are needed,

which we are doing. From their perspective, we are

already interacting with them via EDI, so that is a

problem for us rather than for them. It would be

great to have the proposed systems as soon as possi-

ble, but we have been getting along without them for

a long time.

“Well, Sue,” Baxter said, “I still don’t know what we

should do. What do you think?”