Prepare the Budget Plan worksheet according to guidelines as well as a one-page report stating your assumptions on the budget categories. Include a cover page and supportive references.
The last SLP assignment in the Capstone is a budgeting exercise to supplement IT managerial knowledge. An important aspect of IT planning is to assess system acquisitions through the budgeting process, which involves IT management, user groups, and senior management for approval. Preparing a budget has several objectives, and its first is to provide a mechanism for allocating cost and resources. The second objective is to trigger consensus on IT spending. Lastly, a budget establishes a framework to identify plan versus actual deviations in cost and spending. In addition, acquisition budgets must consider long-term maintenance support. Effective monitoring of IT financial expenditures requires several tools such as Excel programs and monthly reports to highlight performance versus original plans and exception reports.
Using the ITPM worksheet below, students will complete a budget plan to provide financial estimates for direct and indirect cost in acquiring a new system for Alcan. The budgeting process must consider purchase cost as well as assumptions to render a decision on whether or not the system will meet the allocated budget. For the purpose of this assignment, a budget ceiling is not given, but the student must apply realistic judgment to provide budget numbers. Note that any acquisition can go over budget if not properly projected or managed.
ALCAN Service Request
Requestor: Robert Ouellette, CIO
Business Need: Alcan would like to take advantage of implementing a centralized system to improve its production planning process and inventory control. The new information system should be capable of lowering inventory levels while reducing raw materials and finished goods inventory cost.
Service Request: Evaluate the acquisition of an MRP (Material Requirements Planning) software-based solution to integrate the various systems and applications in use at all data centers. The MRP system should enable to manage manufacturing processes more efficiently.
Shared Services Manager Deliverable: Prepare an IT budget for the acquisition and maintenance of an MRP system to support the business need.
Assignment Requirements
Create a detailed budget plan using the ITPM worksheet to estimate the cost of hardware, software, personnel, and other related expenses to support the system. The budget will include all implementation costs in year 1 (implementation year) plus an additional 4 years of cost projection. Refer to the ITPM “Instructions and Definition” tab for explanations. Keep in mind the number of Alcan employees noted in Dube’s case as a rough indicator to select an MRP vendor and hardware. The MRP project should be completed in approximately one year, and the maintenance cost will be estimated over the next four years. The purpose of allocating the cost over a five-year period is to determine the total cost of ownership (TCO) on running the MRP system.
Budget Categories
Hardware and Software. Refer to the ITPM “Instructions and Definitions” tab in the worksheet for hardware and software acquisition. You are free to select any vendor of choice to calculate the associated cost. If your hardware or software cost is not available, the Internet has many sites discussing an average server and MRP cost. For years 2-5, the cost projection is maintenance, which is a percentage of the purchase cost as noted in the ITPM worksheet.
You might need to make assumptions on the worksheet line items not specified by the vendor. Examples are maintenance contract, network connections, load balance service, storage requirements, and miscellaneous. To estimate cost, you could research the Internet or your workplace.
Personnel. For personnel cost, the information is given in the worksheet “IT Specs” tab to calculate the estimated cost. Use judgment to decide the staff needed during the implementation year versus years 2-5.
Advertising and Marketing. Follow the “Instructions and Definitions worksheet” and make the necessary assumptions to arrive at estimated cost.
Leasing and Rental. Follow the “Instructions and Definitions” worksheet and make the necessary assumptions to arrive at estimated cost.
Cost Savings. Follow the “Instructions and Definitions” worksheet and make the necessary assumptions to arrive at estimated cost.
Microsoft ITPM Budget Plan worksheet
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