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1.

Provide an overview of the proposed system, including costs and benefits, with an explanation of the various cost and benefit types and categories. The proposed system for New Century Health Clinic is a computerized in house development system. This was because the clinic was busier and more profitable than ever. Implementing a system to computerize the clinic would reduce the growing workload. It would centralize and streamline operations. All patient files appointments and claims would be accessible from any computer without tracking down the necessary file, appointment book, or daily appointment list. The system could easily be installed while the original model is still in use with minimal disruption. There would be some slow down as the employees are trained to use the new system, but once the relatively simple transition is complete the clinic should see immediate benefits. Benefits including reduced paperwork, higher productivity, and increased employee morale. This could be done for the same or less than hiring an additional employee. If the workload increases to the point of needing a new employee in the future would be as simple as adding a new workstation. The costs for this computerized system would be about $2500. This would save a lot of money because the software is being developed on site. The proposed system would take about 12 weeks to complete and the consulting rate is $30 per hour. Overtime would be $8.00 per hour. With all the costs if the clinic chooses payback analysis, it will determine how long it will take an information system to pay for itself through reduced costs and increased benefits. If return on investment is chosen then it will be a percentage rate that compares the total net benefits received from a project to the total costs of the project. If net percent value is chosen then the total value of benefits is minus the total value of the costs, with both costs and benefits adjusted to reflect the point in time at which they occur. If total cost of ownership is chosen then the clinic will find that the TCO will be higher if the system is developed in house, which is the proposed system. TCO is the better choice for the financial part of the proposed system.

New Century Project:

In- House software

Year 0 1 2 3 4 5

Cost 22,950.00 1,500.00 2,500.00 2000.00 2,800.00 3,000.00

Cumulative Cost 22,950.00 24,450.00 26,950.00 28,950.00 31,750.00 34,750.00

Benefits 2,652.00 7,000.00 9,000.00 10,500.00 11,000.00 12,000.0

Cumulative Benefits Benefits Factor 2652.00 9,652.00 18,652.00 29,152.00 40,152.00 52,152.00 1 0.909 0.826 0.751 0.683 0.621

PV of Benefits $ 2,652.00 $ 6,363.00 $ 7,434.00 $ 7,885.50 $ 7,513.00 $7,452.00

Cost Factor 1 0.909 0.826 0.751 0.683 0.621

PV of Cost $ 22,950.00 $ 1,363.50 $ 2,065.00 $ 1502.00 $ 1912.40 $1863.00

Total ROI:

$34,750.00 50%

$ 169,800.00

$52,152.00

$54,804.00

$10,104.00

$24,813.00

NPV:

$ (14,709.00)

Pay Back Analysis:


50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 1 2 3 4 5 6 Year Cumulative Cost Cumulative Benefits

New Century Project:

Vertical Software Package

Benefits Year 0 1 2 3 4 5 Total ROI: Cost 15,800.00 1,500.00 1,000.00 500.00 500.00 500.00 $19,800.00 123% Cumulative Cost 22,950.00 24,450.00 26,950.00 28,950.00 31,750.00 34,750.00 $ 109,300.00 Benefits 2,652.00 7,000.00 9,000.00 10,500.00 11,000.00 12,000.00 $44,152.00 Cumulative Benefits 2652.00 7,652.00 13,652.00 23,152.00 34,152.00 44,152.00 $46,804.00 Factor 1 0.909 0.826 0.751 0.683 0.621 PV of Benefits $ 2,652.00 $ 4,545.00 $ 4,956.00 $ 7,134.50 $ 7,513.00 $6,210.00 $8,862.00

Cost Factor 1 0.909 0.826 0.751 0.683 0.621 PV of Cost $ 15,800.00 $ 1,363.50 $ 826.00 $ 375.50 $ 341.50 $310.50 $ 16,110.50

NPV:

$ (7,248.50)

Pay Back Analysis:

50,000.00 45,000.00 40,000.00 35,000.00 30,000.00 25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 0.00 1 2 3 4 5 6 Cumulative Cost Cumulative Benefits