Presenters:
Dr. Raimond Selke (GM05322) , Manimaran (GM05236),
Tan Wee Ser (GM 05270)
Content:
(Raimond)
Introduction ATLAM, SAP and the problems
2 Tasks/Problems:
a) Implementation of SAP yes or not?
b) Termination of Mr. Lim
(Mani)
Feasibility Analysis / Analysis of Problem
Depreciation
(Raimond)
Payback Period
(Weeser)
Net Present Value
Internal Rate of Return
(Mani)
Strategy to solve staff resistance
(Raimond, Weeser, and Mani)
Conclusion
Dr. Raimond
Train and prepare the Malaysians for the Maritime Industry; (the
maritime industry's diverse workforce focuses on seafaring as well as
shore-based professionals)
App. 200 (89 admin., ca. 100 in training) staff by 2001, Melaka and
Terenganu
Privatized on Jan. 1, 1997
Vision: a leader in the maritime education and training
Mission: to provide value added learning and provide excellent service
to its clients; value added learning : a learning and development
strategy that meets both the current and future needs of an
organization
The Petra Group, through its subsidiaries, provides financial and
management support for early stage technology businesses.
(www.businessweek.com); SAP introduction to ATLAM, capacity 250
users; Petra Group uses SAP
3
Dr. Raimond
SAP
Dr. Raimond
ATLAM
Dr Raimond
2 TASKS/PROBLEMS
Dr Raimond
PAYBACK PERIOD
The rule: The shorter the payback period, the better the investment.
Payback period (PB) is a financial metric that answers questions like these: How long does it
take for an investment, acquisition, or action to pay for itself? Or, how long does it take for
incoming returns to cover costs? Or, put still another way: How long does it take to break even?
Dr Raimond
PAYBACK PERIOD
Dr Raimond
PAYBACK PERIOD
Dr Raimond
Dr Raimond
11
Dr Raimond
Year 1
Accountants
time
efficiency
Technical
Cost savings
600,000
Process &
Procedures
savings
Year 2
Year 3
Year 4
Year 5
Year 6
400,000
800,000
1,200,000
1,600,000
2,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
500,000
900,000
1,200,000
1,500,000
1,800,000
Working
Capital
saving
900,000
1,200,000
1,500,000
1,500,000
1,500,000
1,500,000
Total cost
savings
1,500,00
0
3,300,000
4,600,000
5,500,000
6,400,000
7,300,000
12
Dr Raimond
Year 1
Average SAP
license Cost
Year 2
Year 3
Year 4
Year 5
Year 6
150,000
200,000
225,000
250,000
250,000
100,000
160,000
180,000
560,000
600,000
640,000
Cost Of overhead
300,000
420,000
490,000
560,000
600,000
640,000
Cost of System
Maintenance and
Firewalls
60,000
120,000
130,000
140,000
150,000
160,000
260,000
300,000
340,000
380,000
400,000
Cost of hardware
Expansion
Cost of training
500,000
800,000
900,000
1,000,0
00
1,100,00
0
1,300,00
0
Total cost
960,000
1,910,00
0
2,200,00
0
2,825,0
00
3,080,00
0
3,390,00
0
13
Dr Raimond
Year 2
Year 3
Year 4
Year 5
Year 6
Depreciation
on projects
(302,848.77
)
(302,848.77
)
(302,848.77
)
(302,848.77
)
(302,848.77
)
(302,848.77)
Earning
Before Tax
237,151.23
1,087,151.2
3
2,097,151.2
3
2,372,151.2
3
3,017,151.2
3
3,607,151.23
(-) Income
Tax
(66,402.34)
(304,402.34
)
(587,202.34
)
(664,202.34
)
(844,802.34
)
(973,930.83)
Earning After
Tax
170,748.89
782,748.89
1,509,948.8
9
1,707,948.8
9
2,172,348.8
9
2,633,220.40
(+)
Depreciation
on reversal
302,848.77
302,848.77
302,848.77
302,848.77
302,848.77
302,848.77
(+) Saving
due to
Depreciation
84,797.66
84,797.66
84,797.66
84,797.66
84,797.66
84,797.66
Earning After
Tax
558,395.32
1,170,395.3
2
1,897,595.3
2
2,095,595.3
2
2,559,995.3
2
3,017,838.34
540,000.00
1,390,000.0
0
2,400,000.0
0
2,675,000.0
0
3,320,000.0
0
3,910,000.00
Positive
/Negative
Cash Flow
(5,344,390.0
0)
14
Dr Raimond
15
Weeser
INFORMATION GIVEN
16
Weeser
NPV
t 1
NCF
(1 k )
t
t
NINV
17
Weeser
After
Discoun DR +
Depreciation t Rate
1
0 1,188,841.0
0
NPV of
Cash flow
(1,188,841.00
)
0.10
0.10
1.10
1.10
2 1,200,000.0
1,132,632.34
0
0.10
1.10
1.21
3 1,500,000.0
1,432,632.34
0
0.10
1.10
1.33
4 1,500,000.0
1,432,632.34
0
0.10
1.10
1.46
5 1,500,000.0
1,432,632.34
0
0.10
1.10
1.61
(DR +
1)^T
900,000.00 832,632.34
756,938.49
936,059.79
1,076,357.88
978,507.17
889,551.97
1,500,000.0
6 Since
the
0
0.10
1.10
NPV is positive,
this 1.77
project
can
1,432,632.34
808,683.61
be accepted.
4,257,257.9
18
Weeser
IRR
t 1
NCF
(1 r )
t
t
NINV
19
Weeser
Tim
After
Cash flow
e
Depreciation
0 1,188,841.
00
(DR +
IRR of Cash flow
1)^T
IRR
DR + 1
0.25
900,000.0
832,632.34
0
0.25
1.25
1.25
1,200,000.
1,132,632.34
00
0.25
1.25
1.56
1,500,000.
1,432,632.34
00
0.25
1.25
1.95
1,500,000.
1,432,632.34
00
0.25
1.25
2.44
1,500,000.
1,432,632.34
00
0.25
1.25
3.05
(1,188,841.00)
666,105.87
724,884.70
733,507.76
586,806.21
469,444.97
20
Mani
Mani
STANDARD CHARTS OF
ACCOUNTS WITHIN PETRA
GROUP
STRONG IT SUPPORT
1.
22
Mani
2.THE UNITS-OF-PRODUCTION DEPRECIATION METHOD ASSIGNS AN EQUAL AMOUNT OFEXPENSE TO EACH UNIT PRODUCED OR SERVICE RENDERED BY THEASSET.
3.THE SUM-OF-THE-YEARS DIGITS METHOD DETERMINES ANNUAL DEPRECIATION BY MULTIPLYING THE ASSET'S DEPRECIABLE COST BY A SERIES OF FRACTIONS BASED ON THE SUM OF THE ASSET'SUSEFUL LIFEDIGITS.
4.THE DOUBLE-DECLINING BALANCE IS A TYPE OFACCELERATED DEPRECIATIONMETHOD THAT CALCULATES A HIGHER DEPRECIATION CHARGE IN THE FIRST YEAR OF AN ASSET'S LIFE AND GRADUALLY DECREASES DEPRECIATION EXPENSE IN SUBSEQUENT YEARS.
24
Weeser
COST BREAKDOWN
MYR
HARDWARE COST
2,000,000
1,000,000
TRAINING COST
1,271,550
CUSTOMIZATION WORK
72,840
INITIAL SOFTWARE
1,000,000
TOTAL COST
5,344,390
25
Mani
26
Mani
BENEFIT-CO ST ANALYSIS (BCA) IS A TECHNIQUE FOR EVALUATING A PROJECT OR INVESTMENT BY CO MPARING THE ECO NOMIC BENEFITS WITH THE ECONO MIC CO STS OF THE ACTIVITY.
CONCLUSION :SHO ULD IMPLEMENT SAP AS ITS BENEFITS IS MORE THAN COSTS.
27
Mani
28
QUESTIONS?
29
THANK YOU!
30