Q1. What challenges is Vinsun facing currently?

Vinsun has been using the inefficient and long drawn out methods of
collecting and storing data like MS Office which would have worked given
its size during inception but not now looking at its rapid growth potential
and size. In an industry like this where a sufficiently competent company
like Vinsun files quotations for projects, availability of up to date information
about materials, labor and other infrastructures is a must. Else it will lead to
acceptance of projects that have negative returns and organizational
inefficiencies. This is what Vinsun is currently suffering from in the case.
Also there is no institutionalization of decision support system whereby all
the departments can integrate on one platform and take uniform decisions
accordingly. The problems mentioned are
1. Too much of information overload which had led to lack of decision
supporting tools.
2. Manual labor effort is very high to feed such information and then search
for specifics whenever required, leading to operational inefficiencies.
3. The data available is not uniform throughout the organization, and hence
very segregated which leads to lack of coordination, redundancies and
errors in project evaluation.
4. Backup of data is also not done, hence risky.
5. The culture and hierarchy of the organization is such that the employees
are not ready to accept changes and implement changes very easily. Most of
them are not familiar with the ERP systems and need to be trained which
they are averse to.
6. Moreover the company has stagnated with past practices and cognitive
clog which has led to difficulty in employing practices necessary to
accumulate the growing size of the firm.
Q2 Compare the options Vinsun has and help Satav make a decision.
Should it be cloud or on premise? Justify.
Vinsun has basically challenged with an initial decision of whether to go for
an ERP system, for a customized solution or any other option feasible.
PROS of ERP :
1. Long term solution to the problems faced by Vinsun, the problem of
integration and standardization of information, remove redundancies and
take efficient decisions.
2. Focus on core activities and get real time data.

3. Adopt best practices within the industry and hence achieve a competitive
advantage over other firms still struggling to generate accurate solutions
within the same market.
CONS of ERP:
1. Risky investment, employees skeptical about returns.
2. Train the employees for using ERP software and integrating the system
within the culture of the organization will lead to loss of resources and many
stakeholders being unhappy about it.

If ERP is implemented then we have two options:

On Cloud---WHY?
1. Low initial investment due to low capital expenditure and company will
incur only operating expenditure.
2. No extra people hired for ERP within the system that will keep the firm
focused on its core activities.
3. Less disruption in the system due to adoption of standardized solutions
with less bugs and errors. These solutions can also be implemented
immediately without tweaking the business much.
4. Accessible from anywhere on the go via internet connection.
On Premise---WHY?
1. Data of the firm is very much secure within the premise.
2. Customized solutions can be offered and system can be changed
whenever required according to the needs of the business.
3. No internet connectivity issues due to usage of intranet within the firm
where anyone can access the system hassle-free.
4. As the size of business will increase in the future years as well (Exhibit 2)
and the requirements of the industry will also keep on changing, an on
premise solution will help achieve a long term competitive advantage.
The cost analysis of the company to which ERP solution contract is being
offered:
ERP on Premise

BLUECHIP: CapEX of 572228+1740000+135479=2447707

OpEx of 57222.8+313200+13547.9+11988=395958.7 per year
CODEAUTOMATIONS: CapEx of 512228+ 440000+135479=1087707
OpEx of 51222.8+66000+13547.9+11988=142758.7 per year
ERP on Cloud
CODEAUTOMATIONS: CapEx 364478+15479=379957
OpEx of 24000+36447.8+1547.9+11988+60000+(Data storage cost of t-1
year*0.1)=73983.7+Data storage cost of year t+(Data storage cost of t-1
year*0.1) where Data storage cost of year 1 is 60000.

Now as Vinsun would require a long term solution integrated with

customization and least disruption, it should go for on premise solution.
Keeping in mind the feasibility of the solution, it must look forward to adapt
CODEAUTOMATIONS proposal and implement its on premise solution.
The initial high cost of On Premise ERP solution can be recovered along the
years as the cloud solution is eventually getting costlier and costlier. As we
can see from the graph below, within 12 years the on premise solution is
proving to be better. So from a long term perspective, I feel on premise
solution to Codeautomations should be approved.