Baxter Manufacturing Company (BMC) is a leader in deep-drawn stampings and it has been in the market for decades. However, the recent technological developments in the industry have necessitated the acquisition or in-house development of an information system that enhances the performance of the company. The key management personnel at the company have been provided with the options to buy the software from an external vendor or to develop it within the company. The following paper will evaluate both the options and endorse a favorable option. Background
BMC needs a manufacturing software system in order to remain competitive within the industry and some of the personnel in the company are of the opinion that Effective Management Systems, Inc. (EMC)’s Time Critical Manufacturing package is the solution for the company’s software needs. On the other hand, other individuals are of the opinion that development of in-house software will be a better decision in favor of the company. The software can be acquired for an upfront payment of $220,000 and yearly maintenance contracts can be acquired for $55,000 per year. The software can be modified in accordance with the needs of the company and the labor for this task will be billed at $60 per hour. The benefits associated with this option are; it can be implemented within 6 months as compared to 2 years time required to develop internal software, it costs less than the development of software internally, EMC is a well known software vendor and the software is reliable, and it will be completely tested and operational software. The disadvantages of this option are; there is very limited flexibility in the software acquired by the external vendor, the software is highly complex however the requirements of BMC are simpler, there is risk of failure involved in the implementation of the new system and extensive training of staff members will be required to ensure that they are able to operate the new system...
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