Atrium Bio-Medical Supply, Inc.

Atrium Bio-Medical Supply, Inc.

Atrium Bio-Medical Supply is a medium sized regional supplier of medical and laboratory equipment.

Since starting the company 12 years ago, Victoria Dawn has built Atrium into a competitive supply company across several metro areas, but her growth potential is limited because the firm does not have an integrated sales and logistics system. Victoria asked you to evaluate Atrium's options for acquiring a new system.

Tasks

1. What options does Atrium have for acquiring a new system?

Atrium could purchase the system, use consulting services or develop it in-house

2. What are the pros and cons of in-house development versus purchasing a system?

Pros of In-House Cons of In-House

• More customizable

• Better knowledge Support • More knowledge needed by staff

• Possibly Scalability Problems

• Longer Development Time

Pros of Purchasing Cons of Purchasing

• Already Tested

• Lower Cost

• Faster Deployment • Higher Cost for Support

• Dependability on vendor

3. If the decision is made to purchase a new system, what are three options for customizing the software?

a. Purchase a basic package with add-ons at additional cost.

b. Contact vendor to see if enhancements are possible before purchase.

c. Purchase a package and modify in-house.

4. Based on Part C of the Systems Analyst's Toolkit, what financial analysis tools should you use to evaluate the software acquisition options for Atrium? Explain how you would apply each of the tools.

Total Cost of Ownership (TCO)-I would weigh the difference in the cost classifications between creating and purchasing and figure out which one in the long run would cost the company less to achieve.

Cost-benefit Analysis-I would determine the initial development cost of the system

Estimate Annual Benefits-Determine annual operating cost

Payback Analysis-Figure out the Return